UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~April~~October 3031, 2010

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 No. 000-52877

CLEAR-LITE HOLDINGS, INC.

(Exact name of registrant in its charter)

	Nevada		20-8257363
	(State or other jurisdiction of		(IRS Employer
	Incorporation or organization)		Identification No.)

102 NE 2nd Street, PMB 400

Boca Raton, Florida 33432-3908

(Address of Principal Executive Offices)(Zip Code)

(561) 544-6966

(Registrant’s telephone number, including area code)

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 x No o¨

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

Large accelerated filer o¨ Accelerated filer o¨ Non-accelerated filer o¨ Smaller reporting company þx

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o¨ No þx

As of ~~June~~ 21January 17, ~~2010~~2011, there were 68107,~~030~~042,~~741~~697 shares of the registrant’s common stock issued and outstanding.

CLEAR-LITE HOLDINGS, INC.

FORM 10-Q

~~April~~OCTOBER 3031, 2010

PART I-- FINANCIAL INFORMATION

Item 1.	Financial Statements.	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	1615
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	2018
Item 4.	Control and Procedures.	2018

PART II-- OTHER INFORMATION

Item 1.	Legal Proceedings.	2220
Item 1A.	Risk Factors.	2220
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	2221
Item 3.	Defaults Upon Senior Securities.	2221
Item 4.	(Removed and Reserved).	2221
Item 5.	Other Information.	2221
Item 6.	Exhibits.	2221

~~SIGNATURE~~SIGNATURES

Item 1. Financial Statements.

CLEAR-LITE HOLDINGS, INC. AND SUBSIDIARY

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE ~~AND NINE~~ MONTHS ENDED ~~APRIL~~OCTOBER 3031, 2010 AND 2009

	Page(s)
Consolidated Balance Sheets as of April 30, 2010 (Unaudited) and July 31, 2009 (Audited)	1
Consolidated Statements of Operations For the Three and Nine Months Ended – April 30, 2010 and April 30, 2009 (Unaudited)	2
Consolidated Statements of Cash Flows For the Nine Months Ended – April 30, 2010 and April 30, 2009 (Unaudited)	3
Notes to the Consolidated Financial Statements (Unaudited)	4-15

(UNAUDITED)

Clear-Lite Holdings, Inc. and Subsidiary
	Page(s)
Consolidated Balance Sheets
Consolidated Balance Sheets as of October 31, 2010 (unaudited) and July 31, 2010	1
		April 30, 2010			July 31, 2009
Consolidated Statements of Operations Three Months Ended October 31, 2010 and 2009 (unaudited)	2
		(Unaudited)			(Audited)
Consolidated Statements of Cash Flows Three Months Ended October 31, 2010 and 2009 (unaudited)	3
Assets
Notes to the Consolidated Financial Statements (unaudited)	4 - 14
Assets:
Cash		$	52,969		$	83,587
Prepaid expenses			599,500			-
Total Current Assets			652,469			83,587
Equipment - net			12,276			-
Debt issue costs - net			8,149			11,728
Total Assets		$	672,894		$	95,315
Liabilities and Stockholders' Deficit
Liabilities:
Accounts payable and accrued expenses		$	108,485		$	61,816
Loans payable - related parties			10,525			32,309
Note payable - other - net of debt discount			506,482			16,712
Accrued interest payable			1,567			710
Derivative liabilities			5,701,153			10,440,356
Total Current Liabilities			6,328,212			10,551,903
Convertible notes payable - net of debt discount			127,920			156,493
Total Liabilities			6,456,132			10,708,396
Stockholders' Deficit
Preferred Stock, $0.001 par value, 5,000,000 shares authorized
no shares issued or outstanding			-			-
Common stock, $0.001 par value, 195,000,000 shares authorized,
68,030,741 and 51,944,528 shares issued and outstanding			68,031			51,945
Additional paid in capital			27,609,678			2,810,302
Accumulated deficit			(33,460,947	)		(13,475,328	)
Total Stockholders' Deficit			(5,783,238	)		(10,613,081	)
Total Liabilities and Stockholders' Deficit		$	672,894		$	95,315

Clear-Lite Holdings, Inc. and Subsidiary
Consolidated Balance Sheets



	October 31, 2010			July 31, 2010
	(unaudited)
Assets

Assets:
Cash	$	4,888		$	3,148
Prepaid expenses		-			27,913
Total Current Assets		4,888			31,061

Equipment - net		11,176			11,726

Debt issue costs - net		2,556			5,216

Total Assets	$	18,620		$	48,003

Liabilities and Stockholders' Deficit

Liabilities:
Accounts payable and accrued expenses	$	462,156		$	211,411
Loans payable - related parties		26,845			18,388
Convertible note payable - net of debt discount		618,701			658,930
Accrued interest payable		10,197			5,600
Derivative liabilities		1,517,003			2,298,159
Total Current Liabilities		2,634,902			3,192,488

Stockholders' Deficit:
Preferred Stock, $0.001 par value, 5,000,000 shares authorized,
no shares issued or outstanding		-			-
Common stock, $0.001 par value, 195,000,000 shares authorized,
88,201,370 and 72,000,741 shares issued and outstanding, respectively		88,201			72,000
Additional paid in capital		27,486,400			27,238,020
Accumulated deficit		(30,190,883	)		(30,454,505	)
Total Stockholders' Deficit		(2,616,282	)		(3,144,485	)

Total Liabilities and Stockholders' Deficit	$	18,620		$	48,003

See accompanying notes to consolidated financial statements

-1-

Clear-Lite Holdings, Inc. and Subsidiary
Consolidated Statements of Operations
(Unaudited)
(unaudited)
	Three Months Ended						~~Nine Months Ended~~
	April 30, 2010			April 30, 2009			April 30, 2010			April 30, 2009
	October 31, 2010			October 31, 2009
Sales	$	-		$	~~873~~305,114		$	~~457,934~~		$	~~611,019~~
Cost of sales		-			-218,753			~~338,585~~			~~336,747~~
Gross profit		-			~~873~~86,361			~~119,349~~			~~274,272~~
General and administrative expenses		~~366~~414,~~145~~723			~~367~~5,~~752~~865,953			~~9,468,843~~			~~942,049~~
Loss from operations		(~~366~~414,~~145~~723	)		(~~366~~5,~~879~~779,592	)		~~(9,349,494~~	)		~~(667,777~~	)
Other income (expense) - net
Other income		-			-13,000			~~12,627~~			48
Interest expense		(1106,~~024,123~~181	)		(~~517~~172,638	)		~~(1,754,378~~	)		~~(517~~	)
Change in fair value of derivative liability		~~(124~~858,~~883~~865	)		-(2,110,337	)		~~2,472,017~~			-
Derivative expense		(~~137~~74,~~404~~339	)		-(10,216,902	)		~~(11,366,391~~	)		-
Total other expense - net		(1,286,410	)		(517	)		(10,636,125	)		(469	)
Total other income (expense) - net		678,345			(12,486,877	)
Net loss	$	(1,652,555	)	$	(367,396	)	$	(19,985,619	)	$	(668,246	)
Net income (loss)	$	263,622		$	(18,266,469	)
Net Loss per Common Share - Basic and Diluted	$	(0.03	)	$	(0.01	)	$	(0.35	)	$	(0.01	)
Net Income (Loss) per Common Share - Basic and Diluted
Weighted Average Number of Common Shares Outstanding
Basic	$	0.00		$	(0.34	)
During the Period - Basic and Diluted		61,455,067			51,105,764			57,432,945			51,098,191
Diluted	$	0.00		$	(0.34	)
Weighted Average Number of Common Shares Outstanding
Basic		77,771,827			53,428,224
Diluted		277,550,837			53,428,224

See accompanying notes to consolidated financial statements

-2-

Clear-Lite Holdings, Inc. and Subsidiary
Consolidated Statements of Cash Flows
(Unaudited)
(unaudited)
	Nine Months Ended
	Three Months Ended
	April 30, 2010			April 30, 2009
	October 31, 2010			October 31, 2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(19,985,619	)	$	(668,246	)
Net income (loss)	$	263,622		$	(18,266,469	)
Adjustments to reconcile net loss to net cash used in operating activities:
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Amortization of debt issue costs		71,078			342
Depreciation		550			-
Amortization of debt discount		1,681,197			-
Amortization of debt issue costs		2,660			7,424
Depreciation		1,003			-
Amortization of debt discount		103,522			164,679
Stock issued for services		518,~~300,000~~200			~~241~~3,~~177~~458,000
Warrants issued for services		~~2,852,383~~-			-1,925,925
Chainge in fair value of derivative liability		(2,472,017	)		-
Change in fair value of derivative liability		(858,865	)		2,110,337
Derivative expense		1174,~~366,391~~339			-10,216,902
Changes in operating assets and liabilities:
(Increase) in:
Increase (Decrease) in:
Accounts receivable		-			(~~873~~305,177	)
Prepaid expenses		27,913			-
Increase in:
Accounts payable and accrued expenses		46250,~~669~~745			42237,~~973~~584
Accrued interest payable		~~857~~4,597			~~175~~535
Net Cash Used in Operating Activities		(1112,~~138,058~~717	)		(~~384~~450,~~452~~260	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets		(13,277	)		-
Net Cash Used in Investing Activities		(13,277	)		-
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of loans payable - related parties		(41,783	)		(11,445	)
Proceeds from loans payable - related parties		12,900			-
Proceeds from loans payable - related party		20,000			-
Repayments of loans payable - related parties		(4,443	)		(18,225	)
Proceeds from issuance of convertible notes		1,110,000			500,000
Payment of debt issue costs in cash		-			(60,000	)
Proceeds received from the exercise of warrants		200,000			-
Proceeds from issuance of convertible notes		106,000			785,000
Repayment of convertible note		(100,000	)		-
Net Cash Provided By Financing Activities		114,457			706,775
Payment of debt issue costs in cash		(67,500	)		(12,500	)
Net Increase in Cash		1,740			256,515
Net Cash Provided By Financing Activities		1,120,717			476,055
Cash - Beginning of Period		3,148			83,587
Net Increase (Decrease) in Cash		(30,618	)		91,603
Cash - End of Period	$	4,888		$	340,102
Cash and Cash Equivalents - Beginning of Period		83,587			203,277
Cash and Cash Equivalents - End of Period	$	52,969		$	294,880
SUPPLEMENTARY CASH FLOW INFORMATION:
Cash Paid During the Period for:
Income taxes	$	-		$	-
Interest	$	-		$	-
SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Debt discount recorded on convertible notes	$	1106,~~110,~~000		$	-785,000
Original issue discount	$	~~182,000~~-		$	80157,000
Conversion of notes to common stock	$	1143,~~120,000~~750		$	-
Issuance of stock for future services	$	599,500		$	-
Reclassification of derivative liability to additional paid in capital	$	102,630		$	-
Cashless exercise of warrants	$	5,604		$
Expiration of derivative liability and reclassification to additional paid in capital	$	14,743,577		$	-

