SUMMER ENERGY HOLDINGS INC (Form: 10-Q, Received: 05/15/2012 13:44:56)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2012

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission file number 001-35496


Summer Energy Holdings, Inc.
(Exact name of registrant as specified in charter)

Nevada	20-2722022
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

800 Bering Drive, Suite 260, Houston, Texas	77057
(Address of principal executive offices)	(Zip Code)

(713) 375-2790
(Issuer’s telephone number, including area code)

Castwell Precast Corporation 5641 South Magic Drive, Murray, Utah 84107
(Former name, former address, and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o .

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o .

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

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company þ

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

The number of shares of the issuer’s common stock, $0.001 par value, outstanding as of May 11, 2012 was 10,504,716.

Summer Energy Holdings, Inc.

FORM 10-Q

	FOR THE QUARTER ENDED MARCH 31, 2012

	INDEX

PART I – FINANCIAL INFORMATION		Page

Item 1.	Unaudited Consolidated Financial Statements	3

Consolidated Balance Sheets		3
Consolidated Statements of Operations		4
Consolidated Statements of Cash Flows		5
Notes to Consolidated Financial Statements		6

Item 2 .	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9

Item 3 .	Quantitative and Qualitative Disclosures About Market Risk	11

Item 4 .	Controls and Procedures	11

PART II – OTHER INFORMATION

Item 5.	Other Information	12

Item 6 .	Exhibits	12

SIGNATURES		13

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SUMMER ENERGY HOLDINGS, INC.

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

MARCH 31, 2012 AND DECEMBER 31, 2011

	March 31, 2012 Unaudited			December 31, 2011 Audited
ASSETS

Current assets
Cash and cash equivalents	$	1,254,927		$	1,751,911
Restricted cash		1,435			605
Accounts receivable, net		148,658			972
Prepaid and other current assets		84,504			13,075
Total current assets		1,489,524			1,766,563

Property and equipment, net		20,105			2,126
Certificates of deposit – restricted		516,168			500,669
Deferred financing costs, net		177,776			194,444

TOTAL ASSETS	$	2,203,573		$	2,463,802

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities
Accounts payable	$	34,726		$	16,962
Accrued expenses		434,978			200,000
Total current liabilities		469,704			216,962

Total liabilities		469,704			216,962

Commitments

Stockholder’s Equity
Preferred Stock - $.001 par value, 10,000,000 shares authorized, no shares issued and outstanding		-			-
Common Stock - $.001 par value, 100,000,000 shares authorized, 10,504,716 and 9,547,624 shares issued and outstanding at March 31, 2012, and December 31, 2011, respectively		10,505			9,548
Subscription receivable		(52,000	)		(52,000	)
Additional paid in capital		2,769,342			2,615,477
Accumulated deficit		(993,978	)		(326,185	)
Total stockholders’ equity		1,733,869			2,246,840

TOTAL LIABILITIES AND STOCKHOLDERS EQUITY	$	2,203,573		$	2,463,802

See accompanying notes to the consolidated financial statements.

SUMMER ENERGY HOLDINGS, INC

AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2012

(UNAUDITED)

ELECTRICITY REVENUE	$	166,777

COST OF GOODS SOLD
Power purchases and balancing/ancillary		58,719
Transportation and distribution providers charge		52,068

Total cost of goods sold		110,787

GROSS PROFIT		55,990

OPERATING EXPENSES

General and administrative		(707,614	)

OPERATING LOSS		(651,624	)

OTHER INCOME (EXPENSE)
Financing costs		(16,668	)
Interest income		499
		(16,169	)

NET LOSS BEFORE INCOME TAXES		(667,793	)

INCOME TAXES		-

NET LOSS	$	(667,793	)



BASIC AND DILUTED LOSS PER SHARE	$	(0.07	)

WEIGHTED AVERAGE NUMBER OF SHARES		9,676,550

See accompanying notes to the consolidated financial statements.

SUMMER ENERGY HOLDINGS, INC

AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2012

(UNAUDITED)

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(667,793	)
Adjustments to reconcile net loss to net cash used by operating activities
Common stock for services		150,000
Interest earned		(499	)
Depreciation, depletion and amortization		1,129
Amortization of deferred financing costs		16,668
Bad debt expense		1,143
Changes in operating assets and liabilities:
Accounts receivable		(148,829	)
Prepaid expenses and other current assets		(71,428	)
Accounts payable		17,763
Accrued expenses		234,977
Net cash used by operating activities		(466,869	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of restricted cash		(830	)
Purchase of certificate of deposit – restricted		(15,000	)
Recapitalization		565
Purchase of property and equipment		(14,850	)

Net cash used in investing activities		(30,115	)

NET CASH DECREASE IN CASH AND CASH EQUIVALIENTS		(496,984	)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		1,751,911

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	1,254,927

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Income taxes paid	$	-
Interest paid	$	-

See accompanying notes to the consolidated financial statements.

SUMMER ENERGY HOLDINGS, INC

AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2012

(UNAUDITED)

NOTE 1 - ORGANIZATION

The consolidated financial statements include the accounts of Summer Energy Holdings, Inc. (formerly Castwell Precast Corporation) and its wholly owned subsidiaries Summer Energy, LLC (Summer LLC) and Castwell Precast, Inc. (Precast Inc) (collectively referred to as “the Company”). All significant intercompany transactions and balances have been eliminated in these consolidated financial statements.

On March 27, 2012, Summer LLC became a wholly-owned subsidiary of Summer Energy Holdings, Inc. (previously known as Castwell Precast Corporation) through a reverse acquisition transaction, which resulted in the former members of Summer LLC owning approximately 92.3% of Summer Energy Holdings, Inc.’s outstanding common stock. Summer LLC’s operation is the Company’s sole line of business. The transaction was treated as a recapitalization of Summer LLC, and Summer LLC (and its historical financial statements) is the continuing entity for financial reporting purposes.

