*Table
        of Contents*







**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 JUNE 30, 2008**




**OR**




o
            **TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF
                1934**




**FOR
      THE TRANSITION PERIOD
      FROM _______ to _______**




**COMMISSION
      FILE NUMBER 000-21571**







**SES
      SOLAR INC.**


(EXACT
      NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)




**Delaware**
            
            **33-0860242**(STATE
                OR OTHER JURISDICTION OF
            
            (IRS
                EMPLOYERINCORPORATION
                OR ORGANIZATION)
            
            IDENTIFICATION
                NUMBER)




129,
      route de Saint-Julien, 1228 Plan-les-Ouates, Geneva,
      Switzerland


(ADDRESS
      OF PRINCIPAL EXECUTIVE OFFICES)





**+41-22-884-1484**


(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 No  ̈




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. (Check one):




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




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





The
      number of shares outstanding of each of the issuer's classes of stock as of
      August 8, 2008 is 73,081,168 shares of common stock, par value $.001 per
      share.












*Table
        of Contents*




TABLE
      OF CONTENTS





Page**PART
                I.**
            **FINANCIAL
                INFORMATION**
            
            1ITEM
                1.
            FINANCIAL
                STATEMENTS
            
            1ITEM
                2.
            MANAGEMENT'S
                DISCUSSION AND ANALYSIS AND PLAN OF
                OPERATIONS
            
            12ITEM
                3.
            QUALITATIVE
                AND QUANTITATIVE DISCLOSURES ABOUT MARKET
                RISK
            
            19ITEM
                4T.
            CONTROLS
                AND PROCEDURES
            
            19**PART
                II.**
            **OTHER
                INFORMATION**
            
            20ITEM
                6.
            EXHIBITS
            
            20







-
            i -
 *Table
            of Contents*




**PART
      I.****FINANCIAL
      INFORMATION**




**ITEM
      1.****FINANCIAL
      STATEMENTS**




**SES
      SOLAR INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS**


**(in
      $, except per share amounts)**




**June
                30,**
            
            **December
                31,****2008**
            
            **2007****(unaudited)****ASSETS
                (in $)**Current
                Assets:Cash
                and cash equivalents
            
            
            6,414,000
            
            
            3,429,033Receivables,
                net of allowance for doubtful accounts of $0 for the periods ended
                2008
                and 2007
            
            
            261,030
            
            
            47,356Due
                from related party
            
            
            93,919
            
            
            84,938Inventory
            
            
            1,341,870
            
            
            271,794Other
                current assets
            
            
            276,608
            
            
            639,763**Total
                current assets**
            
            
            **8,387,427**
            
            
            **4,472,884**Long-Term
                Assets:Deferred
                expense
            
            
            60,000
            
            
            180,000Advance
                payments for machinery
            
            
            425,241
            
            
            396,432**Total
                other long-term assets**
            
            
            **485,241**
            
            
            **576,432**Property
                and Equipment, at cost,
            
            
            486,236
            
            
            437,493Solar
                Plant
            
            
            0
            
            
            3,785,521Building
                construction
            
            
            8,903,635
            
            
            5,398,153Less
                accumulated depreciation and amortization
            
            
            (404,008
            )
            
            (339,014
            )**Total
                fixed assets**
            
            
            **8,985,863**
            
            
            **9,282,153****Total
                long-term assets**
            
            
            **9,471,104**
            
            
            **9,858,585****Total
                assets**
            
            
            **17,858,531**
            
            
            **14,331,469****LIABILITIES
                AND STOCKHOLDERS' EQUITY (DEFICIT)**Current
                Liabilities:Short-term
                loan
            
            
            4,420,350
            
            
            6,147,728Accounts
                payable
            
            
            890,591
            
            
            3,711,775Billings
                in excess of cost and estimated earnings
            
            
            975,065
            
            
            507,044**Total
                current liabilities**
            
            
            **6,286,006**
            
            
            **10,366,547**Long-Term
                Liabilities:Loan
                payable
            
            
            952,310
            
            
            0Construction
                loan
            
            
            6,412,539
            
            
            7,563**Total
                long-term liabilities**
            
            
            **7,364,849**
            
            
            **7,563**Stockholders'
                Equity:Common
                stock, $0.001 par value;
            
            
            73,081
            
            
            73,081100,000,000
                shares authorized;73,081,168
                shares issued and outstandingAdditional
                paid-in capital
            
            
            8,050,093
            
            
            8,050,093Accumulated
                other comprehensive income (loss)Translation
                adjustment
            
            
            (645,743
            )
            
            (395,447
            )Year
                end accumulated deficit
            
            
            (3,269,755
            )
            
            (3,770,368
            )**Total
                stockholders' equity (deficit)**
            
            
            **4,207,676**
            
            
            **3,957,359****Total
                Liabilities and Stockholders' Equity**
            
            
            **17,858,531**
            
            
            **14,331,469**


*See
      accompanying summary of accounting policies and the notes to the financial
      statements.*




-
            1
            -
 *Table
            of Contents*




**SES
      SOLAR INC. AND SUBSIDIARY**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)**


**(in
      $, except per share amounts)**




**For
                the Three Months**
            
            **For
                the Six Months****Ended
                June 30,**
            
            **Ended
                June 30,****2008**
            
            **2007**
            
            **2008**
            
            **2007****(unaudited)**
            
            **(unaudited)**
            
            **(unaudited)**
            
            **(unaudited)**Revenue:
            
            
            
            
            
            
            
            ****Revenue
            
            
            **32,592**
            
            
            **1,165,035**
            
            
            **32,592**
            
            
            **1,165,035**Cost
                of goods sold (exclusive of depreciation shown separately
                below)
            
            
            **1,757**
            
            
            **969,972**
            
            
            **1,757**
            
            
            **969,972**Costs
                and Expenses:Personnel
            
            
            143,816
            
            
            86,779
            
            
            282,243
            
            
            172,164Rent
                and leases expenses
            
            
            39,552
            
            
            32,382
                28,991
            
            
            76,303
            
            
            65,152Research
                & Development
            
            
            67,755
            
            
            58,963
            
            
            220,587
            
            
            169,436Other
                General & Administrative Expenses
            
            
            204,316
            
            
            301,442
            
            
            405,358
            
            
            492,067Depreciation
                and amortization
            
            
            18,435
            
            
            12,145
            
            
            85,091
            
            
            24,741Total
                costs and expenses
            
            
            **473,874**
            
            
            **491,711**
            
            
            **1,069,582**
            
            
            **923,560**Other
                Income and Expense:Interest
                expense
            
            
            (101,854
            )
            
            (16,037
            )
            
            (219,997
            )
            
            (29,006
            )Interest
                income
            
            
            16,544
            
            
            46,788
            
            
            39,189
            
            
            95,288Other
                gain
            
            
            1,134,915
            
            
            0
            
            
            1,134,915
            
            
            0Foreign
                exchange gain/(loss)
            
            
            (58,020
            )
            
            (30,270
            )
            
            337,523
            
            
            (25,569
            )Total
                other income
            
            
            **991,585**
            
            
            **481**
            
            
            **1,291,630**
            
            
            **40,713**Income
                (loss) before taxes from continuing operations
            
            
            548,546
            
            
            (296,167
            )
            
            252,883
            
            
            (687,784
            )Income
                taxes
            
            
            0
            
            
            0
            
            
            0
            
            
            0Net
                income (loss) from continuing operations
            
            
            **548,546**
            
            
            **(296,167**
            **)**
            
            **252,883**
            
            
            **(687,784**
            **)**Income
                from discontinued operations before taxes
            
            
            164,592
            
            
            0
            
            
            247,730
            
            
            0Income
                taxes
            
            
            0
            
            
            0
            
            
            0
            
            
            0Net
                income (loss) from discontinued operations
            
            
            164,592
            
            
            0
            
            
            247,730
            
            
            0Net
                income (loss)
            
            
            **713,138**
            
            
            **(296,167**
            **)**
            
            **500,613**
            
            
            **(687,784**
            **)**Other
                Comprehensive loss/income:Translation
                adjustment
            
            
            102,407
            
            
            17,263
            
            
            (250,296
            )
            
            13,547Comprehensive
                income (loss)
            
            
            **815,545**
            
            
            **(278,904**
            **)**
            
            **250,317**
            
            
            **(674,237**
            **)**Basic
                and diluted weighted average shares
            
            
            73,081,168
            
            
            48,937,761
            
            
            73,081,168
            
            
            48,937,761Basic
                and diluted net income (loss) per share from continuing
                operations
            
            
            **0.008**
            
            
            **(0.006**
            **)**
            
            **0.004**
            
            
            **(0.014**
            **)**Basic
                and diluted net income (loss) per share from discontinuing
                operations
            
            
            **0.002**
            
            
            **0**
            
            
            **0.003**
            
            
            **0**Basic
                and diluted net income (loss) per share
            
            
            **0.010**
            
            
            **(0.006**
            **)**
            
            **0.007**
            
            
            **(0.014**
            **)**


For
      2007
      amounts have been reclassified to reflect discontinued operations. There was
      no
      income or expense from discontinued operations.