See accompanying notes to consolidated financial statements

-3-

Clear-Lite Holdings, Inc. and Subsidiary

Notes to Consolidated Financial Statements

~~April~~October 3031, 2010

(Unaudited)

Note 1 Nature of Operations and Basis of Presentation

~~Nature~~The Company sells energy saving and environmentally friendly lighting products. The Company utilizes the services of ~~operations~~multiple third party manufacturers to produce the Company’s product line.

Clear-Lite Holdings, Inc. (“the Company”) offers a broad range of energy saving and environmentally friendly lighting products.

Note 2 Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited ~~condensed~~ consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and judgments that may affect the amounts reported in its consolidated financial statements and accompanying notes. Actual results may differ from these estimates under different assumptions or conditions.

The financial information as of July 31, ~~2009~~2010 is derived from the audited consolidated financial statements presented in the Company’s Annual Report on Form 10-K for the year ended July 31, ~~2009~~2010. Certain information or footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission for interim financial reporting. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments necessary (which are of a normal and recurring nature) for the fair statement of the results of the interim periods presented. The accompanying unaudited consolidated financial statements should be read in conjunction with the Company’s audited financial statements for the year ended July 31, 2010 and 2009, as presented in the Company’s Annual Report on Form 10-K. Operating results for the ~~nine~~three months ended ~~April~~October 3031, 2010 are not necessarily indicative of the results that may be expected for the entire fiscal year ending July 31, ~~2010~~2011.

~~Debt Issue Costs and Debt Discount~~-4-

The Company has paid debt issue costs, and recorded a debt discount in connection with raising funds through the issuance of convertible debt during 2009 and 2010. These costs are amortized over the life of the debt to interest expense. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.

Clear-Lite Holdings, Inc. and Subsidiary

Notes to Consolidated Financial Statements

~~April~~October 3031, 2010

(Unaudited)

Note 2 Summary of Significant Accounting Policies

Principles of Consolidation

All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of these unaudited consolidated 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 period. The Company regularly evaluates estimates and assumptions related to valuation allowances on accounts receivable and valuation allowances on deferred income taxes. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations could be affected.

Risks and Uncertainties

The Company has had a difficult time operating in an industry that is subject to intense competition and change in consumer demand. The Company's operations are subject to significant risk and uncertainties including financial and operational risks including the potential risk of business failure. Over the past year, the Company continued to exhaust resources without generating any sales.

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. There were no cash equivalents at October 31, 2010 or July 31, 2010, respectively.

-5-

Clear-Lite Holdings, Inc. and Subsidiary

Notes to Consolidated Financial Statements

October 31, 2010

(Unaudited)

The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits.

Debt Issue Costs and Debt Discount

The Company has paid debt issue costs, and recorded debt discounts in connection with raising funds through the issuance of convertible debt. These costs are amortized over the life of the debt to interest expense. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.

Original Issue Discount

For certain convertible debt issued ~~in 2009 and 2010~~, the Company ~~provided~~provides the debt holder with an original issue discount. The original issue discount was recorded to debt discount reducing the face amount of the note and is being amortized to interest expense over the life of the debt.

Fair value of financial instruments

The ~~carrying~~Company ~~amounts~~applies of the ~~Company’s~~accounting ~~short~~guidance under Financial Accounting Standards Board (“FASB”) ASC 820-~~term~~10, ~~financial~~“Fair ~~instruments~~Value Measurements”, ~~including~~as well as certain related FASB staff positions. This guidance defines fair value as the ~~Company’s~~price ~~current~~that ~~assets~~would ~~(exclusive~~be ofreceived ~~cash)~~from ~~and~~selling ~~current~~an ~~liabilities,~~asset ~~approximate~~or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value ~~due~~measurements for assets and liabilities required to be recorded at fair value, the ~~relatively~~Company ~~short~~considers ~~period~~the toprincipal ~~maturity~~or ~~for~~most ~~these~~advantageous ~~instruments~~market in which it would transact business and considers assumptions that marketplace participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.

The guidance also establishes a fair value hierarchy for measurements of fair value as follows:

● Level 1 – quoted market prices in active markets for identical assets or liabilities.

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

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

As of October 31, 2010, the Company’s derivative liabilities are considered level 2. There were no related disclosures for October 31, 2009.

-6-

Clear-Lite Holdings, Inc. and Subsidiary

Notes to Consolidated Financial Statements

October 31, 2010

(Unaudited)

The Company's financial instruments consisted primarily of cash, accounts payable, accrued liabilities, and debt. The carrying amounts of the Company's financial instruments generally approximate their fair values as of October 31, 2010 and July 31, 2010, due to the short term nature of these instruments.

Warrants and Derivative Liabilities

The Company reviews any common stock purchase warrants and other freestanding derivative financial instruments at each balance sheet date and will classify on the balance sheet as:

Equity if they (i) require physical settlement or net-share settlement, or (ii) gives the choice of net-cash settlement or settlement in the Company’s own shares (physical settlement or net-share settlement), or as

Assets or liabilities if they (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside our control), or (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement).

The Company assesses classification of common stock purchase warrants and other freestanding derivatives at each reporting date to determine whether a change in classification between assets and liabilities is required.

Segment Information

During the three months ended October 31, 2010 and 2009, respectively, the Company only operated in one segment; therefore, segment information has not been presented.

Advertising

Costs incurred for producing and communicating advertising for the Company are charged to operations as incurred. Advertising expense for the three months ended October 31, 2010 and, 2009, was $15,417 and $16,896, respectively.

Share Based Payments

Generally, all forms of share-based payments, including stock option grants, warrants, restricted stock grants and stock appreciation rights, are measured at their fair value on the awards’ grant date, and based on the estimated number of awards that are ultimately expected to vest. Share-based payment awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable. The expense resulting from share-based payments are recorded as a component of general and administrative expense.

-7-

Clear-Lite Holdings, Inc. and Subsidiary

Notes to Consolidated Financial Statements

October 31, 2010

(Unaudited)

Earnings per Share

Basic earnings per share (“EPS”) is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to all dilutive potential of shares of common stock outstanding during the period including stock options or warrants, using the treasury stock method (by using the average stock price for the period to determine the number of shares assumed to be purchased from the exercise of stock options or warrants), and convertible debt or convertible preferred stock, using the if-converted method. Diluted EPS excludes all dilutive potential of shares of common stock if their effect is anti-dilutive.

5The computation of basic and diluted loss per share for the three months ended October 31, 2010 and 2009, excludes the following potentially dilutive securities because their inclusion would be anti-dilutive due to the Company’s net loss during the period:

	October 31, 2010		October 31, 2009

Convertible notes		179,450,000		5,540,000
Stock warrants		20,329,010		22,706,344
Total common stock equivalents		199,799,010		28,246,344

For the three months ended October 31, 2010, dilutive net loss is $412,786 and has been determined as follows:

Net income as of October 31, 2010	$	263,622
Interest expense related to the convertible note and convertible debt		108,118
Derivative expense		74,339
Change in fair value of derivative liability		(858,865	)
Diluted net loss as of October 31, 2010	$	(412,786	)

Recent Accounting Pronouncements

In January 2010, the Financial Accounting Standards Board ("FASB") issued updated guidance to amend the disclosure requirements related to recurring and nonrecurring fair value measurements. This update requires new disclosures on significant transfers of assets and liabilities between Level 1 and Level 2 of the fair value hierarchy (including the reasons for these transfers) and the reasons for any transfers in or out of Level 3. This update also requires a reconciliation of recurring Level 3 measurements about purchases, sales, issuances and settlements on a gross basis. In addition to these new disclosure requirements, this update clarifies certain existing disclosure requirements. For example, this update clarifies that reporting entities are required to provide fair value measurement disclosures for each class of assets and liabilities rather than each major category of assets and liabilities. This update also clarifies the requirement for entities to disclose information about both the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value measurements. This update will become effective for the interim and annual reporting period beginning January 1, 2010, except for the requirement to provide the Level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which will become effective for the interim and annual reporting period beginning January 1, 2011. We will not be required to provide the amended disclosures for any previous periods presented for comparative purposes. Other than requiring additional disclosures, adoption of this update will not have a material effect on our financial statements.

