**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 SEPTEMBER 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
              INCORPORATION
                OR ORGANIZATION)
            
            (IRS
                EMPLOYER
              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
      November 6, 2008 is 73,081,168 shares of common stock, par value $.001 per
      share.












TABLE
      OF
      CONTENTS


PagePART I.
              FINANCIAL
                  INFORMATION
              1ITEM 1.
              FINANCIAL
                  STATEMENTS
              1ITEM 2.
              MANAGEMENT'S
                  DISCUSSION AND ANALYSIS AND PLAN OF OPERATIONS
              13ITEM 3.
              QUALITATIVE
                  AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
              20ITEM 4T.
              CONTROLS
                  AND PROCEDURES
              20PART II.
              OTHER
                  INFORMATION
              21ITEM 6.
              EXHIBITS
              21




-i-





**PART
      I.  FINANCIAL INFORMATION**


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




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


**(in
      $)**





**September 30,**
            
            **December 31,****2008**
            
            **2007****(unaudited)****ASSETS
                (in $)**Current
                Assets:Cash
                and cash equivalents
            
            
            1,256,972
            
            
            3,429,033Receivables,
                net of allowance for doubtful accounts of $0 for the periods ended
                2008
                and 2007
            
            
            17,144
            
            
            47,356Due
                from related party
            
            
            87,179
            
            
            84,938Inventory
            
            
            1,486,761
            
            
            271,794Other
                current assets
            
            
            356,789
            
            
            639,763**Total
                current assets**
            
            
            **3,204,845**
            
            
            **4,472,884**Long-Term
                Assets:Deferred
                expense
            
            
            0
            
            
            180,000Advance
                payments for machinery
            
            
            388,901
            
            
            396,432**Total
                other long-term assets**
            
            
            **388,901**
            
            
            **576,432**Property
                and Equipment, at cost
            
            
            451,344
            
            
            437,493Solar
                Plant
            
            
            0
            
            
            3,785,521Building
                construction
            
            
            10,294,462
            
            
            5,398,153Less
                accumulated depreciation and amortization
            
            
            (391,481
            )
            
            (339,014
            )**Total
                fixed assets**
            
            
            **10,354,325**
            
            
            **9,282,153****Total
                long-term assets**
            
            
            **10,743,226**
            
            
            **9,858,585****Total
                assets**
            
            
            **13,948,071**
            
            
            **14,331,469****LIABILITIES
                AND STOCKHOLDERS' EQUITY (DEFICIT)**Current
                Liabilities:Short-term
                loan
            
            
            0
            
            
            6,147,728Accounts
                payable
            
            
            1,073,840
            
            
            3,711,775Billings
                in excess of cost and estimated earnings
            
            
            1,323,249
            
            
            507,044**Total
                current liabilities**
            
            
            **2,397,089**
            
            
            **10,366,547**Long-Term
                Liabilities:Loan
                payable
            
            
            883,972
            
            
            0Construction
                loan
            
            
            7,154,917
            
            
            7,563**Total
                long-term liabilities**
            
            
            **8,038,889**
            
            
            **7,563**Stockholders'
                Equity:Common
                stock, $0.001 par value;100,000,000
                shares authorized;73,081,168
                shares issued and outstanding
            
            
            73,081
            
            
            73,081Additional
                paid-in capital
            
            
            8,050,093
            
            
            8,050,093Accumulated
                other comprehensive income (loss)Translation
                adjustment
            
            
            (484,923
            )
            
            (395,447
            )Year
                end accumulated deficit
            
            
            (4,126,158
            )
            