*See
      accompanying summary of accounting policies and the notes to the financial
      statements.*




-
            2
            -
 *Table
            of Contents*




**SES
      SOLAR INC. AND SUBSIDIARY**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**(in
      $, except per share amounts)**




**Six
                Months Ended June 30,****2008**
            
            **2007****(unaudited)**
            
            **(unaudited)**Cash
                Flows from Operating Activities:Net
                income (loss)
            
            
            500,613
            
            
            (687,784
            )Adjustments
                to reconcile net loss to cash used in operating
                activities:Depreciation
                and amortization
            
            
            85,091
            
            
            24,741Stock
                compensation for options
            
            
            0
            
            
            31,647Gain
                on sale of power plant
            
            
            (1,134,915
            )
            
            0Changes
                in operating assets and liabilities:(Increase)
                decrease in:Receivables,
                including Due from Related Party
            
            
            (202,555
            )
            
            0Inventory
            
            
            (1,010,838
            )
            
            0Other
                current assets
            
            
            418,025
            
            
            44,866Deferred
                Expenses
            
            
            120,000
            
            
            120,000Increase
                (decrease) in:Accounts
                payable and accrued expenses
            
            
            124,690
            
            
            19,432Billings
                in excess of cost and estimated earnings
            
            
            402,272
            
            
            251,834**Net
                cash used in operating activities**
            
            
            (697,617
            )
            
            (195,264
            )Cash
                Flows from Investing Activities:Proceed
                on sale of solar plant
            
            
            4,970,752
            
            
            0Property,
                plants and equipment
            
            
            (6,001,074
            )
            
            (201,941
            )Advance
                payments for machinery
            
            
            0
            
            
            (88,854
            )**Net
                cash used in investing activities**
            
            
            (1,030,322
            )
            
            (290,795
            )Cash
                Flows from Financing Activities:Proceed
                of construction loan
            
            
            6,216,608
            
            
            0Bank
                loan
            
            
            (1,383,347
            )
            
            0**Net
                cash provided by financing activities**
            
            
            **4,833,261**
            
            
            **0**Increase
                (decrease) in cash and cash equivalents
            
            
            3,105,322
            
            
            (486,059
            )Effect
                of exchange rate changes on cash
            
            
            (120,355
            )
            
            7,978Cash
                and cash equivalents, beginning of the quarter
            
            
            3,429,033
            
            
            6,016,666Cash
                and cash equivalents, end of the quarter
            
            
            6,414,000
            
            
            5,538,585Supplemental
                cash flow informationCash
                paid for interest
            
            
            219,997
            
            
            29,006Supplemental
                disclosure of non-cash operating and investing activitiesNon
                cash Activities, Issuance of stock options for services
            
            
            0
            
            
            31,647Non
                cash transaction, Property, plants and equipment in account
                payable
            
            
            395,351
            
            
            0






*See
      accompanying summary of accounting policies and the notes to the financial
      statements.*





-
            3
            -
 *Table
            of Contents*




**SES
      SOLAR INC. AND SUBSIDIARY**


**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


**(Unaudited)**




**1.**
            **Organization
                and Nature of Operations**




Organization
      - SES SOLAR INC. (the “Company,” “SES USA,” “our,” “we” and “us”) is the result
      of a reverse acquisition accomplished on September 27, 2006 between SES USA,
      a
      Delaware company, which had no operations and net assets of $39,069, and Société
d’Energie Solaire SA (“SES Switzerland”), a Swiss company. SES USA acquired all
      of the outstanding shares of SES Switzerland. For accounting purposes, the
      acquisition has been treated as a recapitalization of SES Switzerland with
      SES
      Switzerland as the acquirer (reverse acquisition). SES Switzerland acquired
      10,668,000 of SES USA in the transaction. The historical financial statements
      prior to September 27, 2006 are those of SES Switzerland. The reverse
      acquisition resulted in a change of control of SES USA, with the former
      stockholders of SES Switzerland owning approximately 70% of SES USA and SES
      Switzerland becoming SES USA’s wholly owned subsidiary.




SES
      Switzerland was formed in 2001 for the purpose of researching, developing,
      manufacturing and selling innovative products to the solar photovoltaic market.
      From its inception, SES Switzerland has focused primarily on manufacturing
      and
      installing silicon photovoltaic solar cell panels. The principal source of
      revenue for the Company has been the sale of photovoltaic panels in turn-key
      installations, manufactured in-house or purchased from subcontractors, to
      electric utilities, local government agencies and private
      households.




**2.**
            **Plan
                of Operations**




SES
      USA,
      through its wholly owned operating subsidiary, SES Switzerland, has experienced
      losses from operations and anticipates incurring operating losses in the near
      future. SES Switzerland has, however, developed and patented a new assembly
      technology for solar panels that allow higher quality electrical contacts,
      better performance and reduced manufacturing costs resulting from increased
      automation processes.





The
      Company’s current business plan includes the development of a new assembly line
      based on its proprietary technology and the construction of a manufacturing
      facility in the suburbs of Geneva, Switzerland to produce solar panels or
      modules and solar tiles at a lower cost. These activities require the Company
      to
      design and manufacture prototype panels, have them approved in accordance with
      European and other standards, manufacture in series and sell them in the main
      markets for solar photovoltaic cells. Costs incurred in manufacturing prototype
      panels have been expensed as research and development costs.




SES
      USA
      does not believe that it can achieve profitability until development,
      implementation, and commercialization of new products manufactured through
      the
      new assembling process are operational.





**3.**
            **Basis
                of Presentation**




The
      consolidated interim financial statements included herein are unaudited and
      have
      been prepared by the Company pursuant to the rules and regulations of the United
      States Securities and Exchange Commission. Certain information and footnote
      disclosures normally included in financial statements prepared in accordance
      with accounting principles generally accepted in the United States, or GAAP,
      have been omitted pursuant to such rules and regulations, although the Company
      believes that the disclosures are adequate to make the information presented
      not
      misleading. The consolidated interim financial statements include the accounts
      of the Company and its wholly owned subsidiary, SES Switzerland. All significant
      inter-company accounts and transactions have been eliminated in
      consolidation.




These
      statements reflect all normal recurring adjustments that, in the opinion of
      management, are necessary for fair presentation of the information contained
      herein. These consolidated interim financial statements should be read in
      conjunction with the financial statements and notes thereto included in the
      Company's Annual Report on Form 10-KSB for the fiscal year ended December 31,
      2007. The Company adheres to the same accounting policies in preparation of
      its
      interim financial statements. As permitted under GAAP, interim accounting for
      certain expenses, including income taxes, are based on full year assumptions.
      Such amounts are expensed in full in the year incurred. For interim financial
      reporting purposes, income taxes are recorded based upon estimated annual income
      tax rates.





-
            4
            -
 *Table
            of Contents*




**SES
      SOLAR INC. AND SUBSIDIARY**


**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


**(Unaudited)**





**4.**
            **Summary
                of Significant Accounting
                Policies**




The
      consolidated financial statements include the accounts of the Company and its
      wholly owned subsidiary, SES Switzerland. All significant inter-company accounts
      and transactions have been eliminated in the consolidation.




The
      preparation of financial statements in conformity with GAAP requires management
      to make estimates and assumptions that affect the amounts reported in the
      financial statements and accompanying disclosures.  Although these
      estimates are based on management’s knowledge of current events and actions that
      the Company may undertake in the future, actual results may differ from such
      estimates.




*Foreign
      Currency Translation* - The
      reporting currency of SES USA is the US dollar ($) whereas SES Switzerland’s
      functional currency is the Swiss Franc (CHF). The financial statements of SES
      Switzerland are translated to U.S. dollar equivalents under the current method
      in accordance with SFAS No. 52, “Foreign Currency Translation.” Assets and
      liabilities are translated into U.S. dollar equivalents at rates of exchange
      in
      effect at the balance sheet date. Average rates for the year are used to
      translate revenues and expenses. The cumulative translation adjustment is
      reported as a component of accumulated other comprehensive income (loss).
      Foreign currency differences from inter-company receivables and payables are
      recorded as Foreign Exchange Gains/Losses in the Statement of
      Operations.




