UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549







FORM 10-Q




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




FOR
THE QUARTERLY PERIOD ENDED MARCH 31, 2009




OR




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




FOR
THE TRANSITION PERIOD FROM _______ to _______




COMMISSION
FILE NUMBER 000-21571









SES SOLAR
INC.





(EXACT
NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)




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




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


(ADDRESS
OF PRINCIPAL EXECUTIVE OFFICES)





+41-22-884-1484


(REGISTRANT'S
TELEPHONE NUMBER, INCLUDING AREA CODE)




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




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





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




Large
accelerated filer  ̈    Accelerated
filer ̈    Non-accelerated filer   ̈    Smaller
reporting companyþ




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 May
14, 2009 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 OF FINANCIAL CONDITION ANDRESULTS
      OF OPERATIONS
                    
                    12ITEM
      3.
                    QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET
      RISK
                    
                    19ITEM
      4T.
                    CONTROLS AND PROCEDURES
                    
                    19PART
      II
                    OTHER INFORMATION
                    
                    20ITEM
      2.
                    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS
                    
                    20ITEM
      6.
                    EXHIBITS
                    
                    21


Table of
Contents




PART
I – FINANCIAL
INFORMATION




ITEM
1. FINANCIAL
STATEMENTS




SES
SOLAR INC. AND SUBSIDIARY


CONSOLIDATED
BALANCE SHEETS


(in $, except per share
amounts)




March 31,
                                2009
                              
                              
                              December 31,
                                2008(unaudited)ASSETS
      (in $)Current
      Assets:Cash
      and cash equivalents
                              
                              
                              404,707
                              
                              
                              
                              765,694Receivables,
      net of allowance for doubtful accounts of $0 for the periods ended 2009
      and 2008
                              
                              
                              159,049
                              
                              
                              
                              12,001Due
      from related party
                              
                              
                              83,214
                              
                              
                              
                              90,573Inventory
                              
                              
                              413,371
                              
                              
                              
                              1,665,699Other
      current assets
                              
                              
                              279,329
                              
                              
                              
                              424,186Total
      current assets
                              
                              
                              1,339,670
                              
                              
                              
                              2,958,153Long-Term
      Assets:Deferred
      expense
                              
                              
                              0
                              
                              
                              
                              0Advance
      payments for machinery
                              
                              
                              355,496
                              
                              
                              
                              379,446Total
      other long-term assets
                              
                              
                              355,496
                              
                              
                              
                              379,446Property,
      Plan and Equipment, at cost,
                              
                              
                              561,498
                              
                              
                              
                              600,389Building
      construction
                              
                              
                              13,823,751
                              
                              
                              
                              13,449,460Less
      accumulated depreciation and amortization
                              
                              
                              (418,067
                              )
                              
                              
                              (429,351
                              )Total
      fixed assets
                              
                              
                              13,967,182
                              
                              
                              
                              13,620,498Total
      long-term assets
                              
                              
                              14,322,678
                              
                              
                              
                              13,999,944Total
      assets
                              
                              
                              15,662,348
                              
                              
                              
                              16,958,097LIABILITIES
      AND STOCKHOLDERS' EQUITY (DEFICIT)Current
      Liabilities:Short-term
      loan
                              
                              
                              4,382,097
                              
                              
                              
                              4,769,635Construction
      loan
                              
                              
                              6,007,566
                              
                              
                              
                              5,137,555Accounts
      payable
                              
                              
                              727,053
                              
                              
                              
                              526,168Billings
      in excess of cost and estimated earnings
                              
                              
                              39,372
                              
                              
                              
                              1,448,590Total
      current liabilities
                              
                              
                              11,156,088
                              
                              
                              
                              11,881,948Long-Term
      Liabilities:Loan
      payable
                              
                              
                              843,769
                              
                              
                              
                              918,389Construction
      loan
                              
                              
                              810,715
                              
                              
                              
                              882,413Total
      long-term liabilities
                              
                              
                              1,654,484
                              
                              
                              
                              1,800,802Stockholders'
      Equity:Common
      stock, $0.001 par value;
                              
                              
                              73,081
                              
                              
                              