            (3,770,368
            )**Total
                stockholders' equity (deficit)**
            
            
            **3,512,093**
            
            
            **3,957,359****Total
                Liabilities and Stockholders' Equity**
            
            
            **13,948,071**
            
            
            **14,331,469**




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




- 1 -




**SES
      SOLAR INC. AND SUBSIDIARIES**


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


**(in
      $)**




**For the Three Months**
            
            **For the Nine Months****Ended September 30,**
            
            **Ended September 30,****2008**
            
            **2007**
            
            **2008**
            
            **2007****(unaudited)**
            
            **(unaudited)**
            
            **(unaudited)**
            
            **(unaudited)**Revenue:Revenue
            
            
            **1,569**
            
            
            **90,240**
            
            
            **34,161**
            
            
            **1,255,275**Cost
                of goods sold (exclusive of depreciation shown separately
                below)
            
            
            **1,335**
            
            
            **69,524**
            
            
            **3,092**
            
            
            **1,039,496**Costs
                and Expenses:Personnel
            
            
            123,714
            
            
            91,433
            
            
            405,957
            
            
            263,597Rent
                and leases expenses
            
            
            36,653
            
            
            34,184
            
            
            112,956
            
            
            99,336Research
                & Development
            
            
            58,952
            
            
            152,738
            
            
            279,539
            
            
            322,174Other
                General & Administrative Expenses
            
            
            267,805
            
            
            340,821
            
            
            673,163
            
            
            832,888Depreciation
                and amortization
            
            
            16,527
            
            
            14,264
            
            
            50,829
            
            
            39,005Total
                costs and expenses
            
            
            **503,651**
            
            
            **633,440**
            
            
            **1,522,444**
            
            
            **1,557,000**Other
                Income and Expense:Interest
                expense
            
            
            (102,523
            )
            
            (20,953
            )
            
            (322,520
            )
            
            (49,959
            )Interest
                income
            
            
            7,567
            
            
            44,808
            
            
            46,756
            
            
            140,096Foreign
                exchange gain/(loss)
            
            
            (258,030
            )
            
            188,274
            
            
            79,493
            
            
            162,705Total
                other income (loss)
            
            
            **(352,986**
            )
            
            **212,129**
            
            
            **(196,271**
            **)**
            
            **252,842**Income
                (loss) from continuing operations before taxes
            
            
            (856,403
            )
            
            (400,595
            )
            
            (1,687,646
            )
            
            (1,088,379
            )Income
                taxes
            
            
            0
            
            
            0
            
            
            0
            
            
            0Net
                income (loss) from continuing operations
            
            
            **(856,403**
            )
            
            **(400,595**
            **)**
            
            **(1,687,646**
            **)**
            
            **(1,088,379**
            **)**Income
                (loss) from discontinued operations before taxes (Note 9)
            
            
            0
            
            
            0
            
            
            1,331,856
            
            
            0Income
                taxes
            
            
            0
            
            
            0
            
            
            0
            
            
            0Net
                income (loss) from discontinued operations
            
            
            0
            
            
            0
            
            
            1,331,856
            
            
            0Net
                income (loss)
            
            
            **(856,403**
            **)**
            
            **(400,595**
            **)**
            
            **(355,790**
            **)**
            
            **(1,088,379**
            **)**Other
                Comprehensive loss/income:Translation
                adjustment
            
            
            160,820
            
            
            (99,100
            )
            
            (89,476
            )
            
            (85,553
            )Comprehensive
                income (loss)
            
            
            **(695,583**
            **)**
            
            **(499,695**
            **)**
            
            **(445,266**
            **)**
            
            **(1,173,932**
            **)**Basic
                and diluted weighted average shares
            
            
            73,081,168
            
            
            52,121,504
            
            
            73,081,168
            
            
            50,002,908Basic
                and diluted net income (loss) per share from continuing
                operations
            
            
            **(0.012**
            **)**
            
            **(0.008**
            **)**
            
            **(0.023**
            **)**
            
            **(0.022**
            **)**Basic
                and diluted net income (loss) per share from discontinuing
                operations
            
            
            **0**
            
            
            **0**
            
            
            **0.018**
            
            
            **0**Basic
                and diluted net income (loss) per share
            
            
            **(0.012**
            **)**
            
            **(0.008**
            **)**
            
            **(0.005**
            **)**
            
            **(0.022**
            **)**





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 -




**SES
      SOLAR INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**(in
      $)**




**Nine Months Ended September 30,****2008**
            
            **2007****(unaudited)**
            
            **(unaudited)**Cash
                Flows from Operating Activities:Net
                income (loss)
            
            
            (355,790
            )
            
            (1,088,379
            )Adjustments
                to reconcile net loss to cash used in operating
                activities:Depreciation
                and amortization
            
            
            152,407
            
            
            39,005Gain
                on sale of Solar Plant
            
            
            (1,185,704
            )
            