The
      exchange rates used for translating the financial statements are listed
      below:




Average
                Rates
            
            **2008**
            
            **2007**CHF
            
            CHF$
            
            
            1.04873
            
            
            1.22743




**2008**
            
            **2007**Balance
                Sheet period-end rates
            
            CHF
            
            CHF$
            
            
            1.01802
            
            
            1.12566




*Earnings
      (Loss) Per Share* -
      Earnings (Loss) per share is presented in accordance with the provisions of
      SFAS
      No. 128, “Earnings Per Share.” Basic and diluted loss per share for the six
      months ended June 30, 2007 does not include the effects of warrants and is
      computed by dividing income available to common stockholders by the weighted
      average number of shares of common stock outstanding for the period. Diluted
      earnings per share reflects, in periods in which they have a dilutive effect,
      commitments to issue common stock and common stock issuable upon exercise of
      warrants for periods in which the warrants exercise price is lower than the
      Company’s average share price for the period. The six months ended June 30, 2008
      also does not include the effects of warrants outstanding for the period because
      their exercise price exceeded the average price for the three and six months
      ended June 30, 2008.




**Six
                Months Ended June 30,****2008**
            
            **2007**Basic
                Weighted average shares outstanding
            
            
            73,081,168
            
            
            48,937,761Diluted
                weighted average shares outstanding
            
            
            73,081,168
            
            
            48,937,761







-
            5
            -
 *Table
            of Contents*




**SES
      SOLAR INC. AND SUBSIDIARY**


**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


**(Unaudited)**





**Note** :
      Due to
      the net loss in 2007, the calculation of the effect of common stock equivalents
      due to issuance of warrants is excluded because of anti-dilution. For 2008
      the
      warrants were excluded from the earnings per share calculations because their
      exercise price exceeded the average price for the three and six months ended
      June 30, 2008. The number of shares of common stock excludes 1,500,000
      shares of common stock potentially issuable upon exercise of 1,500,000 common
      share purchase warrants. Each common share purchase warrant is exercisable
      until
      November 22, 2010 at an exercise price of $0.90 per share. As of the June 30,
      2008 balance sheet date, the warrants had not been exercised.




*Revenue
      Recognition* - The
      Company recognizes revenue in accordance with SEC Staff Accounting Bulletin
      No.
      104, "Revenue Recognition" ("SAB 104"). SAB 104 requires that four basic
      criteria be met before revenue can be recognized: (1) persuasive evidence of
      an
      arrangement exists; (2) delivery has occurred or services rendered; (3) the
      seller's price to the buyer is fixed and determinable; and (4) collection is
      reasonably assured.




Revenues
      and profits from general management of construction-type contracts are
      recognized on the completed-contract method and therefore when the project
      is
      completed. A contract is considered complete when all costs except insignificant
      items have been incurred and the installation is operating according to
      specifications or has been accepted by the customer. Contract costs include
      all
      direct materials and labor costs and those indirect costs related to contract
      performance, such as indirect labor, supplies, tools, repairs and depreciation
      costs .
      Costs
      in excess of amounts billed are classified as current assets under Work in
      Progress. Billings in excess of cost are classified under current liabilities
      as
      Billings in Excess of Cost and Estimated Earnings .
      Any
      anticipated losses on contracts are charged to operations as soon as they are
      determinable. No unbilled revenue has been recognized so far.




For
      the
      six months ended June 30, 2008 and 2007, the Company has no billed or unbilled
      amount representing claims or other similar items subject to uncertainty
      concerning their determination or ultimate realization.




Between
      January 2008 and June 2008, the Company recognized sales of photovoltaic
      electricity produced by solar modules on the
      roof of its new manufacturing facility to a local electricity provider in
      Geneva. Revenues from such sales were recognized monthly based on the amount
      of
      electricity produced. As further explained below, such revenue has ceased due
      to
      the sale of the power plant as of June 30, 2008.





**Impact
      of Recently Issued Accounting Pronouncements**




In
      December 2007, the FASB issued SFAS No. 141(R), *“* Business
      Combinations.” SFAS 141(R) requires all business combinations completed
      after the effective date to be accounted for by applying the acquisition method
      (previously referred to as the purchase method). Companies applying this method
      will have to identify the acquirer, determine the acquisition date and purchase
      price and recognize at their acquisition-date fair values the identifiable
      assets acquired, liabilities assumed, and any noncontrolling interests in the
      acquiree. In the case of a bargain purchase the acquirer is required to
      reevaluate the measurements of the recognized assets and liabilities at the
      acquisition date and recognize a gain on that date if an excess remains.
      SFAS 141(R) becomes effective for fiscal periods beginning after
      December 15, 2008. The Company is currently evaluating the impact of
      SFAS 141(R).





In
      September 2006, the Financial Accounting Standards Board (FASB) issued Statement
      No. 157, “Fair Value Measurements” (SFAS No. 157).
      SFAS No. 157 defines fair value for financial accounting and reporting
      purposes, establishes a framework for measuring fair value and expands
      disclosures about fair value measurements but does not change the requirements
      to apply fair value in existing accounting standards. Under SFAS No. 157,
      fair value refers to the price that would be received to sell an asset or paid
      to transfer a liability in an orderly transaction between market participants
      in
      the principal or, in the absence of a principal, the most advantageous market.
      The standard clarifies that fair value should be based on the assumptions market
      participants would use when pricing the applicable asset or
      liability.




SFAS
      No. 157 was effective and adopted by the Company as of January 1,
      2008. The provisions of SFAS No. 157 are being applied prospectively. The
      adoption of SFAS No. 157 did not have a material impact on the Company’
results of operations, cash flows or financial positions. See Note 17 — Fair
      Value of Financial Assets and Liabilities for additional information regarding
      the adoption of SFAS No. 157.




In
      February 2008, the FASB issued FASB Staff Position (FSP) FAS 157-2, “Effective
      Date of FASB Statement No. 157” (FSP FAS 157-2), which delays the effective
      date of SFAS No. 157 for all nonrecurring fair value measurements of
      nonfinancial assets and liabilities until fiscal years beginning after
      November 15, 2008. The Company have elected to defer the adoption of the
      nonrecurring fair value measurement disclosures of nonfinancial assets and
      liabilities. The adoption of FSP FAS 157-2 is not expected to have a material
      impact on the Company’s results of operations, cash flows or financial
      positions.





-
          6
          -
 *Table
          of Contents*




**SES
      SOLAR INC. AND SUBSIDIARY**


**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


**(Unaudited)**




In
      February 2007, the FASB issued SFAS No. 159, *“* The
      Fair
      Value Option for Financial Assets and Liabilities - including an amendment
      to
      FASB Statement No. 115” (SFAS No. 159). This statement permits
      entities to choose to measure many financial instruments and certain other
      items
      at fair value in order to mitigate volatility in reported earnings caused by
      measuring related assets and liabilities differently. SFAS No. 159 is
      effective for the Company’s fiscal year beginning January 1, 2008. The
      Company has not adopted the fair value option for its current financial assets
      or liabilities. Accordingly, the adoption of SFAS No. 159 did not have an
      impact on its consolidated financial statements.




In
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements” (SFAS No. 160). SFAS No. 160
      clarifies that a noncontrolling interest in a subsidiary is an ownership
      interest in the consolidated entity that should be reported as equity in the
      consolidated financial statements. SFAS No. 160 requires that changes in a
      parent's ownership interest in a subsidiary be reported as an equity transaction
      in the consolidated financial statements when it does not result in a change
      in
      control of the subsidiary. When a change in a parent's ownership interest
      results in deconsolidation, a gain or loss should be recognized in the
      consolidated financial statements. SFAS No. 160 must be applied
      prospectively as of January 1, 2009, except for the presentation and
      disclosure requirements, which are required to be applied retrospectively for
      all periods presented. The adoption of SFAS No. 160 will not have a
      material impact on the Company’s results of operations, cash flows or financial
      positions; however, it could impact future transactions entered into by the
      Company.




In
      March
      2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
      Instruments and Hedging Activities, an amendment of FASB Statement No. 133"
      (SFAS No. 161). SFAS No. 161 amends and expands the disclosure
      requirements of SFAS No. 133, "Accounting for Derivative Instruments and
      Hedging Activities" (SFAS No. 133), by requiring enhanced disclosures about
      how and why an entity uses derivative instruments, how derivative instruments
      and related hedged items are accounted for under SFAS No. 133 and its
      related interpretations, and how derivative instruments and related hedged
      items
      affect an entity's financial position, financial performance, and cash flows.
      SFAS No. 161 requires qualitative disclosures about objectives and
      strategies for using derivatives, quantitative disclosures about fair value
      amounts of and gains and losses on derivative instruments, and disclosures
      about
      credit-risk-related contingent features in derivative agreements. SFAS
      No. 161 will be effective for the Company as of January 1, 2009. As
      SFAS No. 161 provides only disclosure requirements, the adoption of this
      standard will not have a material impact on the Company’s results of operations,
      cash flows or financial positions.