Summer LLC is a retail electric provider in the state of Texas under a license with the Public Utility Commission of Texas (PUCT). Summer LLC procures wholesale energy and resells to commercial and residential customers. Summer LLC was organized on April 6, 2011, in the state of Texas.

Precast Inc is an inactive corporation which management intends to close.

NOTE 2 - BASIS OF PRESENTATION

The accompanying financial statements have been prepared in accordance with the requirements of the United States Securities and Exchange Commission (SEC) for unaudited interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three-month period ended March 31, 2012, are not necessarily indicative of the results that may be expected for the year ending December 31, 2012. For further information, refer to the audited consolidated financial statements for the period ended December 31, 2011, and footnotes thereto included in the Company’s Form 8-K filed on March 30, 2012.

The preparation of financial statements in conformity with accounting principles generally accepted 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 as well as the reported amount of revenues and expenses during the reporting period. Actual results may differ from these estimates.

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

Electricity revenue is recognized by the Company upon delivery of electricity to the customer’s meter. This method of revenue recognition is commonly referred to as the flow method. The flow method of revenue relies upon Electric Reliability Council of Texas (ERCOT) settlement statements to determine the estimated revenue for a given month. Supply delivered to customers for the month, measured on a daily basis, provides the basis for revenues. Electricity revenue consists of proceeds from energy sales, including, pass through charges from the Transmission and Distribution Providers (TDSP’s) billed to the customer at cost.

Unbilled Revenue and Accounts Receivable

Electric services not billed by month-end are accrued based upon estimated deliveries to customers as tracked and recorded by ERCOT multiplied by the Company’s average billing rate per kilowatt hour (“kWh”) in effect at the

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

time. At the end of each calendar month, revenue is accrued to unbilled receivables based on the estimated amount of power delivered to customers using the flow technique. Unbilled revenue also includes accruals for estimated TDSP charges and monthly service charges applicable to the estimated electricity usage for the period. All charges that were physically billed to customers in the calendar month are recorded from the unbilled account to the customer receivable account. Accounts receivable are customer obligations billed at the conclusion of a month’s electricity usage and due within 16 days of the date of the invoice. Balances past due are subject to a late fee that is assessed on that billing.

Cost Recognition

Direct energy costs are recorded when the electricity is delivered.

Cost of Goods Sold (COGS) include electric power purchased and pass through charges from the TDSP’s in the areas serviced by the Company. TDSP charges are costs for metering services and maintenance of the electric grid. TDSP charges are established by regulation of the PUCT.

The energy portion of the Company’s COGS is comprised of two components: bilateral wholesale costs and balancing/ancillary costs. These two cost components are incurred and recognized differently as follows:

Bilateral wholesale costs are incurred through contractual arrangements with wholesale power suppliers for firm delivery of power at a fixed volume and fixed price. The Company is invoiced for these wholesale volumes at the end of each calendar month for the volumes purchased for delivery during the month, with payment due 20 days after the end of the month.

Balancing/ancillary costs are based on the customer load and are determined by ERCOT through a multiple step settlement process. Balancing costs/revenues are related to the differential between supply provided by the Company through its bilateral wholesale supply and the supply required to serve the Company’s customer load. The Company endeavors to minimize the amount of balancing/ancillary costs through its load forecasting and forward purchasing programs.

NOTE 4 - RECENT ACCOUNTING PRONOUNCEMENTS

In June 2011, the Financial Accounting Standards Board (“FASB”) issued guidance requiring changes to the presentation of comprehensive income which requires entities to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity, which is not the method of presentation used by the Company, will no longer be permitted, as the Company has no comprehensive income. These changes will have no impact on the calculation and presentation of earnings per share. These changes, with retrospective application, become effective for the Company for interim and annual periods beginning in fiscal year 2013, with early adoption allowed. Other than the change in presentation, these changes will not have an impact on the consolidated financial statements.

In May 2011, the FASB issued additional guidance on fair value measurements that clarifies the application of existing guidance and disclosure requirements, changes certain fair value measurement principles and requires additional disclosures about fair value measurements. The updated guidance is effective on a prospective basis for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011. The adoption of this guidance did not have a material impact on our consolidated financial position, results of operations and cash flows.

In December 2010, the FASB issued ASU 2010 - 28 “Intangibles - Goodwill and Other (ASC Topic 350)”, which amended its existing guidance for goodwill and other intangible assets. This authoritative guidance modifies Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if there are qualitative factors indicating that it is more likely than not that a goodwill impairment exists. The qualitative factors are consistent with the existing guidance which requires goodwill of a reporting unit to be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its

NOTE 4 - RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)

carrying amount. This authoritative guidance becomes effective for the Company in fiscal year 2012. The implementation of this authoritative guidance did not have a material impact on our consolidated financial position, results of operations and cash flows.

In September 2011, the FASB issued ASU 2011-08, “Testing Goodwill for Impairment”. The amendments under ASU 2011-08 will allow entities to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Under these amendments, an entity would not be required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The amendments include a number of events and circumstances for entities to consider in conducting the qualitative assessment. Entities will have the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the first step of the two-step quantitative goodwill impairment test. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011 (fiscal 2012 for the Company), and early adoption is permitted. Adoption of ASU 2011-08 did not have a material impact on the Company’s financial statements.

NOTE 5 - EQUITY

The Company issued 150,000 common shares for services valued at $150,000 for the three months ended March 31, 2012.

During 2011, the Company entered into an advisory agreement with Cambria Capital, LLC (“Cambria”) with respect to certain financial advisory, investment banking and related matters. As compensation for these services, the Company granted Cambria a retainer warrant (“Warrant”) allowing Cambria the right to purchase 400,000 shares of common stock at exercise price of $0.60 per share and a term of 5 years and is fully assignable.