            0Changes
                in operating assets and liabilities:(Increase)
                decrease in:Receivables,
                including Due from Related Party
            
            
            32,678
            
            
            (20,498
            )Inventory
            
            
            (1,182,401
            )
            
            0Other
                current assets
            
            
            311,550
            
            
            (83,374
            )Deferred
                Expenses
            
            
            180,000
            
            
            180,000Increase
                (decrease) in:Accounts
                payable and accrued expenses
            
            
            8,840
            
            
            (114,566
            )Billings
                in excess of cost and estimated earnings
            
            
            833,879
            
            
            440,455**Net
                cash used in operating activities**
            
            
            (1,204,541
            )
            
            (647,357
            )Cash
                Flows from Investing Activities:Proceeds
                on sale of Solar Plant
            
            
            5,065,460
            
            
            0Property,
                plant and equipment
            
            
            (7,784,613
            )
            
            (1,916,939
            )Advance
                payments for machinery
            
            
            0
            
            
            (369,738
            )**Net
                cash used in investing activities**
            
            
            (2,719,153
            )
            
            (2,286,677
            )Cash
                Flows from Financing Activities:Proceeds
                from issuance of long-term debt
            
            
            8,341,781
            
            
            (417,035
            )Repayment
                of long-term debt
            
            
            (6,554,015
            )
            
            960,102**Net
                cash provided by financing activities**
            
            
            **1,787,766**
            
            
            **543,067**Increase
                (decrease) in cash and cash equivalents
            
            
            (2,135,928
            )
            
            (2,390,967
            )Effect
                of exchange rate changes on cash
            
            
            (36,133
            )
            
            (99,426
            )Cash
                and cash equivalents, beginning of the quarter
            
            
            3,429,033
            
            
            6,016,666Cash
                and cash equivalents, end of the quarter
            
            
            1,256,972
            
            
            3,526,273Supplemental
                cash flow informationCash
                paid for interest
            
            
            322,520
            
            
            49,959Supplemental
                disclosure of non-cash operating and investing activitiesNon
                cash transaction, Property, plants and equipment in account
                payable
            
            
            748,924
            
            
            0




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




- 3 -




**SES
      SOLAR INC. AND SUBSIDIARIES**


**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.





As
      of
      July 31, 2008, the Company formed a new Swiss wholly owned subsidiary, SES
      Prod
      SA (“SES Prod”), also located in Geneva. 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, SES Switzerland’s primary activity
      will be managing the Company’s manufacturing facility.





**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 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 primary markets
      for
      solar photovoltaic cells. Costs incurred in manufacturing prototype panels
      have
      been expensed as research and development costs.




SES
      USA
      does not believe it can achieve profitability until development, implementation,
      and commercialization of its 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 subsidiaries, SES Switzerland and SES Prod.
      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 -





**SES
      SOLAR INC. AND SUBSIDIARIES**


**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 subsidiaries, SES Switzerland and SES Prod. 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 U.S. 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$
            
            
            1.05588
            
            
            1.19894




**2008**
            
            **2007**Balance
                Sheet period-end rates
            
            CHF
            
            CHF$
            
            
            1.09672
            
            
            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
      nine months ended September 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 nine months ended
      September 30, 2008 also does not include the effect of warrants outstanding
      for
      the period because their exercise price exceeded the average price for the
      three
      and nine months ended September 30, 2008.




**Nine Months Ended September 30,****2008**
            
            **2007**Basic
                Weighted average shares outstanding
            
            
            73,081,168
            
            
            50,002,908Diluted
                weighted average shares outstanding
            
            
            73,081,168
            
            
            50,002,908





- 5 -




**SES
      SOLAR INC. AND SUBSIDIARIES**


**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


**(Unaudited)**





**Note** : Due
      to
      the net loss, the calculation of the effect of common stock equivalents due
      to
      issuance of warrants is excluded because of anti-dilution. The number of shares
      of common stock listed as beneficially owned by one stockholder includes
      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 September 30, 2008 and December 31, 2007 balance sheet dates, the
      warrants were not yet exercised. Also, they are not included in the computation
      of diluted loss per share because their effect was anti-dilutive.