-
          7
          -
 *Table
          of Contents*




**SES
      SOLAR INC. AND SUBSIDIARY**


**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


**(Unaudited)**





**5.**
            **Inventory**




Inventory
      is summarized as follows:




**Six
                Months Ended**
            
            
            **Twelve
                Months Ended****June
                30,****2008**
            
            
            **December
                31, 2007**$
            
            
            $Raw
                Materials and Others
            
            
            1,142,614
            
            
            97,159Finished
                Goods
            
            
            199,256
            
            
            174,635**Total
                Inventory**
            
            
            **1,341,870**
            
            
            **271,794**





**6.**
            **Borrowings
                Under Revolving Credit Facility, Short and Long-Term
                Loans**




**Six
                Months Ended**
            
            
            **Twelve
                Months Ended**Short-Term
              Loan
            
            
            **June
                30,****2008**
            
            
            **December
                31, 2007**$
            
            
            $Geneva
                (Switzerland) State Department of Energy
            
            
            0
            
            
            861,248Geneva
                (Switzerland) State Department of Energy
            
            
            4,420,350
            
            
            3,997,665UBS
            
            
            0
            
            
            1,288,815**4,420,350**
            
            
            **6,147,728**




**Six
                Months Ended**
            
            
            **Twelve
                Months Ended**Long-Term
              Loan
            
            
            **June
                30,****2008**
            
            
            **December
                31, 2007**$
            
            
            $Banque
                Cantonale de Genève
            
            
            5,430,239
            
            
            7,563Geneva
                (Switzerland) State Department of Energy
            
            
            1,934,610
            
            
            0**7,364,849**
            
            
            **7,563**





On
      November 6, 2003, SES Switzerland received a loan from the Geneva (Switzerland)
      State Department of Energy (“ScanE”) of up to CHF1,000,000 ($982,300). The loan
      bears interest at a rate of 4%. SES Switzerland used CHF969,470 ($952,310)
      of
      this loan as of June 30, 2008, and CHF969,470 ($861,248) as of December 31,
      2007. This loan matured on March 31, 2008. On April 2, 2008, the Company filed
      a
      request with ScanE to renew the loan for a period of 24 months on the same
      terms
      and conditions. By decision dated May 19, 2008, ScanE accepted the Company’s
      request that the loan be extended for a period of 24 months on the same terms
      and conditions. The new maturity date for the loan is March 31, 2010. Pursuant
      to the Canton Geneva Escrow Agreement dated September 15, 2006, Christiane
      Ernè,
      Jean-Christophe Hadorn and Claudia Rey personally pledged 10,000,000 of their
      issued SES USA common shares as a guarantee for the original loan entered into
      on November 6, 2003. These shares now serve as a guarantee for the renewed
      loan
      dated May 19, 2008. The Company does not currently have any plans to repay
      the
      loan before its March 31, 2010 maturity date.





On
      January 21, 2004, ScanE granted the Company a credit facility of CHF1million
      ($982,300) to finance the construction of the Company’s new manufacturing
      facility. Release of these loan proceeds was contingent upon the Company
      satisfying certain conditions precedent, which were satisfied as of November
      13,
      2007. As of January 8, 2008, we had utilized the full amount of the loan, which
      has a fixed annual interest rate of 4%. The loan has a duration of 20 years
      and
      is secured by a mortgage certificate of CHF1,000,000 ($982,300) on the
      manufacturing facility. The loan will be reimbursed in 20-equal annual
      installments of CHF73,581 (approximately $72,279).









-
            8
            -
 *Table
            of Contents*




**SES
      SOLAR INC. AND SUBSIDIARY**


**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


**(Unaudited)**





On
      September 18, 2007, we signed a six month credit facility for CHF4,500,000
      ($4,420,350 as of June 30, 2008) with ScanE. The loan bears interest at 5%.
      The
      proceeds were received on October 1, 2007 and became due on March 17, 2008.
      ScanE extended the loan until June 20, 2008 under the same terms and conditions
      as the existing loan agreement. On June 20, 2008, SES announced the sale of
      its
      photovoltaic power station to Services Industriels de Geneve
      (“SIG”).  The
      Company received substantially all of the proceeds from the sale on June 30,
      2008 and used a portion of the proceeds to reimburse this loan in full as of
      July 2, 2008.




SES
      Switzerland also has a revolving credit line with UBS in the principal amount
      of
      CHF3,000,000 ($2,946,897) used mainly to cover short-term cash needs. The
      revolving credit line is secured by short-term deposits denominated in US
      dollars with UBS, amounting to $3,155,000 as of June 30, 2008. The credit line
      bears interest at 4.75%. The credit line can be cancelled by either party at
      any
      time. The balance of the credit facility was CHF0 ($0) as of June 30, 2008
      and
      CHF1,450,764 ($1,288,815) as of December 31, 2007.




SES
      Switzerland also has a Construction Credit Agreement with Banque Cantonale
      de
      Genève (BCGE) dated December 20, 2006 in the amount of CHF4.8 million
      ($4,715,035), which is used to finance construction of our new manufacturing
      facility. The loan was amended on November 13, 2007 and increased from CHF4.8
      million to CHF8.5 million ($8,349,541). The amended agreement must be drawn
      down
      no later than the date of completion of construction on the new manufacturing
      facility or December 11, 2008. We used CHF5,528,086 ($5,430,239) of the loan
      as
      of June 30, 2008 and CHF8,513 ($7,563) as of December 31, 2007. The loan bears
      interest at a rate of 3.5% and is secured by a second lien exclusive mortgage
      certificate of CHF9,000,000 ($8,840,691) on the manufacturing
      facility.




**7.**
            **Commitments
                and Contingencies**




*Operating
      Leases* -
      Lease expenses for the six months ended June 30, 2008 and 2007 were $76,303
      and
      $65,152, respectively.




The
      following table presents future minimum lease commitments (concerning the lease
      of a vehicle) under operating leases at June 30, 2008:




**Operating**
              **Leases****$**2008
            
            
            8,5272009
            
            
            14,289Thereafter
            
            
            0**Total**
            
            
            **22,816**





In
      addition to the amounts disclosed above, SES Switzerland has an operating lease
      for its office located at 129 Route de Saint-Julien, Plan-les-Ouates,
      Switzerland (a suburb of Geneva). The rent is CHF52,572 ($50,129) per year.
      The
      initial lease term ended on February 28, 2008. The lease has been renewed with
      the same conditions for the next 12 months.




SES
      Switzerland also leases a 1,654 square meter industrial facility in H’rkingen,
      Switzerland. The monthly fixed rent is CHF7,232 (approximately $6,896). The
      lease has no specific termination date. The lease may be cancelled with six
      months notice at the end of the month, except for December, which requires
      an
      additional month’s notice.




On
      May
      27, 2005, we received authorization from the State of Geneva to build a
      manufacturing facility on their property in Plan-les-Ouates, Switzerland and
      we
      received a lease for the land in February 2007. The lease for use of the land
      is
      for 60 years commencing on July 1, 2006.






-
            9
            -
 *Table
            of Contents*




**SES
      SOLAR INC. AND SUBSIDIARY**


**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


**(Unaudited)**





The
      following are the lease commitments:




**Use
                of Land****$**2008
            
            
            34,3582009
            
            
            68,7172010
            
            
            68,7172011
            
            
            68,7172012
            
            
            68,717Thereafter
            
            
            3,676,350**Total**
            
            
            **3,985,576**




SES
      Switzerland has no non-cancellable operating leases.




*Litigation* - The
      Company is from time to time subject to routine litigation incidental to its
      business. There is no such litigation currently pending.




*Capital
      Commitments* - At
      June 30, 2008, the Company has an outstanding purchase order of EUR448,600
      ($708,734) for the future construction of a new machine to be used in the new
      plant for solar module production. The Company has made an advance
      payment of EUR269,160 ($425,241) for the purchase of this machine. The
      balance due will be paid upon delivery of the machine. At June 30, 2008, the
      Company signed purchase agreements for the building of the new plant for
      CHF5,655,000 ($5,554,901). An advance payment of CHF1,899,855($1,866,226) was
      made on July 1, 2008, the remaining amount will be paid at the end of the
      construction.




**8.**
            **Business
                Segments**




As
      December 31, 2007, all of the Company’s operations were conducted through its
      wholly owned subsidiary, SES Switzerland, and were limited to the assembly
      and
      installation of photovoltaic panels in Switzerland. Commencing January 2008,
      the
      Company also began selling electricity produced by its photovoltaic power
      station on the roof of its new manufacturing facility, which we refer to as
      the
      Solar Plant, to a local utility in Geneva. As previously reported, the Solar
      Plant was sold in June 2008. As a result, the Company’s operations are again
      limited to the assembly and installation of photovoltaic panels.