NOTE - 6 COMMITMENT

On February 6, 2012, an application for an amendment to the Company’s Retail Electric Provider Certification was submitted to the PUCT which sought prior approval of a transaction by and between the Company and Castwell Precast Corporation (“Castwell”), a publicly traded Nevada corporation. The application for amendment was requested to reflect a change in ownership in contemplation of a merger with Castwell. On February 27, 2012, the application to amend the Company’s Retail Electric Provider Certification was approved.

The Company is required to maintain stockholder’s equity, determined in accordance with generally accepted accounting principles in the United States, of not less than one million dollars and maintain an irrevocable stand-by letter of credit with a face value of $500,000. The Company will remain subject to these minimum capital standards until February 2014. The Company is in compliance with this requirement as of March 31, 2012 and while the Company believes in the viability of its plan of operations and strategy to generate revenues and in its ability to raise additional funds, there can be no assurances that its plan of operations or ability to raise capital will be successful. The ability of the Company to grow is dependent upon the Company’s ability to further implement its business plan, generate revenues, and obtain additional financing, as needed.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion of the financial condition and results of operations of the Company should be read in conjunction with the consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q. This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 27A of the Securities Act, and is subject to the safe harbors created by those sections. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “will” and variations of these words or similar expressions are intended to identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. We undertake no obligation to revise or publicly release the results of any revisions to these forward-looking statements.

Due to possible uncertainties and risks, readers are cautioned not to place undue reliance on the forward-looking statements contained in this Quarterly Report, which speak only as of the date of this Quarterly Report, or to make predictions about future performance based solely on historical financial performance. We disclaim any obligation to update forward-looking statements contained in this Quarterly Report.

Recent Developments

The consolidated financial statements include the accounts of Summer Energy Holdings, Inc., a Nevada corporation and its wholly-owned subsidiaries Summer Energy, LLC, a Texas limited liability company (“Summer LLC”) and Castwell Precast Inc., a Utah corporation (“Precast Inc.”) (collectively referred to as the “Company”). All significant intercompany transactions and balances have been eliminated in these consolidated financial statements.

On March 27, 2012, Summer LLC became a wholly-owned subsidiary of Summer Energy Holdings, Inc. (formerly known as Castwell Precast Corporation) through a reverse acquisition transaction, which resulted in the former members of Summer LLC owning approximately 92.3% of the Summer Energy Holdings, Inc. outstanding common stock. The Company’s sole operations are conducted through S ummer LLC.

On April 2, 2012 the Board of Directors adopted and approved an Audit Committee Charter, a Compensation Committee Charter and a corporate Code of Business Conduct and Ethics.

On April 11, 2012, the Company posted copies of the new charters on its website. The Company’s website can be found at http://www.mysummerenergy.com. References to our website address do not constitute incorporation by reference of the information contained on our website and should not be considered part of this Quarterly Report.

Plan of Operation

The Company’s wholly owned subsidiary, Summer LLC, is a licensed Retail Electricity Provider (REP) in the State of Texas. In general, Texas regulatory structure permits REPs, such as Summer LLC, to procure and sell electricity at unregulated prices. REPs pay the local transmission and distribution utilities a regulated tariff rate for delivering electricity to their customers. As a REP, we sell electricity and provide the related billing, customer service, collections and remittance services to residential and commercial customers. We intend to offer retail electricity to commercial and residential customers in designated target markets within the State of Texas. In the commercial market, the primary target will be small to medium-sized customers (less than one megawatt of peak usage), but we will also selectively pursue larger commercial customers through management’s existing, historical relationships. Residential customers are a secondary target market. We anticipate that a majority of our customers will be located in the Houston and Dallas-Fort Worth metropolitan areas; although, we anticipate a growing number will be located in a variety of other metropolitan and rural areas within Texas.

We intend to evaluate opportunities to expand our areas of operations within Texas as certain market regions elect to opt-in to deregulation. In addition, we intend to evaluate and pursue opportunities to acquire other REPs to the extent these acquisitions would provide value to us.

We began delivering electricity to customers in mid-February, 2012, beginning with a group of friends and family residential accounts, one large commercial customer, and several small commercial customers. In mid-March, 2012, Summer LLC acquired a portfolio of approximately 2,500 primarily short-term residential customers from an REP that exited the market.

As of March 31, 2012, we had 9 full-time employees and no part time employees or independent contractors.

Results of Operations for the Three Months Ended March 31, 2012

Revenue --For the period January 1, 2012 through March 31, 2012, the Company generated $166,777 in electricity revenue primarily from one large commercial customer, several small commercial customers and from the acquisition of a portfolio of approximately 2,500 primarily short-term residential customers from another REP that exited the market. Management plans to continue to acquire portfolios of commercial and residential customers when offered at reasonable prices. Management also plans to continue to execute on its sales and marketing program to solicit individual commercial and residential customers.

Cost of goods Sold and Gross Margin —For the period January 1, 2012 through March 31, 2012, cost of goods sold totaled $110,787, broken out between power purchase and balancing/ancillary charges and transportation and distribution providers’ charge. Management expects to experience economies of scale, and a resulting increase in its gross margin percentage, as electricity revenue ramps up.

Operating expenses --Operating expenses for the period January 1, 2012 through March 31, 2012, total $707,614, consisting of general and administrative and start-up expenses of $495,757, acquisition of residential customers of $28,180, and professional fees associated with the reverse acquisition of $183,677.

Net loss --Net loss for the period January 1, 2012 through March 31, 2012, totaled $667,793 and was primarily due to operating expenses, professional fees associated with the reverse acquisition, and amortization of financing costs.