*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
      nine months ended September 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 has 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 -


**SES
      SOLAR INC. AND SUBSIDIARIES**


**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 -




**SES
      SOLAR INC. AND SUBSIDIARIES**


**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


**(Unaudited)**





**5.**
            **Inventory**




Inventory
      is summarized as follows:




**Nine**
              **Months Ended**
              **September**
              **30,****2008**
            
            **Twelve**
              **Months Ended**
              **December 31,**
              **2007**$$Raw
                Materials and Others
            
            
            1,301,803
            
            
            97,159Finished
                Goods
            
            
            184,958
            
            
            174,635**Total
                Inventory**
            
            
            **1,486,761**
            
            
            **271,794**








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




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





Long-Term
                Loan
            
            **Nine**
              **Months Ended**
              **September 30,**
              **2008**
            
            **Twelve**
              **Months Ended**
              **December 31,**
              **2007**$$Banque
                Cantonale de Genève
            
            
            6,243,107
            
            
            7,563Geneva
                (Switzerland) State Department of Energy
            
            
            1,795,782
            
            
            0**8,038,889**
            
            
            **7,563**





- 8 -




**SES
      SOLAR INC. AND SUBSIDIARIES**


**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


**(Unaudited)**





On
      November 6, 2003, SES Switzerland received a loan from the Geneva (Switzerland)
      State Department of Energy (“ScanE”) of up to CHF1,000,000 ($911,810). The loan
      bears interest at a rate of 4%. SES Switzerland used CHF969,470 ($883,972)
      of
      this loan as of September 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
      ($911,810) 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 ($911,810) on the
      manufacturing facility. The loan will be reimbursed in 20-equal annual
      installments of CHF73,581 (approximately $69,688).




- 9 -




**SES
      SOLAR INC. AND SUBSIDIARIES**


**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


**(Unaudited)**





On
      September 18, 2007, we signed a six month credit facility for CHF4,500,000
      ($4,103,144) 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 had a revolving credit line with UBS in the principal amount
      of
      CHF3,000,000 ($2,735,429) used mainly to cover short-term cash needs. The
      revolving credit line was secured by short-term deposits denominated in US
      dollars with UBS, amounting to $3,155,000. The credit line bears interest at
      4.75%. On August 13, 2008, $ 3,000,000 of the short-term deposit were used
      to
      offset the credit line. The balance of the credit facility was CHF0 ($0) as
      of
      September 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
      ($4,376,687), 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 ($7,750,383). 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 CHF6,846,938 ($6,243,107) of the loan
      as
      of September 30, 2008 and CHF8,513 ($7,563) as of December 31, 2007. The loan
      bears interest at a rate of 3.75% and is secured by a second lien exclusive
      mortgage certificate of CHF9,000,000 ($8,206,288) on the manufacturing
      facility.




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




*Operating
      Leases* -
      Lease expenses for the nine months ended September 30, 2008 and 2007 were
      $112,956 and $99,336, respectively.




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




**Operating**
              **Leases****$**2008
            
            
            4,2392009
            
            
            14,192Thereafter
            
            
            —**Total**
            
            
            **18,431**





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 ($49,790) 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 Härkingen,
      Switzerland. The monthly fixed rent is CHF7,232 (approximately $6,849). 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.




- 10 -




**SES
      SOLAR INC. AND SUBSIDIARIES**


**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


**(Unaudited)**





The
      following are the lease commitments:




**Use of Land****$**2008
            
            
            17,0632009
            
            
            68,2522010
            
            
            68,2522011
            
            
            68,2522012
            
            
            68,252Thereafter
            
            
            3,651,456**Total**
            
            
            **3,941,527**




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
      September 30, 2008, the Company has an outstanding purchase order of EUR448,600
      ($648,169) 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 ($388,901) for the purchase of this machine. The
      balance due will be paid upon delivery of the machine. At September 30, 2008,
      the Company signed purchase agreements for the building of the new plant for
      CHF6,979,077($6,363,591). An advance payment of CHF3,138,500($2,861,715) was
      made on October 1, 2008, the remaining amount will be paid at the end of the
      construction planned before year end.




**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 began selling electricity produced by its photovoltaic power station
      (the “Solar Plant”) on the roof of its new manufacturing facility 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. 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 is 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 nine-month period ended September
      30, 2008 was $1,331,856 (gain on disposal of $1,185,704, revenue of $247,730
      and
      expenses of $101,578). No income was recorded for the three-month period ended
      September 30, 2008. In 2007 there was no income or expense from discontinued
      operations.