**9.**
            **Discontinued
                Operations**





As
      noted
      above, the Company sold its Solar Plant in June 2008. The balance sheet and
      income statement have been retrospectively adjusted to reflect the effects
      of
      discontinued operations. No restatements were necessary for the fiscal year
      2007
      due to the fact that the Company sold photovoltaic electricity produced by
      the
      Solar Plant to a local electricity provider in Geneva based on a 20 year
      contract. This contract was cancelled on June 30, 2008 due to the sale of the
      Solar Plant. The net income from discontinued operations are from the former
      electricity producing business segment. The Solar Plant and the six month credit
      facility of CHF4.5 million dated September 18, 2007 are the sole assets and
      liabilities, respectively, that comprise the electricity producing business
      segment.





The
      net
      income from discontinued operations during the six-month period ended June
      30,
      2008 was the revenue of $247,730 and for the three-month period ended June
      30,
      2008 $164,592. In 2008, the Company had no expenses from discontinued
      operations. In 200,7 there was no income or expense from discontinued
      operations.





**10.**
            **Stockholders'
                Equity**





*Common
      Stock* - The
      Company has 100,000,000 shares of common stock authorized, par value $0.001
      per
      share, and 73,081,168 shares issued and outstanding.




During
      the six-month period ended June 30, 2008, no stock purchase warrants were
      exercised.





-
            10
            -
 *Table
            of Contents*




**SES
      SOLAR INC. AND SUBSIDIARY**


**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


**(Unaudited)**





Warrant
      transactions consisted of the following during the quarter ended June 30,
      2008.









**Exercisable**
              **Warrants**
            
            
            **Strike**
              **Price
                ($)**Warrants
                outstanding as of December 31, 2007
            
            
            1,500,000
            
            $
            0.90Exercise
                of warrants
            
            
            0
            
            
            0Warrants
                outstanding as of June 30, 2008
            
            
            1,500,000
            
            $
            0.90




Warrants
      outstanding expire as follows:




**Year**
            
            
            **Warrants**
              **Expiring**
            
            
            **Strike**
              **Price
                ($)**2010
            
            
            1,500,000
            
            
            0.901,500,000




The
      Company granted registration rights to Lansing Securities including the right
      to
      include all or any part of the Warrant Shares (the “Registrable Securities”) in
      the next registration statement and subsequent registration statements that
      the
      Company files with the SEC from time to time (the “Registration Statement”)
      (other than a registration statement on Form S-8 or Form S-4) until all of
      the
      Registrable Securities have been duly registered.




On
      August
      31, 2006, SES USA entered into an agreement with Standard Atlantic to advise
      SES
      USA and its stockholders in connection with the purchase of all of the shares
      of
      SES Switzerland. Pursuant to the terms of a Finder’s Agreement between SES USA
      and Standard Financial (the “Finder’s Agreement”) the parties agreed to a
      finder’s fee of $228,000 if a transaction were consummated. The Finder’s
      Agreement also provided that Standard Atlantic would continue to provide
      consulting services to the Company for a period of 24 months regarding investor
      relations matters for a monthly fee of $20,000. The two-year consulting fee
      was
      due and was paid to Standard Financial at closing. The Company recorded the
      total amount as of June 30, 2008, as deferred expense and amortizes the amount
      over the 24 months of the consulting agreement.




**11.**
            **Subsequent
                Events**




As
      of
      August 8, 2008, the Company formed a new Swiss wholly owned subsidiary, SES
      Prod. SA (“SES Prod”). It is expected that in the future, all of the Company’s
      manufacturing activities now being conducted by SES Switzerland will be
      conducted by SES Prod. At such time, the property management activities required
      to manage the Company’s manufacturing facility will be conducted by SES
      Switzerland.





-
            11
            -
 *Table
            of Contents*




**ITEM
      2.****MANAGEMENT'S
      DISCUSSION AND ANALYSIS AND PLAN OF OPERATIONS**




*You
      should read the following discussion of our financial condition and results
      of
      operations together with the audited financial statements and the notes thereto
      included in our Annual Report on Form 10-KSB for the year ended December 31,
      2007. The following discussion contains forward-looking statements that reflect
      our plans, estimates and beliefs. Our actual results may differ materially
      from
      those anticipated in these forward-looking statements, including those set
      forth
      in our Annual Report on Form 10 KSB.*




SES
      Solar
      Inc., a Delaware corporation (the “Company,” “SES USA,” “our,” “we,” and “us”)
      based in Geneva, Switzerland, is engaged in the business of designing,
      engineering, producing and installing solar panels or modules and solar tiles
      for generating electricity. We have developed a new assembly technology for
      solar panels that allow for higher quality electrical contacts, better
      performance and reduced costs resulting from our proprietary automation
      processes. We are constructing a manufacturing facility that will include a
      new
      assembly line based on our proprietary technology to complete the development
      and testing of our new products. To date, while we have been engaged in
      developing and testing our new solar panel assembly technology, we have been
      developing the sales and distribution portions of our business by selling solar
      panels produced by third parties and by responding to quotations for our solar
      tiles to electric companies, local governmental agencies and private home
      owners.





**Overview
      and Plan of Operation**




This
      Overview addresses our plan of operation and the trends, events, and
      uncertainties that have been identified by our management as those that we
      believe are reasonably likely to materially affect the comparison of historical
      operating results reported herein to either past period results or to future
      operating results.




SES
      Switzerland, our wholly owned subsidiary, has developed and patented a new
      assembly technology for solar panels or modules and solar tiles. Our business
      plan includes the development of a new assembly line based on our proprietary
      technology, using a manufacturing facility in the suburbs of Geneva, Switzerland
      that is currently under construction, to produce solar panels or modules and
      solar tiles at a lower cost. We believe this new facility will enable us to
      produce solar photovoltaic (“PV”) modules that are larger than three square
      meters.




To
      implement our business plan, we will need to complete the design of the solar
      panels or modules and solar tiles, manufacture and test the prototype panels,
      have them approved in accordance with European and other standards, manufacture
      them in series and sell them in major markets in Europe and eventually other
      countries around the world. Our plan is to complete the manufacturing facility,
      manufacture the prototypes and have them tested and licensed during the fourth
      quarter of 2008, and to commence production and sale of our new products by
      June
      2009.




To
      date,
      we have generated only limited revenue from the sale of solar panels or modules
      and solar tiles manufactured by third parties and the related engineering
      services required to design and install the same. In addition, during the period
      from January 2008 to June 2008, the Company also generated revenue from the
      sale
      of electricity produced by the solar PV modules on the roof of its new
      manufacturing facility, which we refer to as the Solar Plant, to a local
      utility in Geneva. As of June 30, 2008, the Company no longer expects to
      generate revenue from the sale of electricity produced by the solar PV modules
      on the roof of its new manufacturing facility as the roof was sold during June
      2008.





Once
      our
      manufacturing capabilities are operational, we will have available a product
      line for our SunTechTile® and SwissTile® ** solar
      tiles and, in the future, for high power rated solar modules. Historically,
      we
      have relied upon third party vendors to supply us with component parts such
      as
      cells in order to manufacture and produce our products. As a result of our
      new
      manufacturing facility and our new proprietary technology for module assembly,
      we believe that we are positioning ourselves to manufacture and produce on
      a
      much larger scale solar products that are competitive in the solar energy
      market.





We
      have
      experienced operating losses from our early stage operations, which have
      involved developing and testing our new solar panel technology and commencement
      of the sales and distribution portions of our business by selling custom solar
      panels or modules and solar tiles using an early stage technology. We anticipate
      incurring operating losses over the next few years as we complete the
      development, testing, prototypes and licensing of our new products and commence
      production. Our research and development costs and costs incurred in
      manufacturing prototype panels to date have been expensed. We do not believe
      that we can achieve profitability until
      development, implementation and commercialization of our new products
      manufactured through the new assembling processes are operational.





-
            12
            -
 *Table
            of Contents*




We
      believe the demand for solar panels and solar tiles ultimately will be
      substantial. According to the Energy Information Administration, global demand
      for electricity is expected to increase from 16.4 trillion kilowatt hours in
      2004 to 30.3 trillion kilowatt hours in 2030. Over time, supply constraints,
      rising electricity prices, dependence on foreign countries for fuel feedstock
      and environmental concerns could limit the ability of many conventional sources
      of electricity and other alternative sources to supply this rapidly expanding
      global demand. According to the U.S. Department of Energy, solar energy is
      the
      only source of renewable power with a large enough resource base to supply
      a
      significant percentage of the world’s electricity needs over the next several
      decades.