Liquidity and Capital Resources

At March 31, 2012, our cash and cash equivalents totaled $1,254,927. Our principal cash requirements are for operating expenses, including power purchases, employee cost, customer acquisition, capital expenditures and funding of the operations. Our primary source of cash during the three month period ended March 31, 2012 was from the capital received pursuant to private placement of our common stock during 2011. During 2011, the Company raised $2,522,500 cash and a $52,000 subscription receivable.

General – The Company experienced a net decrease in cash flows of $496,984 for the three month period ended March 31, 2012, attributable to cash used in operating activities of $466,869, explained below, and cash used in investing activities of $30,115 related to the purchase of property and equipment and a restricted certificate of deposit.

Cash Flows from Operating Activities – Net cash used in operations of $466,869 for the three month period ended March 31, 2012, was primarily due to a net loss of $667,793, offset by changes in working capital accounts and non-cash expenses.

The Company has no present agreements or commitments with respect to any material acquisitions of other businesses, products, product rights or technologies. However, the Company will continue to evaluate acquisitions of and/or investments in products, technologies, or companies that complement its business and may make such acquisitions and/or investments in the future. Accordingly, the Company may need to obtain additional sources of capital in the future to finance any such acquisitions and/or investments. The Company may not be able to obtain such financing on commercially reasonable terms, if at all. If the Company is able to obtain additional financing, such financing may result in restrictions on its operations, in the case of debt financing, or substantial dilution for stockholders, in the case of equity financing.

Cash Outflows for Capital Assets, Customer Acquisition and Deposits

We expect to expend funds for capital assets, customer acquisition and deposits in connection with the expansion of our business during the year ended December 31, 2012. The anticipated source of funds is cash on hand and capital that we intend to raise during the second or third quarter of 2012.

Future Financing Needs

The Company did not commence operations and the generation of revenue until the three month period ended March 31, 2012. Our cash position may not be significant enough to support daily operations. Management believes the Company has adequate liquidity to support operations during the short-term, but this belief is based upon many assumptions and is subject to numerous risks. However, the Company will require additional capital in order to meet minimum capital standards imposed by licensing authorities. Those capital standards require the Company to maintain stockholder’s equity, determined in accordance with generally accepted accounting principles in the United States, of not less than one million dollars and maintain an irrevocable stand-by letter of credit with a face value of $500,000. The Company will remain subject to these minimum capital standards until February 2014.

While the Company believes in the viability of its plan of operations and strategy to generate revenues and in its ability to raise additional funds, there can be no assurances that its plan of operations or ability to raise capital will be successful. The ability of the Company to grow is dependent upon the Company’s ability to further implement its business plan, generate revenues, and obtain additional financing, as needed.

Off-Balance Sheet Arrangements

The Company’s existing wholesale power purchase agreement provides that the Company will provide additional credit support to cover mark-to-market risk in connection with the purchase of long term power. A mark-to-market credit risk occurs when the price of previously purchased long term power is greater than the current market price for power purchased for the same term. While we believe that the current environment of historically low power prices limits our exposure to risk, a collateral call, should it occur, could limit our working capital and, if the Company fails to meet the collateral call, could cause liquidation of power positions.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As a “small reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide this information.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of 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 Quarterly Report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures, as of the end of the period covered by this Quarterly Report, were effective at the reasonable assurance level to ensure 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 Securities and Exchange Commission’s rules and forms and (ii) accumulated and communicated to our management, including 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.

Changes in Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Our process for evaluating controls and procedures is continuous and encompasses constant improvement of the design and effectiveness of established controls and procedures and the remediation of any deficiencies which may be identified during this process.

Part II—OTHER INFORMATION

ITEM 5. OTHER INFORMATION.

On April 2, 2012 the Board of Directors adopted and approved an Audit Committee Charter, a Compensation Committee Charter and a corporate Code of Business Conduct and Ethics. The Code of Business Conduct is attached hereto as Exhibit 14.1. The Audit Committee Charter and Compensation Committee Charter are attached hereto as Exhibits 99.1 and 99.2, respectively.

Effective May 10, 2012, the Company received approval from FINRA to change its stock symbol to SUME, in conjunction with the Company’s recent name change to Summer Energy Holdings, Inc.

ITEM 6. EXHIBITS

No.	Item
14.1	Code of Business Conduct and Ethics
31.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
32.1*	Certification of the CEO and CFO pursuant to Rule 13a-14(b) and Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
99.1	Audit Committee Charter
99.2	Compensation Committee Charter
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema Document
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**	XBRL Taxonomy Extension Label Linkbase Document
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document

* In accordance with Item 601(b)(32)(ii) of Regulation S-K, this exhibit shall not be deemed “filed” for the purposes of Section 18 of the Securities and Exchange Act of 1934 or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

** Pursuant to Rule 406T of Regulation S-T, this XBRL information will not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability of that section, nor will it be deemed filed or made a part of a registration statement or prospectus for purposes of Sections 11 and 12 of the Securities Act of 1933, or otherwise subject to liability under those sections.

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this Quarterly Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	SUMMER ENERGY HOLDINGS, INC.

Date: May 14, 2012	By:	/s/Roderick L. Danielson
		Roderick L. Danielson
		Chief Executive Officer
		(Principal Executive Officer)



Date: May 14, 2012		/s/Jaleea P. George
		Jaleea P. George
		Chief Financial Officer
		(Principal Accounting Officer)

SUMMER ENERGY HOLDINGS, INC.

CODE OF BUSINESS CONDUCT AND ETHICS

As adopted by the Board of Directors on

April 2, 2012

I. Introduction

This Code of Business Conduct and Ethics (“ Code ”) has been adopted by our Board of Directors and summarizes the standards that must guide the actions of all employees, officers and directors of the Company and its subsidiaries. While covering a wide range of business practices and procedures, these standards cannot and do not cover every issue that may arise, or every situation where ethical decisions must be made, but rather set forth key guiding principles that represent Company policies and establish conditions for employment at the Company.