**Nine months ended September 30, 2008**Revenue
            
            
            247,730Operating
                expenses
            
            
            (101,578
            )Gain
                (loss) on sale
            
            
            1,185,704Income
                tax (expense) recovery
            
            
            -**Net
                earnings (loss) from discontinued operations**
            
            
            **1,331,856**





**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 nine-month period ended September 30, 2008, no stock purchase warrants
      were
      exercised.




- 11 -






**SES
      SOLAR INC. AND SUBSIDIARIES**


**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


**(Unaudited)**





Warrant
      transactions consisted of the following during the quarter ended September
      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 September 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 paid and recorded
      initially the total amount as deferred expense and amortized the amount over
      the
      24 months of the consulting agreement, which ended on September
      2008.




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




Other
      than as disclosed herein, no major events have occurred since September 30,
      2008.




- 12 -





**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. As used herein, the terms “company,” “SES
      USA,” “our,” “we,” and “us” refer to SES Solar Inc. and its subsidiaries on a
      consolidated basis, and the terms “SES Switzerland” and “SES Production” refer
      to our wholly owned subsidiaries, unless the context requires
      otherwise.*




SES
      Solar
      Inc. is a Delaware corporation based in Geneva, Switzerland engaged in the
      business of designing, engineering, producing and installing solar modules
      and
      solar tiles for generating electricity. We have developed a new assembly
      technology for solar panels that allows 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**




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.




We
      have
      developed and patented a new assembly technology for solar 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
      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
      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 in December
      2008 and commence production and sale of our new products in the first or second
      quarter of 2009.




To
      date,
      we have generated only limited revenue from the sale of solar 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, we generated revenue from the sale of electricity
      produced by our Solar Plant. As of June 30, 2008, we no longer expect to
      generate such revenue from the sale of electricity, as we sold the Solar Plant
      to a third party in June 2008.





Once
      our
      manufacturing capabilities are operational, we will have available a product
      line consisting of our SunTechTile® and SwissTile® ** solar
      tiles and, in the future, our high power rated solar modules. Historically,
      we
      have relied upon third-party vendors to supply us with component parts, such
      as
      PV cells, in order to manufacture and produce our products. As a result of
      our
      new manufacturing facility and our proprietary technology for module assembly,
      we believe that we are positioning ourselves to manufacture and produce our
      solar products on a much larger scale and one that is 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
      modules and solar tiles using an early stage technology. We anticipate incurring
      additional 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 the costs incurred in
      manufacturing prototypes have been expensed to date. We do not believe that
      we
      can achieve profitability until development, implementation and
      commercialization of our solar products manufactured through our new assembling
      processes are operational.




We
      believe the demand for solar modules and solar tiles will ultimately 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.




- 13 -




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 2.9GW 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 nine months ended September 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 $34,161 and incurred costs of goods sold of $3,092. The
      decrease in revenue and corresponding decrease in cost of goods sold over this
      period 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. The Solar Plant, which is housed
      on the roof of our manufacturing facility and operational since December 2007,
      generated revenue of $247,730 through June 30, 2008. As of the end of June
      2008,
      we no longer generate such 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. During the
      remainder of 2008 and the first half of 2009, management anticipates total
      capital expenditures of approximately $18 million for the new manufacturing
      facility, of which we have already financed $10.5 million, and $3.5 million
      for
      the assembly line and related machinery, of which we have already financed
      $389,000. We may also require up to an additional $11 million during the
      next 12 months to finance the purchase of raw materials to be used in the
      production of 2 megawatts of solar tiles. We anticipate financing the remaining
      capital expenditures on the facility and assembly line through available cash,
      loans and lines of credit, but we will likely also need additional financing
      in
      order to purchase such raw materials and expand our operations once our
      manufacturing facility is fully operational. We will also require enhanced
      liquidity in order to secure long-term silicon supply contracts. We do not
      have
      any current agreements in place to secure such financing.