However,
      over the near term there are significant competitive concerns with solar energy.
      As the cost of producing electricity from grid connected PV installations is
      higher than the current cost of electricity from fossil or nuclear plants,
      the
      PV market relies heavily on government subsidies and regulation concerning
      independent power producers. These regulations favor PV electricity in some,
      but
      not all, countries. Existing regulations are subject to change due to local
      political factors affecting the energy market, especially in Europe, where
      the
      process has been ongoing for 10 years. The major PV market in Europe is Germany,
      where the EEG law governs. We expect France will play an increasing role in
      the
      future due to recently enacted laws. Other countries, including Italy, Spain
      and
      Greece, have similar but less favorable laws. The PV market is heavily dependent
      on public policies and, as a result, such policies present the greatest
      uncertainties for our products. Anticipated reductions of the feed-in tariff
      in
      Germany and Switzerland by 9% and 8%, respectively, per year could affect our
      sales. Spain has already spoken of decreasing the tariff during 2008 by
      20%. Without continued and/or enhanced governmental support in the form of
      favorable laws and subsidies, the projected growth of the PV market will not
      exist, which could hurt our results of operations. Our primary market for our
      SwissTile® product will be Switzerland, which recently enacted a new feed in
      tariff that became effective May 2008. This tariff has 10 different values
      depending on PV integration and size. Due to the properties of our SwissTile®
product, we believe that it will receive the highest value, which will be
      favorable for us. The tariff will decrease for new entrants by 8% every year
      starting in 2010.





Worldwide,
      annual installations by the PV industry grew from 0.4GW in 2002 to 1.7GW in
      2006, representing an average annual growth rate of over 42%, and 2.9 GW at
      the
      end of 2007, representing a 70% increase in one year. Cumulative installed
      capacity reached just below 10GW at the end of 2007. Despite this growth, solar
      electricity still represents a small fraction of the supply of electricity.
      So
      long as governments and the market are focused on the ability of manufacturers
      to develop new technologies that reduce the cost of solar electricity, we
      believe that the demand for solar energy products will continue to grow
      significantly. This growth projection is based on continued governmental
      support, on the success of such manufacturing efforts to reduce the gap between
      the cost of solar electricity and more conventional and established methods
      of
      generating electricity, and on other developments affecting the world energy
      market. In addition to the uncertainties associated with government subsidies
      and these other factors, it is also possible that breakthrough technologies
      might emerge in other areas that will reduce demand for new solar energy
      products. Furthermore, even within the solar energy area, it is possible that
      developments in thin films or nanoscience could reduce the cost of PV cells
      or
      that continued shortages in the supply of polysilicon, an essential raw material
      in the production of our PV cells, could impact our proposed new products and
      adversely affect our plan of operation.




We
      are in
      ongoing discussions with strategic partners, including cell manufacturers,
      PV
      line manufacturers and special machine manufacturers to assist us with our
      new
      technology for module assembly. We are also progressing with construction of
      our
      manufacturing facility, which is expected to be fully operational during the
      first half of 2009.




During
      the six months ended June 30, 2008, we continued to market our solar tiles
      and
      to quote our solar PV turn-key installations to prospects. In addition, we
      generated revenue of $32,592 and incurred costs of goods sold of $1,757. The
      decrease in revenue and corresponding decrease in cost of goods sold are
      attributable to management’s increased focus on completing our manufacturing
      facility and producing our solar products on a large scale and away from smaller
      custom installation projects. As
      of the
      end of fiscal year 2007, the Solar Plant ,
      which
      is housed on the roof of our manufacturing facility, is
      operational, and, as of January 2008, we generated revenue of $ 247,730 from
      the
      sale of electricity .
      As of
      the end of June 2008, we no longer generate this revenue due to the sale of
      the
      Solar Plant to Services Industriels de Geneve (“SIG”).





Based
      on current and planned custom installation projects that will be completed
      during the third and fourth quarters of 2008, we believe that our cash flow
      from
      operating activities for the remainder of fiscal year 2008 will be greater
      than
      our cash flow from operating activities during 2007. As previously reported,
      and
      in light of these projects, we believe that our operating expenses in fiscal
      2008 will be approximately $2 million, which we anticipate financing through
      revenue generated from operating income and with available cash. Management
      anticipates total capital expenditures of approximately $14 million for the
      new
      manufacturing facility and $3.5 million for the assembly line and related
      machinery during the remainder of 2008 and the first half of 2009. We
      anticipate financing these capital expenditures through available cash, loans
      and lines of credit, but we will likely also need additional financing to expand
      our operations once our manufacturing facility is fully operational as well
      as
      to secure long-term silicon supply contracts. We
      do not
      have any current agreements in place to secure such financing. In addition,
      we
      entered into a credit facility of CHF4,500,000 ($4,420,350) on September 18,
      2007 with ScanE. The proceeds were received on October 1, 2007 and became due
      on
      March 17, 2008. On June 20, 2008, the Company announced the sale of its Solar
      Plant for gross proceeds of CHF5,716,788 ($5,496,383), inclusive of
      VAT.  SES
      Switzerland received substantially all of the proceeds from this sale on June
      30, 2008 and used a portion of the proceeds to repay in full the CHF4,500,000
      loan as of July 2, 2008.





-
            13
            -
 *Table
            of Contents*




We
      expect
      to continue to experience losses from operations until we can generate revenue
      from manufacturing our new products. As a result of our continuing need to
      expand our operations and develop and market our new products, we expect to
      continue to need additional capital over the long-term in order to continue
      as a
      going concern.




**Selected
      Financial Data**




**June
                30,**
            
            
            **December
                31,***Balance
              Sheets*
            
            
            **2008**
            
            
            **2007****(unaudited)**(in
                $)Total
                current assets
            
            
            8,387,427
            
            
            4,472,884Total
                long-term assets
            
            
            9,471,104
            
            
            9,858,585Total
                current liabilities
            
            
            6,286,006
            
            
            10,366,547Total
                long-term liabilities
            
            
            7,364,849
            
            
            7,563Total
                liabilities and stockholders' equity
            
            
            17,858,531
            
            
            14,331,469






**For
                the Three Months Ended****Statement
              of Operations**
            
            
            **June
                30,****(unaudited)**
            
            
            **2008**
            
            
            **2007**(in
                $)Total
                revenues
            
            
            32,592
            
            
            1,165,035Total
                cost of goods sold (exclusive of depreciation shown separately
                below)
            
            
            (1,757
            )
            
            (969,972
            )Personnel
            
            
            143,816
            
            
            86,779Rent
                and lease expenses
            
            
            39,552
            
            
            32,382Research
                and development
            
            
            67,755
            
            
            58,963Depreciation
                and amortization
            
            
            18,435
            
            
            12,145General
                and administrative expenses
            
            
            204,316
            
            
            301,442Interest
                expense
            
            
            (101,854
            )
            
            (16,037
            )Interest
                income
            
            
            16,544
            
            
            46,788Other
                gain
            
            
            1,134,915
            
            
            0Foreign
                exchange gain (loss)
            
            
            (58,020
            )
            
            (30,270
            )Total
                other income
            
            
            991,585
            
            
            481Taxes
            
            
            0
            
            
            0Net
                income (loss) from continuing operations
            
            
            991,585
            
            
            (296,167
            )Income
                from discontinued operations
            
            
            164,592
            
            
            0Taxes
            
            
            0
            
            
            0Net
                income (loss) from discontinued operations
            
            
            164,592
            
            
            0Net
                income (loss)
            
            
            713,138
            
            
            (296,167
            )Other
                comprehensive income: translation adjustment
            
            
            102,407
            
            
            17,263Comprehensive
                income (loss)
            
            
            815,545
            
            
            (278,904
            )







-
            14
            -
 *Table
            of Contents*




**RESULTS
      OF OPERATIONS - COMPARISON OF THREE MONTHS ENDED JUNE 30, 2008 AND
      2007**




**Net
      Income (Loss)**




Our
      net
      income for the three months ended June 30, 2008 was $713,138 compared to a
      net
      loss of $296,167 for the three months ended June 30, 2007. The net income during
      the period ended June 30, 2008 was due primarily to the $1,134,915 gain
      generated by the sale of our Solar Plant and a decrease in operating expenses
      ($68,626), offset by a foreign exchange loss of $58,020 due to the increase
      in
      the currency exchange rate between the Swiss franc and the US dollar and an
      increase of $85,867 in interest expense due to increased
      borrowings.





**Revenues
      and Cost of Goods Sold**




The
      Company recognizes revenue on the completed-contract method, and therefore
      when
      projects are completed. During the three months ended June 30, 2008, we
      generated total revenue of $32,592 as compared to $1,165,035 for the three
      months ended June 30, 2007.