We must continue and build upon our culture of honesty and accountability. Our commitment to the highest level of ethical conduct should be reflected in all of the Company’s business activities including, but not limited to, relationships with employees, customers, suppliers, competitors, shareholders, lenders, the government and the public. All of our employees, officers and directors must conduct themselves according to the language and spirit of this Code and seek to avoid even the appearance of improper behavior. Even well-intentioned actions that violate the law or this Code may result in negative consequences for the Company and for the individuals involved.

One of our Company’s most valuable assets is our reputation for integrity, professionalism and fairness. We should all recognize that our actions are the foundation of our reputation and adhering to this Code and applicable law is imperative.

II. Compliance with Laws, Rules and Regulations

It is the Company’s policy to conduct our business affairs with honesty and integrity and in full compliance with all applicable laws, rules and regulations. No employee, officer or director of the Company shall commit an illegal or unethical act, or instruct others to do so, for any reason.

If you believe that any practice raises questions as to compliance with this Code or applicable law, rule or regulation or if you otherwise have questions regarding any law, rule or regulation, please contact the Chief Compliance Officer.

III. Trading on Inside Information

Using non-public, Company information to trade in securities, or providing a family member, friend or any other person with a “tip,” is illegal. All such non-public information should be considered inside information and should never be used for personal gain. You should contact the Chief Compliance Officer with any questions about your ability to buy or sell securities.

IV. Protection of Confidential Proprietary Information

Confidential proprietary information generated and gathered in our business is a valuable Company asset. Protecting this information plays a vital role in our continued growth and ability to compete, and all proprietary information should be maintained in strict confidence, except when disclosure is authorized by the Company or required by law.

Proprietary information includes all non-public information that might be useful to competitors or that could be harmful to the Company, its customers or its suppliers if disclosed. Intellectual property, such as trade secrets, patents, trademarks and copyrights, as well as business, research and new product plans, objectives and strategies, records, databases, salary and benefits data, employee medical information, customer, employee and suppliers lists and any unpublished financial or pricing information must also be protected.

Unauthorized use or distribution of proprietary information violates Company policy and could be illegal. Such use or distribution could result in negative consequences for both the Company and the individuals involved, including potential legal and disciplinary actions.

We respect the property rights of other companies and their proprietary information and require our employees, officers and directors to observe such rights.

Your obligation to protect the Company’s proprietary and confidential information continues even after you leave the Company, and you must return all proprietary information in your possession upon leaving the Company.

V. Conflicts of Interest

Our employees, officers and directors have an obligation to act in the best interest of the Company. All employees, officers and directors should endeavor to avoid situations that present a potential or actual conflict between their interest and the interest of the Company.

A “conflict of interest” occurs when a person’s private interest interferes in any way, or even appears to interfere, with the interest of the Company, including its subsidiaries and affiliates. A conflict of interest can arise when an employee, officer or director takes an action or has an interest that may make it difficult for him or her to perform his or her work objectively and effectively. Conflicts of interest may also arise when an employee, officer or director (or his or her family members) receives improper personal benefits as a result of the employee’s, officer’s or director’s position in the Company.

Although it would not be possible to describe every situation in which a conflict of interest may arise, the following are examples of situations which may constitute a conflict of interest:

•

Working, in any capacity, for a competitor, customer or supplier while employed by the Company.

•

Accepting gifts of more than modest value or receiving personal discounts or other benefits as a result of your position in the Company from a competitor, customer or supplier.

•

Competing with the Company for the purchase or sale of property, services or other interests.

•

Having an interest in a transaction involving the Company, a customer or supplier (other than as an employee, officer or director of the Company and not including routine investments in publicly traded companies).

•

Receiving a loan or guarantee of an obligation as a result of your position with the Company.

•

Directing business to a supplier owned or managed by, or which employs, a relative or friend.

Situations involving a conflict of interest may not always be obvious or easy to resolve. You should report actions that may involve a conflict of interest to the Chief Compliance Officer.

In order to avoid conflicts of interests, each of the senior executive officers must disclose to the Chief Compliance Officer any material transaction or relationship that reasonably could be expected to give rise to such a conflict, and the Chief Compliance Officer shall notify the Corporate Governance Committee of any such disclosure. Conflicts of interests involving the Chief Compliance Officer and directors shall be disclosed to the Corporate Governance Committee.

VI. Protection and Proper Use of Company Assets

Protecting Company assets against loss, theft or other misuse is the responsibility of every employee, officer and director. Loss, theft and misuse of Company assets directly impact our profitability. Any suspected loss, misuse or theft should be reported to a manager/supervisor or the Chief Compliance Officer.

The sole purpose of the Company’s equipment, vehicles and supplies is the conduct of our business. They may only be used for Company business consistent with Company guidelines.

VII. Corporate Opportunities

Employees, officers and directors are prohibited from taking for themselves business opportunities that arise through the use of corporate property, information or position. No employee, officer or director may use corporate property, information or position for personal gain, and no employee, officer or director may compete with the Company. Competing with the Company may involve engaging in the same line of business as the Company, or any situation where the employee, officer or director takes away from the Company opportunities for sales or purchases of products, services or interests.

VIII. Ethical Dealing

Each employee, officer and director of the Company should endeavor to deal ethically with customers, suppliers, competitors, the public and one another at all times and in accordance with ethical business practices. No one should take unethical advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair dealing practice. No bribes, kickbacks or other similar payments in any form shall be made directly or indirectly to or for anyone for the purpose of obtaining or retaining business or obtaining any other favorable action. The Company and the employee, officer or director involved may be subject to disciplinary action as well as potential civil or criminal liability for violation of this policy.