-8-

Clear-Lite Holdings, Inc. and Subsidiary

Notes to Consolidated Financial Statements

~~April~~October 3031, 2010

(Unaudited)

~~The~~In ~~computation~~August of2010, ~~basic~~the ~~and~~FASB ~~diluted~~issued ~~loss~~Accounting ~~per~~Standards ~~share~~Update ~~for~~(“ASU”) ~~the~~No. 2010-05, ~~quarter~~Measuring ~~ended~~Liabilities ~~April~~at 30Fair Value, or ASU 2010-05, ~~and~~which amends ASC 820 to provide clarification of a circumstance in which a quoted price in an active market for ~~the~~an ~~year~~identical ~~ended~~liability ~~July~~is ~~31,~~not ~~2009~~available. ~~excludes~~A reporting entity is required to measure fair value using one or more of the following ~~potentially~~methods: ~~dilutive~~1) ~~securities~~a ~~because~~valuation ~~their~~technique ~~inclusion~~that ~~would~~uses bea) ~~anti~~the quoted price of the identical liability when traded as an asset or b) quoted prices for similar liabilities (or similar liabilities when traded as assets) and/or 2) a valuation technique that is consistent with the principles of ASC 820. ASU 2010-~~dilutive~~05 ~~due~~also toclarifies that when estimating the ~~Company’s~~fair ~~net~~value ~~loss~~of ~~during~~a liability, a reporting entity is not required to adjust to include inputs relating to the ~~period:~~existence of transfer restrictions on that liability. The adoption did not have a material impact on our consolidated financial statements.

	April 30, 2010		July 31, 2009
Convertible notes		5,946,666		2,400,000
Stock warrants		17,398,011		13,891,694
Total common stock equivalents		23,344,677		16,291,694

Recent accounting pronouncements

In January 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2010-06, “Improving Disclosures about Fair Value Measurements (“ASU 2010-06”). ASU 2010-06 amends ASC 820, “Fair Value Measurements” (“ASC 820“) to require a number of additional disclosures regarding fair value measurements. The amended guidance requires entities to disclose the amounts of significant transfers between Level 1 and Level 2 of the fair value hierarchy and the reasons for these transfers, the reasons for any transfers in or out of Level 3, and information in the reconciliation of recurring Level 3 measurements about purchases, sales, issuances and settlements on a gross basis. The ASU also clarifies the requirement for entities to disclose information about both the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value measurements. The amended guidance was effective for financial periods beginning after December 15, 2009, except the requirement to disclose Level 3 transactions on a gross basis, which becomes effective for financial periods beginning after December 15, 2010. ASU 2010-06 did not have a significant effect on the Company’s consolidated financial position or results of operations.

Other accounting guidance that has been issued or proposed by FASB and other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s consolidated financial statements upon their respective adoptions.

Note 3 Going Concern

As reflected in the accompanying unaudited consolidated financial statements, the Company has a ~~net~~ loss from operations of $19414,~~985,619~~723 and net cash used in operations of $1112,~~138,058~~717 for the ~~nine~~three months ended ~~April~~October 3031, 2010; a working capital deficit of $52,~~675~~630,~~743~~014, and ~~has and~~ a stockholders’ deficit of $52,~~783~~616,~~238~~282 at ~~April~~October 3031, 2010.

6The ability of the Company to continue its operations is dependent on Management's plans, which include the raising of capital through debt and/or equity markets with additional funding from other traditional financing sources, including term notes and convertible notes, until such time that funds provided by operations are sufficient to fund working capital requirements. The Company may need to incur additional liabilities with certain related parties to sustain the Company’s existence.

The Company can give no assurances that any more financing will be consummated. The Company continues to explore potential expansion opportunities in the industry in order to re-generate sales, while leveraging distribution systems to consolidate lower costs. We expect that our operations will require approximately $25,000 per month for the next six months in the plan to re-evaluate the current business model. We do not have sufficient cash reserves for the next six months and we plan to seek additional capital from the issuance of our debt or equity instruments.

In response to these problems, management has taken the following actions:

·	Raising additional capital through convertible note offerings

·	Is attempting to develop increased brand awareness

·	Continues to analyze and evaluate the current business and determine the viability in the current economic marketplace

The accompanying unaudited consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

-9-

Clear-Lite Holdings, Inc. and Subsidiary

Notes to Consolidated Financial Statements

~~April~~October 3031, 2010

(Unaudited)

The ability of the Company to continue its operations is dependent on Management's plans, which include the raising of capital through debt and/or equity markets with additional funding from other traditional financing sources, including term notes and convertible notes, until such time that funds provided by operations are sufficient to fund working capital requirements. The Company may need to incur additional liabilities with certain related parties to sustain the Company’s existence.

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

In response to these problems, management has taken the following actions:

· Raising additional capital through convertible note offerings;

· the Company is signing up new international distributors;

· The Company is attempting to develop increased brand awareness; and

· The Company continues to develop new technologies in the hopes of bringing these additional technologies to market.

Note 4 Debt

(A)	Loans Payable – Related Parties

The Company is indebted to an officer, director and shareholder for cash advances and unreimbursed expenses. These loans are unsecured, non-interest bearing and due upon demand.

7(B) July 2010 Convertible Promissory Note

On July 19, 2010, the Company entered into a convertible promissory note facility of up to $650,000 with one investor. On August 26, 2010, the Company issued the investor 1 convertible promissory note with principal of $31,000 maturing on July 19, 2013. The Company has classified all long-term debt as current due to the current liquidity of the Company. The convertible promissory note bears interest at 10%. The investor is entitled at its option to convert all or part of the principal and accrued interest into shares of the Company’s common stock at a conversion price equal to the lesser of $0.10 or 65% of the average of the two lowest closing prices of the common stock in the 22 trading days (the closing bid price on the Over-the-Counter Bulletin Board or applicable trading market) immediately prior to the conversion. The Company classified the embedded conversion feature as a derivative liability due to management’s assessment that the Company may not have sufficient authorized number of common shares required to net-share settle.

(C)	October 2010 Convertible Promissory Note

On October 4, 2010, the Company issued a convertible promissory note with principal of $50,000 maturing on July 6, 2011. This note is unsecured and bears interest at 8%. The notes are convertible into shares of the Company’s common stock at a 42% discount of the average of the lowest 3 trading prices (the closing bid price on the Over-the-Counter Bulletin Board or applicable trading market) of the Company’s common stock during the ten trading day period ending one trading day prior to the date the conversion notice is sent by the noteholder to the Company. The Company classified the embedded conversion feature as a derivative liability due to management’s assessment that the Company may not have sufficient authorized number of common shares required to net-share settle.

-10-

Clear-Lite Holdings, Inc. and Subsidiary

Notes to Consolidated Financial Statements

~~April~~October 3031, 2010

(Unaudited)

(BD) ~~Loans~~October ~~Payable~~Convertible –Promissory ~~Other~~Note With Warrants

On ~~March~~October 3113, ~~2009~~2010, the Company ~~executed~~issued a ~~loan~~convertible ~~for~~promissory note with principal of $~~100~~25,000 maturing on October 13, 2011. The ~~loan~~notes ~~bore~~are ~~interest~~convertible into shares of the Company’s common stock at ~~Prime~~a ~~plus~~35% ~~one~~discount ~~percent.~~of ~~The~~the ~~loan~~average ~~was~~of ~~unsecured~~the ~~and~~lowest ~~due~~3 trading prices (the closing bid price on ~~demand. This~~the ~~loan~~Over-the-Counter ~~was~~Bulletin ~~repaid~~Board inor ~~full~~applicable ontrading ~~November~~market) 6,of ~~2009.~~the AtCompany’s common stock during the ~~time~~ten oftrading ~~repayment,~~day period ending one trading day prior to the date the conversion notice is sent by the noteholder to the Company. The ~~fully~~Company ~~amortized~~classified the ~~remaining~~embedded ~~debt~~conversion ~~discount~~feature onas a derivative liability due to management’s assessment that the Company may not have sufficient authorized number of shares common stock required to net-share settle. The note ~~($70,685)~~is ~~and~~secured by the assets of the Company. In ~~marked~~addition to ~~market~~the convertible note, the ~~derivative~~Company ~~liability~~issued the investor 2,500,000 ~~then~~five-year ~~took~~warrants ~~that~~to ~~balance~~purchase ~~and~~common ~~reclassified~~stock ~~the~~with ~~balance~~an exercise price of $0.01/warrant. The notes contain a provision in which the conversion price can be reduced in any event the Company issues any security or debt instrument with a lower consideration per share. The Company classified the warrant feature as a derivative liability ~~($1,429,545)~~due to ~~additional~~management’s ~~paid~~assessment inthat ~~capital~~the Company may not have sufficient authorized number of common shares required to net-share settle.