Cost
      of
      goods sold for the three months ended June 30, 2008 was $1,757 compared to
      cost
      of goods sold of $969,972 for the three months ended June 30,2007.





The
      decrease in revenue and corresponding decrease in cost of goods sold are
      attributable to management’s increased focus on completing our manufacturing
      facility and producing our products on a large scale and away from smaller
      custom installation projects.




**Operating
      Expenses**




Operating
      expenses for the three months ended June 30, 2008 and 2007 were $473,874
      and $491,711, respectively, which represents a 4% decrease. Personnel,
      rent, research and development, general and administrative expenses, and
      depreciation and amortization expenses constitute the components of our
      operating expenses.




The
      majority of the decrease was related to personnel costs to develop the new
      activities of our operating subsidiary (increase of $57,037) and additional
      research and development expenses (increase of $8,792), partially offset by
      decrease in general and administrative expenses, including expenses associated
      with the preparation and SEC compliance of various public filings (decrease
      of
      $97,126) and an increase of $6,290 in depreciation and amortization
      expense.




We
      expect
      that as we continue to implement our business plan these expenses will increase
      accordingly.




**Other
      Income (Expense)**




Interest
      expense increased to $101,854 for the three months ended June 30, 2008 compared
      with $16,037 for the three months ended June 30, 2007. The increase in interest
      expense was primarily attributable to the increase in loans from ScanE and
      from
      Banque Cantonale de Genève (“BCGE”).




Interest
      income for the three months ended June 30, 2008 was $16,544 compared to $46,788
      for the three months ended June 30, 2007. The interest income earned during
      the
      period was received from time deposits.





The
      one
      time net gain generated by the sale of our Solar Plant to SIG was $1,134,915.
      This amount mostly covers research and development costs of the Solar Plant
      that
      had been previously expensed.




Foreign
      exchange loss for the three months ended June 30, 2008 was $58,020 as compared
      to $30,270 for the three months ended June 30, 2007. Our wholly owned
      subsidiary, SES Switzerland, conducts substantially all its business and incurs
      substantially all its costs in Swiss francs. The foreign exchange loss reflects
      the increase in the currency exchange rate between the Swiss franc and the
      US
      dollar.





**Net
      Income (Loss) from Discontinued Operations, net of tax**





Our
      electricity producing segment was sold in June 2008. The Solar Plant has been
      operational since the end of 2007, and as of January 2008, has generated revenue
      through the sale of electricity. For the three months ended June 30, 2008,
      we
      recorded net income from discounted operations from such sales in the amount
      of
      $164,592. Due to the sale of the Solar Plant at the end of June 2008, no further
      revenue from the sale of electricity will be recognized in future
      periods.




-
          15
          -
 *Table
          of Contents*






**Statement
              of Operations**
            
            
            **For
                the Six Months Ended**
              **June
                30,****(unaudited)**
            
            
            **2008**
            
            
            **2007**in
                $Total
                revenues
            
            
            32,592
            
            
            1,165,035Total
                cost of goods sold (exclusive of depreciation shown separately
                below)
            
            
            (1,757
            )
            
            (969,972
            )Personnel
            
            
            282,243
            
            
            172,164Rent
                and lease expenses
            
            
            76,303
            
            
            65,152Research
                and development
            
            
            220,587
            
            
            169,436Depreciation
                and amortization
            
            
            85,091
            
            
            24,741General
                and administrative expenses
            
            
            405,358
            
            
            492,067Interest
                expense
            
            
            (219,997
            )
            
            (29,006
            )Interest
                income
            
            
            39,189
            
            
            95,288Other
                gain
            
            
            1,134,915
            
            
            0Foreign
                exchange gain /(loss)
            
            
            337,523
            
            
            (25,569
            )Total
                other income (expense)
            
            
            1,291,630
            
            
            40,713Taxes
            
            
            0
            
            
            0Net
                income (loss) from continuing operations
            
            
            252,883
            
            
            (687,784
            )Income
                from discontinued operations
            
            
            247,730
            
            
            0Taxes
            
            
            0
            
            
            0Net
                income (loss) from discontinued operations
            
            
            247,730
            
            
            0Net
                income (loss)
            
            
            500,613
            
            
            (687,784
            )Other
                comprehensive income: translation adjustment
            
            
            (250,296
            )
            
            13,547Comprehensive
                income (loss)
            
            
            250,317
            
            
            (674,237
            )




**RESULTS
      OF OPERATIONS - COMPARISON OF SIX MONTHS ENDED JUNE 30, 2008 AND
      2007**





**Net
      Income (Loss)**




Our
      net
      income for the six months ended June 30, 2008 was $500,613 as compared to a
      net
      loss of $687,784 for the six months ended June 30, 2007. The net income during
      the period ended June 30, 2008 was due primarily to the $1,134,915 gain
      generated by the sale of our Solar Plant partially offset by an increase of
      $190,991 in interest expense due to increased borrowings.





**Revenues
      and Cost of Goods Sold**




We
      recognize revenue on the completed-contract method, and therefore, only when
      projects are completed. During the period January 1 to June 30, 2008, we
      generated total revenue of $32,592 as compared to $1,165,035 for the six months
      ended June 30, 2007.





Cost
      of
      goods sold for the six months ended June 30, 2008 was $1,757 compared to cost
      of
      goods sold of $969,972 for the six months ended June 30, 2007.





-
            16
            -
 *Table
            of Contents*




**Operating
      Expenses**





Operating
      expenses for the six months ended June 30, 2008 were $1,069,582 compared to
      operating expenses of $923,560 for the six months ended June 30, 2007.
      Personnel, rent, research and development, general and administrative, and
      depreciation and amortization expenses constitute the components of our
      operating expenses. The majority of the increase was related to personnel costs
      to develop the new activities of our subsidiary (increase of $110,079), and
      additional research and development expenses (increase of $51,151), partially
      offset by a decrease in general and administrative expenses associated with
      preparation and SEC compliance of various public filings (decrease of $86,709).
      We expect that as we continue to implement our business plan these expenses
      will
      increase accordingly.





**Other
      Income (Expense)**




Interest
      expense increased to $219,997 for the six months ended June 30, 2008 as compared
      to $29,006 for the six months ended June 30, 2007. The increase in interest
      expense was primarily attributable to the increase in the amount of the loan
      from ScanE and from BCGE.





Interest
      income for the six months ended June 30, 2008 was $39,189 as compared to $95,288
      for the period ended June 30, 2007. The interest income earned during the period
      was received from time deposits.





The
      one
      time net gain generated by the sale of our Solar Plant to SIG was $1,134,915.
      This amount mostly covers research and development costs of the Solar Plant
      that
      had been previously expensed.





Foreign
      exchange gain for the six months ended June 30, 2008 was $337,523 compared
      to
      foreign exchange loss of $25,569 for the six months ended June 30, 2007.
      Historical financial statements prior to September 27, 2006, the date of the
      reverse acquisition, are those of SES Switzerland, which conducts substantially
      all its business and incurs substantially all its costs in Swiss francs.





**Net
      Income (Loss) from Discontinued Operations, net of tax**





Our
      electricity producing segment was sold in June 2008. The Solar Plant, which
      is
      housed on the roof our manufacturing facility, has been operational since the
      end of 2007, and as of January 2008, has generated revenue through the sale
      of
      electricity. For the six months ended June 30, 2008, revenue generated from
      such
      sales totaled $247,730. Due to the sale of the Solar Plant at the end of June
      2008, no further revenue from the sale of electricity will be recognized in
      future periods.





**Liquidity
      and Capital Resources**




Our
      principal cash requirements are for operating expenses, including consulting,
      accounting and legal costs, staff costs, and accounts payable.




As
      of
      June 30, 2008, we had working capital of $2,101,421 compared to $4,102,538
      as of
      June 30, 2007, and our cash and cash equivalents increased to $6,414,000 as
      of
      June 30, 2008 compared to $5,538,585 as of June 30, 2007. This decrease of
      working capital is the result of increased short-term borrowings and accounts
      payable over the comparable periods. The increase in available cash and cash
      equivalents is attributable to the sale of our Solar Plant.




As
      of
      June 30, 2008, we had accounts payable of $890,591 compared to
      $3,711,775 **** as
      of
      December 31, 2007. This large decrease is the result of amounts paid to
      creditors for construction costs relating to our manufacturing facility. We
      made
      these payments utilizing loan proceeds received from BCGE and
      ScanE.




At
      June
      30, 2008, we had short-term debt in the amount of $4,420,350 compared to
      $6,147,728 as of December 31, 2007.