Occasional business gifts to and entertainment of non-government employees in connection with business discussions or the development of business relationships are generally deemed appropriate in the conduct of Company business. However, these gifts should be given infrequently and their value should be modest. Gifts or entertainment in any form that would likely result in a feeling or expectation of personal obligation should not be extended or accepted.

Practices that are acceptable in commercial business environments may be against the law or the policies governing federal, state or local government employees. Therefore, no gifts or business entertainment of any kind may be given to any government employee without the prior approval of a manager/supervisor or the Chief Compliance Officer.

Except in certain limited circumstances, the Foreign Corrupt Practices Act (“ FCPA ”) prohibits giving anything of value directly or indirectly to any “foreign official” for the purpose of obtaining or retaining business. When in doubt as to whether a contemplated payment or gift may violate the FCPA, contact the Chief Compliance Officer before taking any action.

IX. Accuracy and Completeness of Books and Records

Each employee and officer of the Company is responsible for ensuring that the books, records and accounts of the Company are complete, correct and accurate.

X. Quality of Public Disclosures

The Company has a responsibility to provide full and accurate information in our public disclosures, in all material respects, about the Company’s financial condition and results of operations. Our reports and documents filed with or submitted to the Securities and Exchange Commission and our other public communications shall include full, fair, accurate, timely and understandable disclosure.

XI. Compliance with This Code and Reporting of Any Illegal or Unethical Behavior

All employees, directors and officers are expected to comply with all of the provisions of this Code. The Code will be strictly enforced throughout the Company and violations will be dealt with immediately, including subjecting persons to corrective and/or disciplinary action such as dismissal or removal from office.

Violations of the Code that involve illegal behavior will be reported to the appropriate authorities.

Situations which may involve a violation of ethics, laws or this Code may not always be clear and may require difficult judgment. Employees should report any concerns or questions about violations of laws, rules, regulations or this Code to their supervisors/managers or the Chief Compliance Officer or, in the case of accounting, internal accounting controls or auditing matters, the Audit Committee of the Board of Directors. Interested parties may also communicate directly with the Company’s non-management directors through contact information located in the Company’s annual proxy statement.

Any concerns about violations of laws, rules, regulations or this Code by any senior executive officer or director should be reported promptly to the Chief Compliance Officer, and the Chief Compliance Officer shall notify the Audit Committee of any violation. Any such concerns involving the Chief Compliance Officer should be reported to the Audit Committee. Reporting of such violations may also be done anonymously through the Company’s compliance hotline or in writing to the Chief Compliance Officer and/or the Chairman of the Audit Committee. An anonymous report should provide enough information about the incident or situation to allow the Company to investigate properly. If concerns or complaints require confidentiality, including keeping an identity anonymous, we will endeavor to protect this confidentiality, subject to applicable law, regulation or legal proceedings.

The Company encourages all employees, officers and directors to report any suspected violations promptly and intends to thoroughly investigate any good faith reports of violations. The Company will not tolerate any kind of retaliation for reports or complaints regarding misconduct that were made in good faith. Open communication of issues and concerns by all employees without fear of retribution or retaliation is vital to the successful implementation of this Code. You are required to cooperate in internal investigations of misconduct and unethical behavior.

The Company recognizes the need for this Code to be applied equally to everyone it covers. The Chief Compliance Officer of the Company will have primary authority and responsibility for the enforcement of this Code, subject to the supervision of the Corporate Governance Committee, or, in the case of accounting, internal accounting controls or auditing matters, the Audit Committee of the Board of Directors, and the Company will devote the necessary resources to enable the Chief Compliance Officer to establish such procedures as may be reasonably necessary to create a culture of accountability and facilitate compliance with the Code. Questions concerning this Code should be directed to the Chief Compliance Officer.

XII. Waivers and Amendments

Any waivers of the provisions in this Code for executive officers or directors may only be granted by the Audit Committee or the Board of Directors and will be promptly disclosed to the Company’s shareholders. Any waivers of this Code for other employees may only be granted by the Chief Compliance Officer. Amendments to this Code must be approved by the Corporate Governance Committee of the Board of Directors and amendments of the provisions in this Code applicable to the CEO and the senior financial officers will also be promptly disclosed to the Company’s shareholders.

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Roderick L. Danielson, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Summer Energy Holdings, Inc. (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Dated: May 14, 2012

/s/ Roderick L. Danielson

Roderick L. Danielson,

President and Chief Executive Officer

(Principal Executive Officer)

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Jaleea P. George, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Summer Energy Holdings, Inc. (the “Registrant”);

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Dated: May 14, 2012

/s/ Jaleea P. George

Jaleea P. George,

Chief Financial Officer, Secretary, Treasurer

(Principal Financial Officer)

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13A-14(B) AND RULE 15D-14(B) OF THE SECURITIES EXCHANGE ACT OF 1934 AND 18 U.S.C. SECTION 1350

In connection with the Quarterly Report of Summer Energy Holdings, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Roderick L. Danielson, Chief Executive Officer and Jaleea P. George, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition of the Company as of the dates presented and the results of operations of the Company for the periods presented.

Date: May 14, 2012


By:	/s/ Roderick L. Danielson
	Roderick L. Danielson, President and Chief Executive Officer


By:	/s/ Jaleea P. George
	Jaleea P. George,
	Chief Financial Officer

A signed original of this written statement required by section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies the Quarterly Report pursuant to Rule 13a-14(b) or Rule 15d-14(b) under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934.

SUMMER ENERGY HOLDINGS, INC.