~~a. The loan was subject to voluntary conversion if, at any time after closing, a reverse acquisition with a public shell company, the Company completes a private placement~~ (~~“new financing”~~E) ofConversion ~~private placement offering~~ of anConvertible ~~aggregate~~Debt ~~amount~~to ofCommon ~~$500,000. The holder will obtain all the rights granted within such offering.~~Stock

bDuring the three months ended October 31, 2010, 3 convertible note holders converted the principal of their notes into shares of common stock. The Innoteholders ~~connection~~converted ~~with~~principal of $143,750 at a conversion rate ranging from $0.005 - $0.019 into 15,850,629 shares of the ~~voluntary~~Company’s common stock. At conversion, the Company ~~has~~fully ~~determined~~amortized ~~that~~the remaining debt discount associated with each convertible note, revalued the derivative liability with a mark to market adjustment through the statement of operations, and reclassified the fair value isof ~~applicable~~the derivative liability to additional paid in capital.

c.(F) ~~The~~Summary ~~Company computed the fair value~~ of ~~the~~Convertible ~~conversion~~Notes ~~feature~~Payable ~~and~~- ~~the~~Net ~~potential~~of ~~warrants~~Debt ~~based on the following management assumptions:~~Discount

Expected dividends	0%
Convertible note payable - net of debt discount balance at July 31, 2010		$	658,930
Expected volatility	319%-354%
Convertible notes issued during the three months ended October 31, 2010			106,000
Expected term: conversion feature	2 years
Conversion of convertible notes issued during the three months ended October 31, 2010			(143,750	)
Expected term: warrants	5 years
Debt discount during the three months ended October 31, 2010			(2,479	)
Risk free interest rate	0.81% - 2.53%
Convertible note payable - net of debt discount balance at October 31, 2010		$	618,701

~~d. The Company classified the conversion feature and warrants as a derivative liability due to management’s assessment that the Company may not have the authorized number of shares required to net~~-~~share settle. See Note 4(F) for valuation and expense.~~11-

1. During the period ended July 31, 2009, the Company issued $720,000 convertible notes with a maturity of 2 years and bearing interest at 10% for cash proceeds of $600,000. These notes are secured.

a. The original issue discount was recorded to debt discount, reducing the carrying amount of the note, and is being amortized over the life of the note.

b. The notes are convertible at $0.30 per share, or 2,400,000 shares of common stock.

c. The notes contain a ratchet provision in which the conversion price can be reduced in any event the Company issues any security or debt instrument with a lower consideration per share.

d. Note holder received Series “A” and Series “B” warrants

i. The Note holder is entitled to 1 Series “A” and 1 Series “B” warrant for each convertible share.

Clear-Lite Holdings, Inc. and Subsidiary

Notes to Consolidated Financial Statements

~~April~~October 3031, 2010

(Unaudited)

ii. Conversion price is $0.30 per share for Series “A” and $0.60 per share for Series “B”.

iii. Expiration of 5 years.

iv. As a result, the Company issued 2,400,000 Series “A” warrants and 2,400,000 Series “B” warrants.

e. The Company classified the conversion feature and warrants as a derivative liability due to management’s assessment that the Company may not have the authorized number of shares required to net-share settle. See Note 4(F) for valuation and expense.

2. During the nine months ended April 30, 2010, the Company issued $1,092,000 convertible notes with a maturity of 2 years and bearing interest at 10% for cash proceeds of $910,000. These notes are unsecured.

a. The original issue discount was recorded to debt discount, reducing the carrying amount of the note, and is being amortized over the life of the note.

b. The notes are convertible at $0.30 per share, or 3,640,000 shares of common stock.

c. The Notes contain a provision in which the conversion price will be reduced in any event the Company issues any security or debt instrument with a lower consideration per share.

d. Note holder received Series “A” and Series “B” warrants

i. The Note holder received 1 Series “A” and 1 Series “B” warrant for each convertible share

ii. Conversion price is $0.30 per share for Series “A” and $0.60 per share for Series “B”.

iii. Expiration of 5 years

iv. As a result, the Company issued 3,640,000 Series “A” warrants and 3,640,000 Series “B” warrants

e. The Company has determined that fair value accounting is applicable. The Company classified the conversion feature and warrants as a derivative liability due to management’s assessment that the Company may not have the authorized number of shares required to net-share settle. The Company determined that the embedded conversion feature and the warrant grants (ratchet down of exercise price based upon lower exercise price in any future offerings) are not indexed to the Company’s own stock and, therefore, is an embedded derivative financial liability (the “Embedded Derivative”), which requires bifurcation and to be separately accounted for pursuant to ASC 815-40-25.

f. The Company computed the fair value of the conversion feature and the warrants based on the following management assumptions:

Expected dividends	0%
Expected volatility	319%-354%
Expected term: conversion feature	2 years
Expected term: warrants	5 years
Risk free interest rate	0.74% - 2.51%

Clear-Lite Holdings, Inc. and Subsidiary

Notes to Consolidated Financial Statements

April 30, 2010

(Unaudited)

(D) Conversion of Convertible Debt

During the nine months ended April 30, 2010, sixteen convertible noteholders converted the principal of their notes into shares of common stock. The noteholders converted principal of $1,120,000 at a conversion rate of $0.30 into 3,733,333 shares of the Company’s common stock. At conversion, the Company fully amortized the remaining debt discount associated with each convertible note, revalued the derivative liability with a mark to market adjustment through the statement of operations, and reclassified the fair value of the derivative liability to additional paid in capital.

(E) Convertible Promissory Notes and Derivative Liability

During the period February 26, 2010 to April 15, 2010, the Company issued 3 convertible promissory notes with an aggregate principal of $200,000 maturing on November 26, 2010 and January 2011. These notes are unsecured and bear interest at 8%. The notes are convertible into shares of the Company’s common stock at a 42% discount of the average of the lowest 3 trading prices (the closing bid price on the Over-the-Counter Bulletin Board or applicable trading market) of the Company’s common stock during the ten trading day period ending one trading day prior to the date the conversion notice is sent by the noteholder to the Company. The Company classified the embedded conversion feature as a derivative liability due to management’s assessment that the Company may not have sufficient authorized number of shares of common stock required to net-share settle.

(F)	Derivative Liability

The Company identified conversion features embedded within convertible debt, warrants and convertible promissory notes. The Company has determined that the features associated with the embedded conversion option and warrants should be accounted for at fair value as a derivative liability. At each reporting period, the Company marks these derivative financial instruments to fair value. As a result of the application of ASC 815-40-15, the fair value of the conversion features and warrants are summarized as follow:

Derivative liability balance at July 31, 2009	$	10,440,357
Derivative liability balance at July 31, 2010	$	2,298,159
Fair value at the commitment date for convertible notes and warrants issued during the nine months ended April 30, 2010		12,476,390
Fair value at the commitment date for convertible notes and warrants issued during the three months ended October 31, 2010		180,339
Fair value mark to market adjustment at April 30, 2010		(2,472,017	)
Fair value mark to market adjustment at October 31, 2010		(858,865	)
		20,444,730
Reclassification of derivative liability to additional paid in capital due to conversion		(102,630	)
Reclassification of derivative liability to additional paid in capital due to repayment or conversion		(14,743,577	)
Derivative liability balance at October 31, 2010	$	1,517,003
Derivative liability balance at April 30, 2010	$	5,701,153

The Company recorded the derivative liability to debt discount to the extent of the face amount of the notes and expensed immediately the remaining value of the derivative as it exceeded the face amount of the note. The Company recorded a derivative expense in the amount of $74,339 and $10,216,902 for the three months ended October 31, 2010 and 2009, respectively.

Clear-Lite Holdings, Inc. and Subsidiary

Notes to Consolidated Financial Statements

April 30, 2010

(Unaudited)

The Company recorded the derivative liability to debt discount to the extent of the face amount of the notes and expensed immediately the remaining value of the derivative as it exceeded the face amount of the note. The Company recorded a derivative expense in the amount of $137,404 and $11,366,391 for the three and nine months ended April 30, 2010, respectively.

The Company measured the fair value of the conversion features and warrants using a Black-Scholes valuation model based upon the date in which ASC 815-40-15, if effective, would have established a commitment date since these warrants were not indexed to the Company’s own stock. The fair value at issuance was based upon the following management assumptions:

Expected dividends	0%
Expected volatility	~~508~~319%- 484%
Expected term: conversion feature	20.75 – 3 years
Expected term: warrants	5 years
Risk free interest rate	0.4122% - 21.3813%

(G)	Mark to Market

At ~~April~~October 3031, 2010, the Company remeasured the conversion features and recorded a fair value adjustment of $2858,~~472,017~~865. The following management assumptions were considered:

Expected dividends	0%
Expected volatility	~~508~~484%
Risk fee interest rate	0.41% - 21.3817%
Expected life of conversion features in years	0.5807 – 12.5972
Expected life of warrants in years	3.9847 – 4.6095
Expected forfeitures	0%

~~(H) Debt Issuance Costs~~-12-

During the three and nine months ended April 30, 2010, in connection with raising convertible debt, the Company paid debt issue costs totaling $7,500 and $67,500, respectively. During the three and nine months ended April 30, 2010, the Company amortized $52,514 and $71,079, respectively.

Total debt issue costs are as follows:

Debt issue costs – net – July 31, 2009	$	11,728
Debt issue costs paid - 2010		67,500
Amortization of debt issue costs - 2010		(71,079	)
Debt issue costs – net – April 30, 2010	$	8,149

Clear-Lite Holdings, Inc. and Subsidiary

Notes to Consolidated Financial Statements

~~April~~October 3031, 2010

(Unaudited)

~~Note~~At 5October ~~Fair~~31, ~~Value~~2009, the Company remeasured the conversion features and recorded a fair value adjustment of $(2,110,337). The following management assumptions were considered:

The fair value of the Company's financial assets and liabilities reflects the Company's estimate of amounts that it would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from sources independent from the Company) and to minimize the use of unobservable inputs (the Company's assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

Expected dividends	0%
Expected volatility	319%
Risk fee interest rate	0.90 – 2.29%
Expected life of conversion features in years	1.41 – 1.95
Expected life of warrants in years	4.42 – 4.95
Expected forfeitures	0%

Level 1:		Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2:		Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
Level 3:		Unobservable inputs based on the Company's assessment of the assumptions that market participants would use in pricing the asset or liability.