We
      currently have several loans outstanding with ScanE. The first such loan in
      the
      amount of up to $982,300 was made on November 3, 2003 and carries a principal
      balance of $952,310. The loan bears interest at 4%. Although the loan matured
      on
      March 31, 2008, we filed a request on April 2, 2008 with ScanE to renew the
      loan
      for a period of 24 months on the same terms and conditions. On May 19, 2008,
      ScanE granted our Company’s request that the loan be extended for a period of 24
      months on the same terms and conditions. The new maturity date for the loan
      is
      March 31, 2010.




On
      January 21, 2004, we obtained a CHF1 million ($982,300) credit facility from
      ScanE to finance the construction of our new manufacturing facility. Release
      of
      the loan proceeds was contingent upon the Company satisfying certain conditions
      precedent, which were satisfied by November 13, 2007. As of January 8, 2008,
      we
      had utilized the full amount of the loan, which bears a fixed annual interest
      rate of 4%.





-
            17
            -
 *Table
            of Contents*





A
      new six
      month credit facility of CHF4,500,000 ($4,420,350) was signed on September
      18,
      2007 with ScanE. The loan bears interest at 5%. The proceeds were received
      on
      October 1, 2007 and were to be reimbursed on March 17, 2008. ScanE extended
      the loan under the existing loan agreement until June 20, 2008. On June 20,
      2008, the Company announced that it had agreed to sell its PV power plant on
      the
      roof of its manufacturing facility to Services Industriels de Geneve
      (“SIG”).  The
      Company received substantially all of the proceeds from this sale on June 30,
      2008 and used a portion of the proceeds to reimburse the CHF4,500,000 loan
      in
      full as of July 2, 2008.




SES
      Switzerland also has a revolving credit line with UBS, which was increased
      from
      CHF100,000 ($98,230) to CHF3,000,000 ($2,946,897) as of January 31, 2008, used
      mainly to cover short-term cash needs. The revolving credit line is secured
      by
      short term deposits denominated in US dollars with UBS, amounting to $3,155,000
      as of June 30, 2008. The credit line bears interest at the rate of 4.75%. The
      credit line can be cancelled by either party at any time. The credit facility
      had a balance CHF0 ($0) as June 30, 2008 and CHF1,450,764 ($1,288,815) as of
      December 31, 2007.




SES
      Switzerland also has a Construction Credit Agreement with BCGE dated December
      20, 2006 in the amount of $4,715,035 (CHF4.8 million), which is intended for
      financing the construction of our new manufacturing facility. The loan was
      amended on November 13, 2007 and increased from CHF4.8 million to CHF8.5 million
      ($8,349,541). The amended loan amount must be drawn down no later than the
      date
      of completion of the construction or December 11, 2008. We used $5,430,239
      (CHF5,528,086) of this financing as of June 30, 2008, and $7,563 (CHF8,513)
      as
      of December 31, 2007. The loan bears interest at a rate of 3.5% and is secured
      by a second lien exclusive mortgage certificate of CHF9,000,000 ($8,840,691)
      on
      the manufacturing facility.




Our
      ability to meet our financial commitments in the near term will be primarily
      dependent upon continued revenue from the sale of custom manufactured solar
      panels or modules when available and solar tiles and the related engineering
      services required to design and install the same, the sale of electricity
      produced by the solar roof on our manufacturing facility, and the continued
      extension of credit from existing or new lenders.




Management
      believes that our cash and cash equivalents, cash provided by operating
      activities, and cash available from existing loans will be sufficient to meet
      our working capital requirements for the next twelve months. If our future
      revenues do not increase significantly to a level sufficient to cover our net
      losses, we will continue to need to raise additional funds to expand our
      operations. In addition, we may need to raise additional funds sooner than
      anticipated to respond to competitive pressures, to develop new or enhanced
      products or services, to fund our expansion or to make acquisitions. We may
      not
      be able to find financing on acceptable terms or at all.




**Operating
      Activities**




Net
      cash
      used in operating activities was $697,617 for the six months ended June 30,
      2008
      as compared to $195,264 of net cash used in operating activities for the six
      months ended June 30, 2007. In local currency, use of funds for operating
      activities was larger during this period compared to the same period in 2007.
      However, exchange rate volatility has greatly offset the difference. Billings
      in
      excess of cost and estimated earnings increased by $150,438 due to advances
      received for new projects. Additionally, inventory of our new PV SwissTile®
products increased by $1,010,838. Finally operating activities include a net
      gain of $1,134,915 from the sale of the solar plant.




**Investing
      Activities**




Net
      cash
      used in investing activities was $1,030,323 during the six months ended June
      30,
      2008 as compared to $290,795 used in investing activities during the six months
      ended June 30, 2007. The increase in investing activities is mostly due to
      investments for the construction of our manufacturing plant. Net cash is
      comprised of cash received from the sale of the Solar Plant for $4,970,752
      and
      the use of cash to pay creditors for the construction of the building and plant
      in the amount of $6,001,074.




We
      continue to expect total capital expenditures of approximately $17,500,000
      as we
      build our new manufacturing facility and purchase additional
      equipment.





-
            18
            -
 *Table
            of Contents*




**Financing
      Activities**




Net
      cash
      provided by financing activities was $4,833,261 for the six months ended June
      30, 2008 as compared to $0 for the six months ended June 30, 2007.




The
      increase financing was received from bank loans granted to build the new plant
      from BCGE and ScanE. During 2008, the amount represents a net financing between
      use of bank loans for $6,216,608 and the reimbursement of our line of credit
      with UBS for $1,383,347.





**Off-Balance
      Sheet Arrangements**




We
      have
      no outstanding derivative financial instruments, interest rate swap transactions
      or foreign currency contracts. We do not engage in trading activities involving
      non-exchange traded contracts.




At
      June
      30, 2008, we had an outstanding purchase order of EUR448,600 ($708,734), using
      the exchange rate of 0.63296 as of  June 30, 2008 for the future
      construction of a new machine to be used in the new manufacturing plant for
      solar modules production. We made an advance of EUR269,160 ($425,241) for
      the purchase of this machine. The balance due will be paid upon delivery of
      the
      machine.




**ITEM
      3.****QUALITATIVE
      AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK**




Not
      applicable to “smaller reporting companies” under Item 305(e) of Regulation
      S-K.




**ITEM
      4T.****CONTROLS
      AND PROCEDURES**




Disclosure
      controls and procedures are controls and other procedures that are designed
      to
      ensure that information required to be disclosed in Company reports filed or
      submitted under the Securities Exchange Act of 1934 (the "Exchange Act") is
      recorded, processed, summarized and reported within the time periods specified
      in the Securities and Exchange Commission’s rules and forms. Disclosure controls
      and procedures include, without limitation, controls and procedures designed
      to
      ensure that information required to be disclosed in Company reports filed under
      the Exchange Act, is accumulated and communicated to management, including
      the
      Company’s principal executive officer and principal financial officer, as
      appropriate, to allow timely decisions regarding required
      disclosure.




As
      of the
      end of the period covered by this report, we conducted an evaluation, under
      the
      supervision and with the participation of our Chief Executive Officer and Chief
      Financial Officer, of our disclosure controls and procedures (as defined in
      Rule
      13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation,
      our Chief Executive Officer and Chief Financial Officer concluded that the
      Company’s disclosure controls and procedures are effective to ensure that
      information required to be disclosed by the Company in the reports that we
      file
      or submit under the Exchange Act is recorded, processed, summarized and reported
      within the time periods specified in the SEC’s rules and forms and which also
      are effective in ensuring that information required to be disclosed by the
      Company in the reports that it files or submits under the Exchange Act is
      accumulated and communicated to the Company’s management, including the
      Company’s Chief Executive Officer and Chief Financial Officer, to allow timely
      decisions regarding required disclosure.




**CHANGES
      IN INTERNAL CONTROL OVER FINANCIAL REPORTING**




There
      were no changes in the Company’s internal controls over financial reporting that
      occurred during the quarter ended June 30, 2008 that have materially affected,
      or are reasonably likely to materially affect, the internal control over
      financial reporting.





-
            19
            -
 *Table
            of Contents*




**PART
      II****OTHER
      INFORMATION**




**ITEM
      6.****EXHIBITS**




**Exhibits**31.1
            
            Certification
                of Principal Executive Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.31.2
            
            Certification
                of Principal Financial Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.32.1
            
            Certification
                of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.32.2
            
            Certification
                of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.







-
            20
            -
 *Table
            of Contents*




**SIGNATURES**




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




Dated:
                August 14, 2008
            
            SES
                SOLAR INC.
              (Registrant)By:
            /s/
                SANDRINE CRISAFULLISandrine
                Crisafulli
              Chief
                Financial Officer and Chief Operating Officer
              (principal
                financial officer and principal accountingofficer)


-
      21
      -