We
      entered into a credit facility of CHF4,500,000 ($4,13,144) on September 18,
      2007
      with the Geneva (Switzerland) State Department of Energy (“ScanE”). The proceeds
      were received on October 1, 2007 and became due on March 17, 2008. On June
      20,
      2008, we announced the sale of our Solar Plant for gross proceeds of
      CHF5,716,788 ($5,496,383), inclusive of VAT. We 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.




- 14 -




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**




**September 30,**
            
            **December 31,***Balance Sheets*
            
            **2008**
            
            **2007****(unaudited)**(in
                $)Total
                current assets
            
            
            3,204,845
            
            
            4,472,884Total
                long-term assets
            
            
            10,743,226
            
            
            9,858,585Total
                current liabilities
            
            
            2,397,089
            
            
            10,366,547Total
                long-term liabilities
            
            
            8,038,889
            
            
            7,563Total
                liabilities and stockholders' equity
            
            
            13,948,071
            
            
            14,331,469




**For the Three Months Ended****Statement of Operations**
            
            **September 30,****(unaudited)**
            
            **2008**
            
            **2007**(in $)Total
                revenues
            
            
            1,569
            
            
            90,240Total
                cost of goods sold (exclusive of depreciation shown separately
                below)
            
            
            (1,335
            )
            
            (69,524
            )Personnel
            
            
            123,714
            
            
            91,433Rent
                and lease expenses
            
            
            36,653
            
            
            34,184Research
                and development
            
            
            58,952
            
            
            152,738Depreciation
                and amortization
            
            
            16,527
            
            
            14,264General
                and administrative expenses
            
            
            267,805
            
            
            340,821Interest
                expense
            
            
            (102,523
            )
            
            (20,953
            )Interest
                income
            
            
            7,567
            
            
            44,808Other
                gain
            
            
            0
            
            
            0Foreign
                exchange gain (loss)
            
            
            (258,030
            )
            
            188,274Total
                other income
            
            
            (352,986
            )
            
            212,129Taxes
            
            
            0
            
            
            0Net
                income (loss) from continuing operations
            
            
            (856,403
            )
            
            (400,595
            )Income
                from discontinued operations
            
            
            0
            
            
            0Taxes
            
            
            0
            
            
            0Net
                income (loss) from discontinued operations
            
            
            0
            
            
            0Net
                income (loss)
            
            
            (856,403
            )
            
            (400,595
            )Other
                comprehensive income: translation adjustment
            
            
            160,820
            
            
            (99,100
            )Comprehensive
                income (loss)
            
            
            (695,583
            )
            
            (499,695
            )




- 15 -




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




**Net
      Income (Loss)**




Our
      net
      loss for the three months ended September 30, 2008 was $856,403 as compared
      to a
      net loss of $400,595 for the three months ended September 30, 2007. The net
      loss
      during the period ended September 30, 2008 was due primarily to the foreign
      exchange loss of $258,030 resulting from the increase in the currency
      exchange rate between the Swiss franc and the US dollar, a decrease of $37,241
      in interest income due to decreased time deposits and an increase of $81,570
      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 September 30, 2008, we
      generated total revenue of $1,569 as compared to $90,240 for the three months
      ended September 30, 2007.





Cost
      of
      goods sold for the three months ended September 30, 2008 was $1,335 compared
      to
      cost of goods sold of $69,524 for the three months ended September 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 September 30, 2008 and 2007 were $503,651
      and $633,440, respectively, which represents a 20% decrease. Personnel,
      rent, research and development, general and administrative expenses, and
      depreciation and amortization expenses constitute the components of our
      operating expenses.




The
      overall decrease is explained by a decrease of $93,786 in research and
      development expense and a decrease of $73,016 in general and administrative
      expenses, including expenses associated with the preparation and SEC compliance
      of various public filings, partially offset by an increase of $32,281 in
      personnel costs to develop the new activities of our operating subsidiary and
      an
      increase of $2,263 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 $102,523 for the three months ended September 30, 2008
      compared with $20,953 for the three months ended September 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 September 30, 2008 was $7,567 compared to
      $44,808 for the three months ended September 30, 2007. The interest income
      earned during the period was received from time deposits.





Foreign
      exchange loss for the three months ended September 30, 2008 was $258,030
      compared to foreign exchange gain of $188,274 for the three months ended
      September 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 had been
      operational since the end of 2007, and as of January 2008, generated revenue
      through the sale of electricity. 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.