(H)	Debt Issuance Costs

~~The~~During ~~Company's~~the ~~investment~~year ~~strategy~~ended isJuly ~~focused~~31, on2010 ~~capital~~and ~~preservation.~~from ~~The~~January ~~Company~~1, ~~intends~~2009 to ~~invest~~July in31, ~~instruments~~2009, ~~that~~in ~~meet~~connection ~~credit~~with ~~quality~~raising ~~standards. The~~convertible ~~current~~debt, ~~expectation~~the isCompany topaid ~~maintain~~debt ~~cash~~issue ~~and~~costs ~~cash~~totaling ~~equivalents~~$67,500 ~~once~~and ~~these~~$15,500, ~~resources are available~~respectively.

12Total debt issue costs are as follows:

Clear-Lite Holdings, Inc. and Subsidiary

Debt issue costs – net – July 31, 2010	$	5,216
Amortization of debt issue costs during the three months ended October 31, 2010		(2,660	)
Debt issue costs – net – October 31, 2010	$	2,556

~~Notes~~Note to5 ~~Consolidated~~Stockholders’ ~~Financial Statements~~Deficit

April 30, 2010

(Unaudited)

The following are the major categories of liabilities measured at fair value on a nonrecurring basis during the nine months ended April 30, 2010 and the year ended July 31, 2009, using quoted prices in active markets for identical liabilities (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3):

	Level 1: Quoted Prices in Active Markets for Identical Liabilities		Level 2: Significant Other Observable Inputs		Level 3: Significant Unobservable Inputs		Total at April 30, 2010
Derivative Liabilities	$	-	$	5,701,153	$	-	$	5,701,153
Total	$	-	$	5,701,153	$	-	$	5,701,153

	Level 1: Quoted Prices in Active Markets for Identical Liabilities		Level 2: Significant Other Observable Inputs		Level 3: Significant Unobservable Inputs		Total at July 31, 2009
Derivative Liabilities	$	-	$	10,440,356	$	-	$	10,440,356
Total	$	-	$	10,440,356	$	-	$	10,440,356

Note 6 Stockholders’ Deficit

(A)	Common Stock

In addition to the common stock issuances described in Note 4 (DE) (Conversions of convertible debt to common stock), the Company issued the following during the ~~nine~~three months ended ~~March~~October 31, 2010:

~~For~~Three ~~the Nine~~ Months Ended ~~April~~October 3031, 2010

OnIssuance ~~October~~of 1,Shares ~~2009, the Company issued 4,550,000 common shares~~ for ~~services rendered, having a fair value of $3,458,000 ($0.76/share). Fair value was based upon the quoted closing trading price of the Company’s common stock.~~Services

On ~~January~~August 3114, 2010, the Company issued 2350,~~250,~~000 common shares for services rendered ~~and to be rendered~~, having a fair value of $218,~~452,500~~200 ($10.09052/share). Fair value was based upon the quoted closing trading price of the Company’s common stock. The Company immediately expensed $1,853,000 for issuances for services that had been rendered, and the Company recorded a prepaid asset in the amount of $599,500 for issuance for services that had yet to be rendered. The Company will expense the prepaid asset once the services are provided. Since there are circumstances that could prevent these issuances, these shares are not considered outstanding for purposes of computing earnings per share since these shares are contingently issuable.

-13-

Clear-Lite Holdings, Inc. and Subsidiary

Notes to Consolidated Financial Statements

~~April~~October 3031, 2010

(Unaudited)

~~On March 18, 2010, the Company issued 100,000 common shares for services rendered, having a fair value of $103,000~~ (~~$1.03/share~~B)~~. Fair~~ ~~value was based upon the quoted closing trading price of the Company’s common stock.~~Warrants

OnThe ~~April~~following ~~30,~~is ~~2010, the Company cancelled 150,000 common shares issued for services, having~~ a ~~fair~~summary ~~value~~ of ~~$114,000 ($0.76/share). Fair value was based upon~~ the ~~quoted closing trading price of the~~ Company’s ~~common~~warrant ~~stock at issuance which was October 1, 2009.~~activity:

(B) Warrants Issued for Services

	Warrants		Weighted Average Exercise Price
Outstanding – July 31, 2010		17,829,010	$	0.21
Exercisable – July 31, 2010		17,829,010	$	0.21
Granted		2,500,000	$	0.01
Exercised		-	$	-
Forfeited/Cancelled		-	$	-
Outstanding – October 31, 2010		20,329,010	$	0.18
Exercisable – October 31, 2010		20,329,010	$	0.18

During the nine months ended April 30, 2010, the Company granted 3,384,650, five year stock purchase warrants, to purchase shares of the Company’s common stock at an exercise price of $0.30.

Warrants Outstanding								Warrants Exercisable
Range of exercise price		Number Outstanding		Weighted Average Remaining Contractual Life (in years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$	0.01 - $0.60		20,329,010		3.60 years	$	0.18		20,329,010	$	0.18

~~The~~At ~~Company~~October ~~determined~~31, 2010 and July 31, 2010, the ~~fair~~total intrinsic value of ~~these~~ warrants ~~was~~outstanding ~~$2,852,385,~~and ~~based~~exercisable ~~upon~~was ~~the~~$0 ~~following~~and ~~management~~$0, ~~assumptions:~~respectively.

Expected dividends	0%
Expected volatility	319-354%
Expected term	5 years
Risk free interest rate	2.31-2.49%

Note 6 Commitments and Contingencies

~~(C)~~Litigations, ~~Exercise~~Claims ofand ~~Warrants for Cash~~Assessments

~~During~~From time to time, the ~~nine~~Company ~~months~~may ~~ended~~become ~~April~~involved ~~30,~~in ~~2010~~various lawsuits and legal proceedings, ~~two~~which ~~warrant~~arise ~~holders~~in ~~exercised~~the aordinary ~~total~~course of 1business. However,~~333,334~~ ~~warrants~~litigation ~~for~~is 1subject to inherent uncertainties,~~333,334~~ ~~shares~~and ofan ~~the~~adverse ~~Company’s~~result ~~common~~in ~~stock~~these ator another ~~exercise~~matters ~~price~~may ofarise ~~$0.15~~that ~~per~~may ~~warrant~~harm its business. The Company ~~received~~is ~~gross~~currently ~~proceeds~~not aware of ~~$200~~any such legal proceedings or claims that they believe will have,~~000~~ individually or in the aggregate, a material adverse affect on its business, financial condition or operating results.

(D) Exercise of Warrants on a Cashless Basis

During the nine months ended April 30, 2010, thirteen warrant holders exercised a total of 5,825,000 warrants for 4,269,545 shares of the Company’s common stock. The warrant holders utilized the cashless exercise provision which enabled the warrant holders to exercise the warrants for shares of common stock without contributing cash at the stated exercise value.

Note 7 Subsequent Events

OnDuring ~~June~~the 17period November 1, 2010 to January 18, 2011, 3 convertible note holders converted the ~~Company~~principal ~~issued~~of 1their notes into shares of common stock. The noteholders converted principal of $49,~~500~~316 at a conversion rate ranging from $0.0022 - $0.0036 into 17,~~000~~341,324 shares of the Company’s common stock. At ~~for~~conversion, ~~gross~~the ~~proceeds~~Company offully ~~$150,000~~amortized ~~($0.10/share).~~the ~~The~~remaining ~~investor~~debt ~~also~~discount ~~received~~associated 1with each convertible note,~~500,000~~ ~~5-year~~revalued ~~warrants~~the derivative liability with ana ~~exercise~~mark ~~price~~to market adjustment through the statement of $0operations, and reclassified the fair value of the derivative liability to additional paid in capital.~~10/share.~~

15-14-

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

Forward-Looking Information

You should read the following discussion and analysis of our financial condition and plan of operations together with our financial statements and related notes appearing elsewhere in this Quarterly Report. Various statements have been made in this Quarterly Report on Form 10-Q that may constitute “forward-looking statements”. Forward-looking statements may also be made in Clear-Lite’s other reports filed with or furnished to the United States Securities and Exchange Commission (the “SEC”) and in other documents. In addition, from time to time, Clear-Lite through its management may make oral forward-looking statements. Forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from such statements. The words “believe,” “expect,” “anticipate,” “optimistic,” “intend,” “plan,” “aim,” “will,” “may,” “should,” “could,” “would,” “likely” and similar expressions are intended to identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. Clear-Lite undertakes no obligation to update or revise any forward-looking statements.

Background

Clear-Lite Holdings Inc., through its TAG Industries Inc. subsidiary, sources products through global, high-quality, green-technology contract manufacturers and manufacturing outsourcing relationships in order to offer Earth-Friendly lighting products, generate cost efficiencies, deliver products faster, more cost efficiently, better serve customers as well as meet the needs of Eco-Friendly customers in targeted segments and geographical areas throughout the world. This ensures the efficient use of and return on capital.

To maintain our competitiveness, we continuously strive to improve our products, technology, manufacturing, and logistics. In addition, the company works with various parties to conduct product, research and development to help acquire access to intellectual property by way of licensing agreements, patents, trademarks, copyrights and trade secrets.