                              73,081100,000,000
      shares authorized;73,081,168
      shares issued and outstandingAdditional
      paid-in capital
                              
                              
                              8,050,093
                              
                              
                              
                              8,050,093Accumulated
      other comprehensive income (loss)Translation
      adjustment
                              
                              
                              (383,703
                              )
                              
                              
                              (603,005
                              )Year
      end accumulated deficit
                              
                              
                              (4,871,199
                              )
                              
                              
                              (4,244,822
                              )Less:
      Cost of common stock in treasury, 67,000 shares
                              
                              
                              (16,496
                              )
                              
                              
                              0Total
      stockholders' equity (deficit)
                              
                              
                              2,851,776
                              
                              
                              
                              3,275,347Total
      Liabilities and Stockholders' Equity
                              
                              
                              15,662,348
                              
                              
                              
                              16,958,097




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


1
 Table of
Contents


SES
SOLAR INC. AND SUBSIDIARY


CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS


(in
$, except per share amounts)





Three Months Ended March
31,2009
                
                2008(unaudited)
                
                (unaudited)Revenue:Revenue
                
                
                1,022,416
                
                
                0Cost
      of goods sold (exclusive of depreciation shown separately
      below)
                
                
                (706,912
                )
                
                0Costs
      and Expenses:Personnel
                
                
                154,644
                
                
                138,427Rent
      and Leases Expenses
                
                
                46,297
                
                
                36,751Research
      and Development
                
                
                61,039
                
                
                152,832Other
      general and administrative
                
                
                155,144
                
                
                201,042Depreciation
      and amortization
                
                
                23,690
                
                
                66,656Total
      costs and expenses
                
                
                440,814
                
                
                595,708Other
      Income and Expense:Interest
      expense
                
                
                (8,636
                )
                
                (118,143
                )Interest
      income and other
                
                
                0
                
                
                22,645Foreign
      Exchange Gain (Loss)
                
                
                (492,431
                )
                
                395,543Total
      Other Income (Loss)
                
                
                (501,067
                )
                
                300,045Loss
      before taxes from continuing operations
                
                
                (626,377
                )
                
                (295,663)
                )Income
      taxes
                
                
                0
                
                
                0Net
      Income (Loss) from continuing operations
                
                
                (626,377
                )
                
                (295,663
                )Income
      from discontinued operations before taxes
                
                
                0
                
                
                83,138Income
      taxes
                
                
                0
                
                
                0Net
      Income from discontinued operations before taxes
                
                
                0
                
                
                83,138Net
      Income (Loss)
                
                
                (626,377)
                
                
                (212,525)Other
      Comprehensive Loss/Income:Translation
      adjustment
                
                
                219,302
                
                
                (352,703
                )Comprehensive
      loss
                
                
                (407,075
                )
                
                (565,228
                )Basic
      and diluted Weighted Average Shares
                
                
                73,081,168
                
                
                73,081,168Basic
      and diluted Net Income (Loss) per Share from continuing
      operations
                
                
                (0.009
                )
                
                (0.004
                )Basic
      and diluted Net Income (Loss) per Share from discontinuing
      operations
                
                
                0
                
                
                0.001Basic
      and diluted Net Loss Per Share
                
                
                (0.009
                )
                
                (0.003
                )




For
2008 amounts have been reclassified to reflect discontinued
operations.





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


2
 Table of
Contents


SES
SOLAR INC. AND SUBSIDIARY


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(in
$, except per share amounts)





Three Months Ended March
31,2009
                
                2008(unaudited)
                
                (unaudited)Cash
      Flows from Operating Activities:Net
      loss
                
                
                (626,377
                )
                
                (212,525
                )Adjustments
      to reconcile net loss to cash used in operating
activities:Depreciation
      and amortization
                
                
                23,690
                
                
                66,656Changes
      in operating assets and liabilities:(Increase)
      decrease in:Receivables,
      including Due from Related Party
                
                
                (148,578
                )
                