AUDIT COMMITTEE CHARTER

As adopted by the Board of Directors on

April 2, 2012

I. Purposes of the Committee

The primary purpose of the Audit Committee (the “ Committee ”) is oversight. The Committee shall assist the Board of Directors (the “ Board ”) of Summer Energy Holdings, Inc. (the “ Company ”) in fulfilling its responsibility to oversee:

·	Management’s conduct of the Company’s financial reporting process;

·	The integrity of the financial statements and other financial information provided by the Company to the Securities and Exchange Commission (the “ SEC ”) and the public;

·	The Company’s system of internal accounting and financial controls;

·	The Company’s compliance with legal and regulatory requirements;

·	The performance of the Company’s internal audit function;

·	The independent auditors’ qualifications, performance, and independence; and

·	The annual independent audit of the Company’s financial statements.

The Committee shall have direct authority and responsibility to appoint (subject to shareholder ratification), compensate, retain, and oversee the independent auditors.

The Committee shall also prepare the Committee’s report that the SEC rules require be included in the Company’s annual proxy statement.

The Company’s management is responsible for preparing the Company’s financial statements. The independent auditors are responsible for auditing those financial statements. Management, including the internal audit function, and the independent auditors, have more time, knowledge, and detailed information about the Company than do Committee members. Consequently, in carrying out its oversight responsibilities, the Committee is not providing any expert or special assurance as to the Company’s financial statements, or any professional certification as to the independent auditors’ work, including with respect to auditor independence. Each member of the Committee shall be entitled to rely on the integrity of people and organizations from whom the Committee receives information and the accuracy of such information, including representations by management and the independent auditors regarding non-audit services provided by the independent auditors.

II. Committee Membership

The Committee shall have at least three (3) members. Committee members shall be appointed by the Board from among its members and may be removed by the Board at any time. Each member of the Committee must satisfy such criteria of independence as the Board may establish and such additional regulatory or listing requirements as the Board may determine to be applicable or appropriate.

Accordingly, each member of the Committee shall be financially literate within a reasonable period of time after appointment to the Committee; must be “independent” within the meaning of Rule 10A-3 under the Securities Exchange Act of 1934; and may not serve on more than two other public company audit committees unless the Board determines that such simultaneous service would not impair the ability of the member to serve effectively on the Committee. In addition, at least one member of the Committee shall be an “audit committee financial expert” as defined by the SEC.

The actual number of members shall be determined from time to time by resolution of the Board. Two members of the Committee shall constitute a quorum thereof.

III. Committee Structure and Operations

The Chair of the Committee shall be designated by the Board. The Committee shall fix its own rules of procedure and shall meet where and as provided by such rules or by resolution of the Committee. In addition to the regular meeting schedule established by the Committee, the Chair of the Committee may call a special meeting at any time.

The Committee shall designate its Secretary.

In the absence of the Chair during any Committee meeting, the Committee may designate a Chair pro tempore.

The Committee shall act only on the affirmative vote of a majority of the members at a meeting or by unanimous written consent.

The Committee may establish sub-committees to carry out such duties as the Committee may assign.

IV. Committee Activities

The following shall be the common recurring activities of the Committee in carrying out its purposes. These activities are set forth as a guide with the understanding that the Committee may diverge from this guide as appropriate given the circumstances.

a.	Appoint the independent auditors to audit the consolidated financial statements of the Company and its subsidiaries for the coming year; approve the engagement fees and terms; and recommend ratification of that appointment by the shareholders.

Pre-approve all audit and non-audit services to be provided by the independent auditors to the Company in accordance with the Committee’s policies and procedures, and regularly review: (a) the adequacy of the Committee’s policies and procedures for pre-approving the use of the independent auditors for audit and non-audit services with a view to auditor independence; (b) the audit and non-audit services pre-approved in accordance with the Committee’s policies and procedures; and (c) fees paid to the independent auditors for pre-approved audit and non-audit services.

Regularly review with the independent auditors: (a) the arrangements for and the scope of the independent auditors’ audit of the Company’s consolidated financial statements; (b) the results of the audit by the Company’s independent auditors of the Company’s consolidated financial statements; (c) any audit problems or difficulties encountered by the independent auditors and management’s response; (d) any significant deficiency in the design or the operation of the Company’s internal accounting controls identified by the independent auditors and any resulting recommendations; (e) all critical accounting policies and practices used by the Company; (f) all alternative accounting treatments of financial information within generally accepted accounting principles that have been discussed with management, including the ramifications of the use of such alternative treatments and disclosures, and the treatment preferred by the independent auditors; and (g) all other material written communications between the independent auditors and management. The Committee shall have ultimate authority to resolve any disagreement between management and the independent auditors regarding financial reporting.

d.	Review major changes to the Company’s auditing and accounting principles and practices based on advice of the independent auditors, the Chief Financial Officer, or management.

At least annually, obtain and review a report by the independent auditors describing: (a) the firm’s internal quality-control procedures; (b) any material issues raised by the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five (5) years, respecting one or more independent audits carried out by the firm, and any steps taken to deal with any such issues; and (c) all relationships between the independent auditors and the Company covered by applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditors’ independence. The Committee shall discuss such report with the independent auditors, including issues that impact the independent auditors’ qualifications, performance, or independence.

f.	Evaluate, along with the other members of the Board, management and the Chief Financial Officer, the qualifications, performance, and independence of the independent auditors, including the performance of the lead audit partner.

g.	Monitor regular rotation of audit partners by the independent auditors as required by law.

The Committee, along with the other members of the Board, shall discuss with management and the independent auditors the audited financial statements to be included in the Company’s Annual Report on Form 10-K, including the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The Committee shall review and consider with the independent auditors the matters required to be discussed by Statement of Auditing Standards No. 114 (“ SAS No. 114 ”), including deficiencies in internal controls, fraud, illegal acts, management judgments and estimates, audit adjustments, audit difficulties, and the independent auditors’ judgments about the quality of the Company’s accounting practices.