In addition, we sell our products and services through indirect sales channels and utilize the services of an extensive network sales and marketing agencies and related support groups.

Plan of Operation

We are positioned as a green lighting alternative that offers environmentally friendly lighting products. The Company, with the ClearLite(R) brand and private brands, will sell energy-efficient and technologically advanced lighting products including lamps and light fixtures to the retail and I/C markets.

~~The~~Our ~~Company,~~goal ~~with~~is ~~the~~to ~~ClearLite(R)~~provide ~~brand~~an ~~and~~easy ~~private~~pathway ~~brands,~~for ~~sells~~consumers ~~energy-efficient~~ and ~~technologically~~organizations ~~advanced~~to adopt as many green lighting ~~products~~solutions ~~including~~as ~~lamps~~their ~~and~~budgets ~~light~~will ~~fixtures~~accommodate. toTo do this, the Company offers both retail and industrial/commercial ~~(“I/C”)~~solutions ~~markets~~that emphasize the importance of the environment, costs savings and better light alternatives.

Our plan ~~goal~~includes focusing ison todeveloping ~~provide an easy pathway for consumers and organizations to adopt as many green lighting solutions as their budgets will accommodate. To do this,~~ the ~~Company~~following ~~will~~operational ~~offer both retail and industrial/commercial solutions that emphasize the importance of the environment, costs savings and better light alternatives.~~characteristics:

We· ~~plan~~Rapid toturnaround ~~focus~~from onconcept ~~developing~~to ~~the following operational characteristics:~~delivery;

· ~~Rapid~~High ~~turnaround~~quality ~~from~~customer ~~concept to delivery~~service; ~~first to market;~~

· ~~Prompt,~~Highly ~~high~~informed ~~quality,~~sales ~~one-call customer service~~people;

· Highly informed sales people with great tips for greening;

·	Strong communication and collaboration among product distributors and service providers to ensure a seamless customer experience; and

·	Outsourced technical support and quality control.

16All of the above will be supported by our fulfillment partners. They will own and maintain the proper inventory levels. They will also provide the day-to-day inventory management and order processing controls, such as EDI.

~~All~~Our plan of ~~the~~action ~~above~~over ~~will~~the benext ~~supported~~six bymonths ~~our~~is ~~logistics,~~to ~~distribution,~~continue ~~and~~operations ~~fulfillment~~to ~~partners.~~manufacture ~~They~~and ~~will~~distribute ~~own~~energy saving and ~~maintain~~environmentally ~~the~~friendly ~~proper~~lighting ~~inventory levels~~products. It ~~They~~is ~~will~~imperative ~~also~~that ~~provide~~ the ~~day-to-day~~Company raises ~~inventory~~additional ~~management~~capital ~~and~~financing in order ~~processing~~to ~~controls,~~sustain ~~such as EDI~~operations.

Our plan of action over the next twelve months is to continue its operations to manufacture and distribute energy saving and environmentally friendly lighting products and raise additional capital financing, if necessary, to sustain operations.-15-

Results of Operations

Summary Statements of Operations for the ~~nine~~three months ended ~~April~~October 3031, 2010 and 2009.

	April 30, 2010 Unaudited		April 30, 2009 Unaudited
	October 31, 2010 Unaudited		October 31, 2009 Unaudited
Sales	$	~~457,934~~-	$	~~611~~305,~~019~~114
Gross profit	$	~~119,349~~-	$	~~274~~218,~~272~~753
General and administrative expenses	$	9414,~~468,843~~723	$	~~942~~5,~~049~~865,953
Other expenses - net	$	(10,636,125)	$	(469)
Other income (expenses) - net	$	678,345	$	(12,486,877)
Net loss	$	(19,985,619)	$	(668,246 )
Net income (loss)	$	263,622	$	(18,266,469)
Net Loss per Common Share – Basic and Diluted	$	(0.~~35)~~00	$	(0.0134)

For the ~~nine~~three months ended ~~April~~October 3031, 2010, as compared to the ~~nine~~three months ended ~~April~~October 3031, 2009, the Company reported a net ~~loss~~ income of $~~(19~~263,~~985,619)~~622 or $(0.~~35)~~00 per share and a net loss of $(~~668~~18,~~246~~266,469) or $(0.0134) per share, respectively. The change in net loss between periods was primarily attributable to the following: decrease in sales byfrom ~~approximately~~ $~~150~~305,~~000,~~114 ato ~~significant~~$0; ~~increase in professional fees associated with compliance costs for~~ a ~~public~~substantial ~~company,~~decrease ~~increased~~in ~~share~~ stock-based compensation ~~paid~~in tothe ~~strategic~~amount ~~partners~~of $5,365,725, ~~significant~~and ~~increase~~a insubstantial ~~interest~~decrease ~~expense associated with the increase~~ in ~~debt financing, and~~ derivative ~~expenses~~expense and change in fair market value of derivative ~~liabilities~~expense by $13,111,765.

Sales: Sales decreased $~~153~~305,~~085~~114 during the ~~nine~~three months ended ~~April~~October 3031, 2010, down from $~~611~~305,~~019~~114 during the ~~nine~~three months ended ~~April~~October 3031, 2009. The decrease in sales is attributable to the ~~Company~~difficulty ~~launching~~ the ~~Armorlite~~Company ~~brand~~is ~~and~~having ~~attempting~~selling tothe ~~build~~product ~~brand awareness~~line. ~~We have also experienced that few major retailers are currently willing to take on new vendors due to difficult economic climate.~~

~~Gross~~· ~~profit:~~The ~~Gross~~Company ~~profit~~is ~~decreased~~experiencing ~~$154,923~~difficulty ~~during~~penetrating the ~~nine~~domestic ~~months~~and ~~ended~~international ~~April~~markets ~~30,~~at ~~2010, down from $274,272 during~~ the ~~nine~~current ~~months ended April 30, 2009~~time. ~~The decrease in gross profit is reflective of the decreased sales.~~

~~General~~· ~~and~~The ~~Administrative~~Company ~~Expense:~~believes ~~General~~that ~~and~~most ~~administrative~~consumers ~~expenses~~are ~~increased~~not ~~$8,526,794~~ready to ~~$9,468,843~~pay ~~during~~a ~~the~~premium ~~nine~~price ~~months~~for ~~ended~~high ~~April~~quality ~~30,~~products ~~2010,~~in upthe ~~from~~lighting ~~$942,049~~industry during the ~~nine~~current ~~months~~economic ~~ended April 30, 2009~~times. The increase in general and administrative expenses is primarily attributable to an increase in stock based compensation of approximately $8,000,000, an increase in salaries and wages and related payroll expenses of approximately $259,374, an increase in travel related expenses of approximately $60,500, an increase in insurances of approximately $71,400, an increase in promotional expenses of approximately $40,100, and an increase in commissions of approximately $48,000.

~~Other~~· ~~expenses – net increased by $10,635,656.~~ The ~~increase~~Company isbelieves ~~primarily~~due ~~attributable~~ to anits ~~increase~~current inneed ~~interest expense by approximately $1,753,861 to $1,754,378~~ for ~~nine~~additional ~~months ended April 30~~capital, ~~2010,~~it ~~as compared to $517 during the nine months ended April 30, 2009. The increase~~ is ~~primarily~~having ~~attributable~~a todifficult ~~the~~times ~~interest~~educating ~~accrued on~~ the ~~Company’s~~consumer ~~convertible notes and loans payable, amortization of debt discount of the discounts incurred~~ on the ~~issuance~~benefits of ~~the~~paying convertible notes, and amortization of debt issuance costs incurred on the raise of convertible notes. The increase is also attributable to the derivative expense ($11,366,391) and offset by the change in fair value of derivative liability in the amount of $2,472,017. Throughout the nine months ended April 30, 2010, the Company raised capital through a ~~convertible~~premium ~~note~~price ~~offering. Embedded within the terms of the note offering were terms that the company had to account~~ for atits ~~fair~~green ~~value, resulting in tremendous non-cash expenses~~technology.

17· The Company is also having difficulty establishing a presence in major retail and mass market locations both domestically and abroad due to the cost structure that it would take these retailers to substitute our product from their current vendor offerings.

~~Going~~· ~~Concern: As~~The ~~shown~~Company inbelieves ~~the~~those ~~accompanying~~retailers ~~unaudited~~that ~~consolidated financial~~are ~~statements,~~willing ~~the~~to ~~Company~~accept ~~incurred~~new ~~a net loss of $(19~~vendors,~~985,619)~~ ~~during~~ the ~~nine~~signup, ~~months~~enrollment, ~~ended~~market ~~April 30~~test, ~~2010.~~and Asintegration ofprocess ~~that~~is ~~date,~~taking ~~the~~longer ~~Company~~than ~~had~~anticipated. aMany ~~working~~organizations ~~capital~~are ~~deficit~~running ofleaner ~~$5,675,743~~so ~~and~~there anis ~~accumulated~~less ~~deficit~~headcount/headroom ofto ~~$(33,460,947)~~make changes. ~~Those~~As ~~factors~~a ~~raise~~result, ~~substantial doubt about~~ the ~~Company’s~~process ~~ability~~is totaking ~~continue as a going concern~~longer.

·	The sales cycle is much longer than we anticipated, from a forecasted 6-to-9 months to 18+ months

Gross profit: Gross profit decreased $218,753 during the three months ended October 31, 2010, down from $218,753 during the three months ended October 31, 2009. The decrease in gross profit is reflective of the decreased sales.