- 16 -




**Statement of Operations**
            
            **For the Nine Months Ended**
              **September 30,****(unaudited)**
            
            **2008**
            
            **2007**in
                $Total
                revenues
            
            
            34,161
            
            
            1,255,275Total
                cost of goods sold (exclusive of depreciation shown separately
                below)
            
            
            (3,092
            )
            
            (1,039,496
            )Personnel
            
            
            405,957
            
            
            263,597Rent
                and lease expenses
            
            
            112,956
            
            
            99,336Research
                and development
            
            
            279,539
            
            
            322,174Depreciation
                and amortization
            
            
            50,829
            
            
            39,005General
                and administrative expenses
            
            
            673,163
            
            
            832,888Interest
                expense
            
            
            (322,520
            )
            
            (49,959
            )Interest
                income
            
            
            46,756
            
            
            140,096Foreign
                exchange gain (loss)
            
            
            79,493
            
            
            162,705Total
                other income (expense)
            
            
            (196,271
            )
            
            252,842Taxes
            
            
            0
            
            
            0Net
                income (loss) from continuing operations
            
            
            (1,687,646
            )
            
            (1,088,379
            )Income
                (loss) from discontinued operations
            
            
            1,331,856
            
            
            0Taxes
            
            
            0
            
            
            0Net
                income (loss) from discontinued operations
            
            
            1,331,856
            
            
            0Net
                income (loss)
            
            
            (355,790
            )
            
            (1,088,379
            )Other
                comprehensive income (loss): translation adjustment
            
            
            (89,476
            )
            
            (85,553
            )Comprehensive
                income (loss)
            
            
            (445,266
            )
            
            (1,173,932
            )




**RESULTS
      OF OPERATIONS - COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 2008 AND
      2007**





**Net
      Income (Loss)**




Our
      net
      loss for the nine months ended September 30, 2008 was $355,790 as compared
      to a
      net loss of $1,088,379 for the nine months ended September 30, 2007. The net
      loss during the period ended September 30, 2008 was due primarily to an increase
      of $272,561 in interest expense resulting from increased borrowings, a
      decrease of $83,212 in foreign exchange gain due to the increase in the currency
      exchange rate between the Swiss franc and the US dollar and a decrease of
      $93,340 in interest income due to decreased time deposits, offset by the
      $1,185,704 gain generated from the sale of our Solar Plant.





**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 September 30, 2008,
      we
      generated total revenue of $34,161 as compared to $1,255,275 for the nine months
      ended September 30, 2007.





Cost
      of
      goods sold for the nine months ended September 30, 2008 was $3,092 compared
      to
      cost of goods sold of $1,039,496 for the nine months ended September 30,
      2007.





As
      noted
      above, 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.




- 17 -


**Operating
      Expenses**





Operating
      expenses for the nine months ended September 30, 2008 were $1,522,444 compared
      to operating expenses of $1,557,000 for the nine months ended September 30,
      2007. Personnel, rent, research and development, general and administrative,
      and
      depreciation and amortization expenses constitute the components of our
      operating expenses. The slight decrease in operating expenses is attributable
      to
      an increase in personnel costs to develop the new activities of our subsidiary
      (increase of $142,360), offset by a decrease in general and administrative
      expenses associated with preparation and SEC compliance of various public
      filings (decrease of $159,725). We expect that as we continue to implement
      our
      business plan these expenses will increase accordingly.





**Other
      Income (Expense)**




Interest
      expense increased to $322,520 for the nine months ended September 30, 2008
      as
      compared to $49,959 for the nine months ended September 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 nine months ended September 30, 2008 was $46,756 as compared
      to
      $140,096 for the period ended September 30, 2007. The interest income earned
      during the period was received from time deposits.





Foreign
      exchange gain for the nine months ended September 30, 2008 was $79,493 compared
      to foreign exchange gain of $162,705 for the nine months ended September 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, had been operational since the
      end of 2007, and from January 2008, generated revenue through the sale of
      electricity. For the nine months ended September 30, 2008, revenue generated
      from such sales totaled $247,730. The one time net gain generated by the sale
      of
      our Solar Plant was $1,185,704. This amount mostly covers research and
      development costs of the Solar Plant that had been previously expensed. 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
      September 30, 2008, we had working capital of $807,756 compared to $1,558,361
      as
      of September 30, 2007, and our cash and cash equivalents decreased to $1,256,972
      as of September 30, 2008 compared to $3,526,273 as of September 30, 2007. This
      decrease in working capital is the result partially of increased billings in
      excess of cost and estimated earnings and accounts payable over the comparable
      periods. The decrease in available cash and cash equivalents is attributable
      to
      repayment of short-term loans.