Discuss with the independent auditors and management the Company’s interim financial results to be included in each quarterly report on Form 10-Q, including the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Each such review shall include any matters required to be discussed by SAS No. 114, and shall occur prior to the Company’s filing of the related Form 10-Q with the SEC.

Maintain and periodically review the Company’s procedures for the receipt, retention, and treatment of complaints regarding accounting, internal accounting controls or auditing matters, including procedures for the confidential, anonymous submission by employees of the Company, of concerns regarding questionable accounting or auditing matters.

Confer with the Chief Financial Officer, management, and the independent auditors as requested by any of them or by the Committee, at least annually, and review their reports with respect to the functioning, quality, and adequacy of programs for compliance with the Company’s policies and procedures regarding business ethics, financial controls, and internal auditing, including information regarding violations or probable violations of such policies.

l.	Discuss from time to time the Company’s earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies.

m.	Discuss from time to time the Company’s policies with respect to risk assessment and risk management.

n.	Maintain hiring policies for employees and former employees of the independent auditors.

o.	Review the expenses of officers of the Company who are also members of the Board and such other officers as it may deem appropriate.

Review with the Chief Financial Officer, at least annually, the activities, budget, staffing, and structure of the internal auditing function of the Company and its subsidiaries, including their evaluations of the performance of that function and any recommendations with respect to improving the performance of or strengthening of that function. As appropriate, the Committee shall review the reports of any internal auditor on a financial safeguard problem that has not resulted in corrective action or has not otherwise been resolved to the auditor’s satisfaction at any intermediate level of audit management.

q.	From time to time, meet separately with management, the internal auditors, and the independent auditors to discuss issues warranting attention by the Committee.

r.	Prepare any report or other disclosure by the Committee required to be included in any proxy statement for the election of the Company’s directors under the rules of the SEC.

s.	Take other such actions and do other such things as may be referred to it from time to time by the Board.

V. Committee Evaluation

The Committee will annually complete a self-evaluation of the Committee’s own performance and effectiveness and will consider whether any changes to the Committee’s charter are appropriate.

VI. Committee Reports

The Chair of the Committee will report regularly to the full Board on the Committee’s activities, findings, and recommendations, including the results of the Committee’s self-evaluation and any recommended changes to the Committee’s charter.

VII. Resources and Authority of the Committee

The Committee has exclusive authority with respect to the retention of the independent auditors described in Section IV of this charter. In discharging its oversight role, the Committee is empowered to investigate any matter brought to its attention with full access to all books, records, facilities, and personnel of the Company. The Committee also has the authority to retain outside advisors, including legal counsel, auditors, or other experts, as it deems appropriate; to approve the fees and expenses of such advisors; and to incur such other ordinary administrative expenses as are necessary or appropriate in carrying out its duties.

SUMMER ENERGY HOLDINGS, INC.

COMPENSATION COMMITTEE CHARTER

As adopted by the Board of Directors on

April 2, 2012

The primary purpose of the Compensation Committee (the “ Committee ”) is to advise the Board of Directors (the “ Board ”) of Summer Energy Holdings, Inc. (the “ Company ”) with respect to executive compensation.

I. Members

The Board shall appoint a Compensation Committee of at least three (3) members, consisting entirely of “independent” directors of the Board, within the meaning of Rule 10A-3 under the Securities Exchange Act of 1934. The Committee shall designate one (1) member as chairperson. Each appointed member of the Compensation Committee will be subject to annual reconfirmation and may be removed by the Board at any time.

II. Purposes, Duties and Responsibilities

The Compensation Committee advises the Board with respect to the compensation of executive officers of the Company. Specifically, the Compensation Committee will:

a. Review annually, and approve, the Company’s compensation strategy.

Review, determine, and recommend to the Board for approval the individual elements of the total compensation for the Chief Executive Officer (“ CEO ”), who must not be present during the voting or deliberations of the Compensation Committee with respect to the compensation matters of the CEO.

Review, determine, and recommend to the Board for approval the individual elements of the total compensation of all other executive officers (other than the CEO).

Review and analyze the appropriateness and adequacy of the Company’s annual, periodic or long-term incentive compensation programs and other benefit plans and assure that they are administered in a manner consistent with their terms, the Company’s compensation strategy and applicable rules and regulations.

Make awards to executives under the incentive stock option plans and other plans as may be adopted by the Company.

Prepare and approve reports on the Compensation Committee’s compensation policies applicable to the Company’s executive officers, the factors and criteria on which the CEO’s compensation was based, and such other matters as may be required by the applicable rules and regulations of the SEC and other regulatory authorities.

Review, recommend to the Board, and administer all plans that require “disinterested administration” under Rule 16b-3 under the Securities Exchange Act of 1934.

Approve the amendment or modification of any compensation or benefit plan pertaining to executives of the Company that does not require shareholders’ approval.

Review and recommend to the Board changes to the outside directors’ compensation.

Retain outside consultants and obtain assistance from members of management as the Compensation Committee deems appropriate in the exercise of its authority.

Make reports and recommendations to the Board within the scope of the Compensation Committee’s functions.

Approve all special perquisites, special cash payments, and other special compensation and benefit arrangements for the Company’s executive officers.

Review the Compensation Committee Charter from time to time and recommend any changes thereto to the Board.

III. Meetings

The Compensation Committee will meet as often as it deems necessary or appropriate, in its judgment, either in person or telephonically, and at such times and places as the Committee may determine. The majority of the members of the Compensation Committee constitutes a quorum and shall be empowered to act on behalf of the Compensation Committee. The Compensation Committee may, from time to time, delegate authority to subcommittees consisting of one or more members as it shall deem appropriate, subject to such reporting to or ratification by the Compensation Committee, as the Compensation Committee shall direct. Minutes will be kept of each meeting of the Compensation Committee and any subcommittees thereof.