General and Administrative Expense: General and administrative expenses decreased $5,451,230 to $414,723 during the three months ended October 31, 2010, down from $5,865,953 during the three months ended October 31, 2009. The decrease in general and administrative expenses is primarily attributable to a considerable decrease in stock based compensation of approximately $5,365,725, and a decrease in other general and administrative expenses due to the Company’s limited capital resources.

Other income (expenses) – net increased by $13,165,222. The increase is primarily attributable to a decrease in derivate expenses of $10,142,563, and a decrease in the change in fair value of derivative liabilities of $2,969,202.

Going Concern: As shown in the accompanying unaudited consolidated financial statements, the Company incurred a net loss from operations of $(414,723) during the three months ended October 31, 2010. As of that date, the Company had a working capital deficit of $2,630,014 and an accumulated deficit of $30,190,883. Those factors raise substantial doubt about the Company’s ability to continue as a going concern.

Management of the Company plans to address this concern by doing the following:

●· Raising additional capital through convertible note offerings ~~and stock purchase agreements~~;

●· ~~Working~~The ~~with~~Company ~~several~~is ~~established~~attempting ~~vendors who already have placement with major retailers~~ to ~~gain~~develop ~~product~~increase ~~category~~brand ~~entry, improve visibility, and generate meaningful sales volumes;~~awareness.

~~● Remaining~~· ~~committed~~The toCompany ~~building~~continues ~~the~~to ~~business~~analyze and ~~increasing~~evaluate ~~awareness~~the ofcurrent ~~our~~business ~~ArmorLiteTM product~~ and ~~other~~determine ~~lighting~~the ~~products~~viability toin the ~~general~~current ~~public;~~economic marketplace

● Focusing on going global. The Company is focusing more time and effort on markets outside of the United States and Canada than before. If there is hesitancy in the US/Canada due to reluctance to add vendors in this difficult economic climate, then we believe our superior technology may be more welcome outside the US/Canada where one or more of these conditions may not hold to be true; and-16-

~~● Licensing~~ The ~~one~~ability orof ~~more~~the ~~marquee~~Company ~~brands~~to continue as a going concern is dependent on its ability to ~~establish~~do ~~product~~all ~~entry~~or most of the above listed steps. It is imperative that the company raise additional capital in ~~select~~the ~~markets~~near ~~with~~term ~~strong~~to ~~potential~~continue ~~growth~~executing the current business plan.

The ability of the Company to continue as a going concern is dependent on its ability to do all or most of the above listed steps. As illustrated above, the Company has already been successful in setting its plan in action and looks forward to further progress as the year progresses.

Summary Statements of Operations for the three months ended April 30, 2010 and 2009.

	April 30, 2010 Unaudited		April 30, 2009 Unaudited
Sales	$	-	$	873
Gross profit	$	-	$	873
General and administrative expenses	$	366,145	$	367,752
Other expenses - net	$	(1,286,410)	$	(517)
Net loss	$	(1,652,555)	$	(367,396)
Net Loss per Common Share – Basic and Diluted	$	(0.03)	$	(0.01)

For the three months ended April 30, 2010, as compared to the three months ended April 30, 2009, the Company reported a net loss of $(1,652,555) or $(0.03) per share and a net loss of $(367,396) or $(0.01) per share, respectively. The change in net loss between periods was primarily attributable to significant increase, in interest expense associated with the increase in debt financing, and derivative expenses and change in fair value of derivative liabilities.

Sales: Sales decreased $873 during the three months ended April 30, 2010, down from $873 during the three months ended April 30, 2009.

Gross profit: Gross profit decreased $873 during the three months ended April 30, 2010, down from $873 during the three months ended April 30, 2009.

General and Administrative Expense: General and administrative expenses decreased $1,607 to $366,145 during the three months ended April 30, 2010, down from $367,752 during the three months ended April 30, 2009.

Other expenses – net increased by $1,285,893. The increase is primarily attributable to an increase in interest expense by approximately $1,023,606 to $1,024,123 for nine months ended April 30, 2010, as compared to $517 during the three months ended April 30, 2009. The increase is primarily attributable to the interest accrued on the Company’s convertible notes and loans payable, amortization of debt discount of the discounts incurred on the issuance of the convertible notes, and amortization of debt issuance costs incurred on the raise of convertible notes. The increase is also attributable to the derivative expense ($137,404) and the change in fair value of derivative liability ($124,883): Throughout the three months ended April 30, 2010, the Company raised capital through a convertible note offering. Embedded within the terms of the note offering were terms that the company had to account for at fair value, resulting in tremendous non-cash expenses.

Liquidity and Capital Resources

The following table summarizes total current assets, liabilities and working capital at ~~April~~October 3031, 2010 compared to July 31, ~~2009~~2010.

April 30, 2010 (Unaudited)

July 31, 2009 Audited

Increase/ (Decrease)

October 31, 2010 (Unaudited)

July 31, 2010 (Audited)

Increase/ (Decrease)

Current Assets

~~652~~4,~~469~~888

8331,~~587~~061

~~568~~(26,~~882~~173)

Current Liabilities

62,~~328~~634,~~212~~902

103,~~551~~192,~~903~~488

(4557,~~223,691~~586)

Working Capital (Deficit)

(52,~~675~~630,~~743~~014)

(103,~~468~~161,~~316~~427)

4(531,~~792,573~~413)

As of ~~April~~October 3031, 2010, we had working capital deficit of $(52,~~675~~630,~~743~~014) as compared to a working capital deficit of $(103,~~468~~161,~~316~~427) as of July 31, ~~2009~~2010, ana ~~increase~~decrease of $4(531,~~792,573~~413). The ~~increase~~decrease is primarily a result ~~the recognition~~ of ~~derivative~~the ~~liabilities~~change ~~embedded~~ in ~~the~~fair ~~company’s~~market ~~financial~~value ~~instruments, a decrease in cash~~ of ~~$30,618,~~the ~~offset~~derivative byliabilities anembedded ~~increase~~ in ~~prepaid~~the ~~expenses~~Company’s ofconvertible ~~$599,500~~notes outstanding.

Net cash used for operating activities for the ~~nine~~three months ended ~~April~~October 3031, 2010, was $(1112,~~138,058)~~717. The ~~net~~Company ~~loss~~had ~~for~~limited capital during the ~~nine~~three months ended ~~April~~October 3031, 2010, ~~was~~and ~~$(19,985,619)~~limited expenses and activity to conserve the limited resources.

Net cash ~~used~~obtained ~~for~~through ~~investing~~all financing activities for the ~~nine~~three months ended ~~April~~October 3031, 2010, was $~~(13~~114,~~277),~~457. The asCompany ~~compared~~had todifficulty $0raising ~~for~~additional capital during the ~~nine~~three months ended ~~April~~October 3031, ~~2009~~2010.

~~Net~~Financing ~~cash obtained through all financing activities for the nine months ended April 30, 2010, was $1,120,717 as compared to $476,055 for the nine months ended April 30, 2009.~~Transactions:

~~Management~~On ~~anticipates~~July ~~being~~19, ~~able~~2010, ~~to fund~~ the Company’s ~~foreseeable~~entered ~~liquidity~~into ~~requirements~~a ~~through~~convertible ~~the~~promissory ~~financing~~note itfacility ~~will~~of ~~continue~~up to ~~obtain~~$650,000 ~~during~~with ~~the~~one ~~rest~~investor. On ofAugust ~~2010.~~26, ~~However~~2010, the Company ~~can~~issued ~~give~~the noinvestor ~~assurances~~1 ~~that~~convertible ~~any~~promissory ~~more~~note ~~financing~~with ~~will~~principal beof ~~consummated~~$31,000 maturing on July 19, 2013. The convertible promissory note bears interest at a rate of 10%. The ~~Company~~company ~~continues~~has toclassified ~~explore~~all ~~potential~~long-term ~~expansion~~debt ~~opportunities~~as incurrent due to the ~~industry~~current inliquidity ~~order~~of tothe ~~boost~~Company. The ~~sales,~~investor ~~while~~is ~~leveraging~~entitled ~~distribution~~at ~~systems~~its option to ~~consolidate~~convert ~~lower~~all ~~costs. We~~or ~~expect~~part ~~that~~of ~~our~~the ~~operations~~principal ~~will~~and ~~require~~accrued ~~approximately~~interest ~~$100,000~~into ~~per~~shares ~~month~~of ~~for~~the Company’s common stock at a conversion price equal to the ~~next~~lesser ~~twelve~~of ~~months~~$0.10 Weor do65% ~~not~~of ~~have~~the ~~sufficient~~average ~~cash~~of ~~reserves~~the ~~for~~two ~~the~~lowest ~~next~~closing ~~twelve~~prices ~~months~~of ~~and~~the wecommon ~~plan~~stock toin ~~seek~~the ~~additional~~22 ~~capital~~trading ~~from~~days (the ~~issuance~~closing ofbid ~~our~~price ~~debt~~on the Over-the-Counter Bulletin Board or ~~equity~~applicable ~~instruments~~trading market) immediately prior to the conversion.

On October 13, 2010, the Company issued a convertible promissory note with principal of $25,000 maturing on October 13, 2011. The notes are convertible into shares of the Company’s common stock at a 35% discount of the average of the lowest 3 trading prices (the closing bid price on the Over-the-Counter Bulletin Board or applicable trading market) of the Company’s common stock during the ten trading day period ending one trading day prior to the date the conversion notice is sent by the noteholder to the Company.