As
      of
      September 30, 2008, we had accounts payable of $1,073,840 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
      September 30, 2008, we had short-term debt in the amount of $0 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 $911,810 was made on November 3, 2003 and carries a principal
      balance of $883,972. 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 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 ($911,810) credit facility from
      ScanE to finance the construction of our new manufacturing facility. Release
      of
      the loan proceeds was contingent upon our satisfying certain conditions
      precedent, which we did as of November 13, 2007. As of January 8, 2008, we
      had
      utilized the full amount of this loan, which bears a fixed annual interest
      rate
      of 4%.




- 18 -


A
      new six
      month credit facility of CHF4,500,000 ($4,103,144) 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, we announced the sale of our Solar Plant on the roof of its manufacturing
      facility.  We 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 in the principal amount
      of
      CHF3,000,000 ($2,735,429) used mainly to cover short-term cash needs. The
      revolving credit line was secured by short-term deposits denominated in US
      dollars with UBS, amounting to $3,155,000. The credit line bears interest at
      4.75%. On August 13, 2008, $3,000,000 of the short-term deposit was used to
      offset the credit line. The balance of the credit facility was CHF0 ($0) as
      of
      September 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 $4,376,687 (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
      ($7,750,383). The amended loan amount must be drawn down no later than the
      date
      of completion of the construction or December 11, 2008. We used $6,243,107
      (CHF6,846,938) of this financing as of September 30, 2008, and $7,563 (CHF8,513)
      as of December 31, 2007. The loan bears interest at a rate of 3.75% and is
      secured by a second lien exclusive mortgage certificate of CHF9,000,000
      ($8,206,288) 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 our manufactured solar panels
      or modules, when available, and solar tiles and the related engineering services
      required to design and install the same 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, if any, 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 $1,204,541 for the nine months ended September
      30, 2008 compared to $647,357 of net cash used in operating activities for
      the
      nine months ended September 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 $393,424 due
      to
      advances received for new projects. Additionally, inventory of our new PV
      SwissTile® products increased by $1,182,401. Operating activities also include a
      net gain of $1,185,704 from the sale of the Solar Plant.




**Investing
      Activities**




Net
      cash
      used in investing activities was $2,719,153 during the nine months ended
      September 30, 2008 as compared to $2,286,677 used in investing activities during
      the nine months ended September 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 $5,065,460 and the use of cash to pay creditors for the
      construction of the building and plant in the amount of $7,784,613.




During
      the remainder of 2008 and the first half of 2009, management anticipates total
      capital expenditures of approximately $18 million for the new manufacturing
      facility, of which we have already financed $10.5 million, and $3.5 million
      for
      the assembly line and related machinery. In addition, we may require during
      the
      next 12 months up to an additional $11 million to finance the purchase of raw
      materials to be used in the production of 2 megawatts of solar
      tiles.




- 19 -


**Financing
      Activities**




Net
      cash
      provided by financing activities was $1,787,766 for the nine months ended
      September 30, 2008 as compared to $543,067 for the nine months ended September
      30, 2007.




The
      increase in financing activities is due to 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 $3,161,756 and the reimbursement of our line
      of
      credit with UBS for $1,373,990.





**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
      September 30, 2008, we had an outstanding purchase order of EUR448,600
      ($648,169), using the exchange rate of 0.6921 as of  September 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 ($388,901) 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 September 30, 2008 that have materially
      affected, or are reasonably likely to materially affect, the internal control
      over financial reporting.




- 20 -


**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.




- 21 -





**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:
                  November 7, 2008
              
              SES
                  SOLAR INC.
                (Registrant)By:
              /s/
                  SANDRINE CRISAFULLISandrine
                  Crisafulli
                Chief
                  Financial Officer and Chief Operating Officer
                (principal
                  financial officer and principal accounting
                  officer)




- 22 -