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Critical Accounting Policies and Estimates

We have identified critical accounting principles that affect our unaudited consolidated financial statements by considering accounting policies that involve the most complex or subjective decisions or assessments as well as considering newly adopted principals. They are:

Use of Estimates, Going Concern Consideration – The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. Among the estimates we have made in the preparation of the financial statements is an estimate of our projected revenues, expenses and cash flows in making the disclosures about our liquidity in this report. As an early stage company, many variables may affect our estimates of cash flows that could materially alter our view of our liquidity and capital requirements as our business develops. Our consolidated financial statements have been prepared assuming we are a “going concern.” No adjustment has been made in the consolidated financial statements which could result should we be unable to continue as a going concern.

Share-Based Compensation - US GAAP requires public companies to expense employee share-based payments (including options, restricted stock units and performance stock units) based on fair value. We must use our judgment to determine key factors in determining the fair value of the share-based payment, such as volatility, forfeiture rates and the expected term in which the award will be outstanding.

Warrants and derivative liabilities - The Company reviews any common stock purchase warrants and other freestanding derivative financial instruments at each balance sheet date and will classify on the balance sheet as:

a) Equity if they (i) require physical settlement or net-share settlement, or (ii) gives us a choice of net-cash settlement or settlement in our own shares (physical settlement or net-share settlement), or as

b) Assets or liabilities if they (i) require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside our control), or (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement).

The Company assesses classification of our common stock purchase warrants and other freestanding derivatives at each reporting date to determine whether a change in classification between assets and liabilities is required.

Original Issue Discount - For certain convertible debt issued in 2009 and 2010, the Company provided the debt holder with an original issue discount. The original issue discount was recorded to debt discount reducing the face amount of the note and is being amortized to interest expense over the life of the debt.

Revenue recognition - The Company follows the guidance of the Securities and Exchange Commission’s Staff Accounting Bulletin No. 104 for revenue recognition and records revenue when all of the following have occurred: (1) persuasive evidence of an arrangement exists, (2) the product is delivered, (3) the sales price to the customer is fixed or determinable, and (4) collectability of the related customer receivable is reasonably assured. There is no stated right of return for products. Sales are recognized upon shipment of products to customers.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs).

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We do not hold any derivative instruments and do not engage in any hedging activities.

Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures. Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our Chief Executive and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were ineffective such that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

20-18-

Our Chief Executive Officer and Chief Financial Officer are responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Furthermore, smaller reporting companies face additional limitations. Smaller reporting companies employ fewer individuals and find it difficult to properly segregate duties. Often, one or two individuals control every aspect of the Company’s operation and are in a position to override any system of internal control. Additionally, smaller reporting companies tend to utilize general accounting software packages that lack a rigorous set of software controls.

Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the Company’s internal control over financial reporting as of ~~April~~October 3031, 2010. In making this assessment, our Chief Executive Officer and Chief Financial Officer used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework. Based on this evaluation, Our Chief Executive Officer and Chief Financial Officer concluded that, as of ~~April~~October 3031, 2010, our internal control over financial reporting was effective.

(b) Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

21-19-

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

WeOther than listed below, we are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

On June 15, 2010, Orion Energy Systems, Inc. petitioned to cancel the Company’s United States Trademark Registration No. 3,804,378 for ARMORLITE, alleging prior use in commerce. Orion, however, failed to allege a sufficiently early date of use to prevail on its petition. On December 15, 2010, Orion’s motion for leave to amend its petition to allege an earlier and legally sufficient date was granted in Cancellation No. 92-052556. The company answered the petition as required by January 15, 2011 and trial of Orion’s contentions of prior use in commerce is scheduled to begin in November, 2011.

Item 1A. Risk Factors.

WeIn ~~believe~~addition ~~there~~to ~~are no changes that constitute material changes from~~ the risk factors previously disclosed in our Annual Report ofon Form 10-K for the year ended July 31, ~~2009~~2010, filed with the SEC on November 1615, ~~2009~~2010 (the “2010 Annual Report”), ~~and~~the ~~amended~~Company ~~and~~believes ~~restated~~it onis ~~February~~subject ~~10,~~to the risk factors below as of the date hereof. To the extent that some of the Company’s risk factors have changed since the filing of the 2010 Annual Report, such risk factors have been updated below.

OUR FUTURE SUCCESS IS DEPENDENT, IN PART, ON THE PERFORMANCE AND CONTINUED SERVICE OF PAUL E. NIEDERMEYER, OUR CHIEF EXECUTIVE OFFICER AND SOLE DIRECTOR. WITHOUT HIS CONTINUED SERVICE, WE MAY BE FORCED TO INTERRUPT OR EVENTUALLY CEASE OUR OPERATIONS.

We are presently dependent to a great extent upon the experience, abilities and continued services of Paul E. Niedermeyer. We currently do not have an employment agreement with Mr. Niedermeyer. The loss of his services could have a material adverse effect on our business, financial condition or results of operation.

IF WE FAIL TO REMAIN CURRENT ON OUR REPORTING REQUIREMENTS, WE COULD BE REMOVED FROM THE OTCBB, WHICH WOULD LIMIT THE ABILITY OF BROKER-DEALERS TO SELL OUR SECURITIES AND THE ABILITY OF SHAREHOLDERS TO SELL THEIR SECURITIES IN THE SECONDARY MARKET.

Companies trading on the OTCBB, such as Clear-Lite Holdings, Inc., must be reporting issuers under Section 12 of the Exchange Act, and must be current in their reports under Section 13 of the Exchange Act, in order to maintain price quotation privileges on the OTCBB. If we fail to remain current on our reporting requirements, we could be removed from the OTCBB. As a result, the market liquidity for our securities could be adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of shareholders to sell their securities in the secondary market.

FOR THE FORESEEABLE FUTURE, PAUL E. NIEDERMEYER MAY BE ABLE TO INFLUENCE THE SELECTION OF ALL MEMBERS OF OUR BOARD OF DIRECTORS, AS WELL AS VIRTUALLY EVERY OTHER MATTER THAT REQUIRES BOARD APPROVAL, WHICH MAY LIMIT THE ABILITY OF OTHER STOCKHOLDERS TO INFLUENCE CORPORATE MATTERS.

Paul E. Niedermeyer is the Company’s sole director. Mr. Niedermeyer may have significant influence over our management and affairs, and may be able to influence virtually all matters requiring board approval, including the appointment of directors and significant corporate transactions, even if they own considerably less than 50% of the total number of outstanding shares of our common stock. Moreover, these persons may take actions in their own interests that you or our other stockholders do not view as beneficial.

THE COMPANY’S NEWLY APPOINTED CHIEF EXECUTIVE OFFICER HAS LIMITED EXPERIENCE IN THE LIGHTING INDUSTRY.

Paul E. Niedermeyer has less than two years experience in the lighting products industry, which is a highly competitive market. If Mr. Niedermeyer is unable to quickly learn and execute the company’s business plan, or, unable to accurately anticipate or respond in a timely manner to market changes, this could have a material adverse impact on the business. It’s important to note that the former CEO, Thomas J. Irvine, established and maintained all logistic and sourcing relationships on behalf of the Company since inception. It is unclear whether or not these partners and suppliers will agree to maintain the same pricing terms and conditions with Mr. Niedermeyer on a going forward basis. In addition, Mr. Irvine managed sales representative relationships on behalf of the Company. He also led product presentations and formal pitches to prospective buyers at major retailers through these sales representatives. Mr. Niedermeyer will either need to assume control over these functions, hire talent to fill these roles, or outsource these functions as appropriate to ensure they are handled properly.

-20-

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

There were no unregistered sales of ~~Equity~~the ~~Securities~~Company’s ~~and~~equity ~~Use~~securities ~~of Proceeds~~ during the ~~period~~quarter ended ~~April~~October 3031, 2010 that were not otherwise disclosed on a Form 8-K.

Item 3. Defaults Upon Senior Securities.

There were no defaults upon senior securities during the period ended ~~April~~October 3031, 2010.

Item 4. (Removed and Reserved).

Item 5. Other Information.

There is no other information required to be disclosed under this item which was not previously disclosed.

Item 6. Exhibits.

Exhibit Number	Description of Document
Exhibit No.	Description
31.1	Rule 13a-14(a)/ 15d-14(a) Certification of ~~Thomas~~the ~~J. Irvine,~~ Principal Executive Officer of the Company.
31.2	Rule 13a-14(a)/ 15d-14(a) Certification of ~~David~~the ~~Briones,~~ Principal ~~Financial~~Accounting Officer of the Company.
32.1	Certification Pursuant to 18 U.S.C. ~~section~~Section 1350 of ~~Thomas~~the ~~J. Irvine,~~ Principal Executive Officer of the Company.
32.2	Certification Pursuant to 18 U.S.C. ~~section~~Section 1350 of ~~David~~the ~~Briones,~~ Principal ~~Financial~~Accounting Officer of the Company.

22-21-

SIGNATURES

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

	CLEAR-LITE HOLDINGS, INC.
Date: June 21, 2010	By:	/s/ Thomas J. Irvine
Date: January 19, 2011	By:	/s/ Paul E. Niedermeyer
		Thomas J. Irvine Chief Executive Officer
		Paul E. Niedermeyer Chief Executive Officer
	By:	/s/ David Briones
		David Briones Chief Financial Officer

23-22-

Filing Compare · CLEAR-LITE HOLDINGS, INC.