                (48,324
                )Inventory
                
                
                1,121,185
                
                
                0Other
      current assets
                
                
                110,823
                
                
                (57,370
                )Deferred
      Expenses
                
                
                0
                
                
                60,000Increase
      (decrease) in:Accounts
      payable and accrued expenses
                
                
                46,911
                
                
                90,162Billings
      in excess of cost and estimated earnings
                
                
                (1,364,533
                )
                
                (10,157
                )Net
      cash used in operating activities
                
                
                (836,879
                )
                
                (111,558
                )Cash
      Flows from Investing Activities:Property,
      plants and equipment
                
                
                (1,227,464
                )
                
                (3,772,295
                )Advance
      payments for machinery
                
                
                0
                
                
                0Net
      cash used in investing activities
                
                
                (1,227,464
                )
                
                (3,772,295
                )Cash
      Flows from Financing Activities:Treasury
      shares
                
                
                (16,496
                )
                
                0Repayment/Proceed
      of loans
                
                
                1,292,279
                
                
                3,785,988Bank
      loan
                
                
                0
                
                
                433,590Net
      cash provided by financing activities
                
                
                1,275,783
                
                
                4,219,578Increase
      (decrease) in cash and cash equivalents
                
                
                (788,560)
                
                
                335,725Effect
      of exchange rate changes on cash
                
                
                427,573
                
                
                (365,389
                )Cash
      and cash equivalents, beginning of the quarter
                
                
                765,694
                
                
                3,429,033Cash
      and cash equivalents, end of the quarter
                
                
                404,707
                
                
                3,399,369Supplemental
      cash flow informationCash
      paid for interest
                
                
                8,636
                
                
                118,143Supplemental
      disclosure of non-cash operating and investing activitiesNon
      cash transaction, Property, plants and equipment in account
      payable
                
                
                354,345
                
                
                144,970




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


3
 Table of
Contents


SES
SOLAR INC. AND SUBSIDIARY


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)




1.
Organization and Nature of Operations




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




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




The
Company has experienced losses from operations and anticipates incurring losses
in the near future. The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. The Company incurred
a net loss of ($626,377) and a negative cash flow from operations of ($836,879),
and had a working capital deficiency of ($9,803,018) at March 31, 2009. These
matters raise substantial doubt about its ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.





The
Company has financed the construction of the new manufacturing facility with so
called construction loans (Note 6). The Company intends to convert these
construction loans into a mortgage immediately after completion of the facility.
Since the manufacturing facility has not been completed as of March 31, 2009, no
construction loans have been converted into mortgages.





The
Company's ability to continue its operations and market and sell its products
and services will depend on the Company's ability to convert the construction
loans into mortgages and to obtain additional financing. If the Company is
unable to obtain such financing, the Company will not be able to continue its
business. Any additional equity financing may be dilutive to shareholders, and
debt financing, if available, will increase expenses and may involve restrictive
covenants. The Company will be required to raise additional capital on terms
which are uncertain, especially under the current capital market conditions.
Under these circumstances, if the Company is unable to obtain capital or is
required to raise it on undesirable terms, it may have a material adverse effect
on the Company's financial condition.





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.





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


4
 Table of
Contents


SES
SOLAR INC. AND SUBSIDIARY


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS


(Unaudited)





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
Securities and Exchange Commission (the “SEC”). Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States 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. 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-K for the fiscal year ended December 31,
2008. The Company adheres to the same accounting policies in preparation of its
interim financial statements. As permitted under generally accepted accounting
principles (“GAPP”), 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. 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.





All
amounts are presented in U.S. dollars ($) unless otherwise stated.




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 the Company’s
wholly owned subsidiaries’ functional currency is the Swiss Franc (CHF). The
financial statements of SES Switzerland and SES Prod 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
                          
                          2009
                          
                          2008CHF
                          
                          CHF$
                          
                          
                          1.14468
                          
                          
                          1.06789




2009
                        
                        2008Balance Sheet period-end
    rates
                        
                        CHF
                        
                        CHF$
                        
                        
                        1.14898
                        
                        
                        1.05562




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
three months ended March 31, 2009 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.


5
 Table of
Contents


SES
SOLAR INC. AND SUBSIDIARY


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





Three Months
      Ended
                  March 31,2009
                
                2008Basic
      Weighted average shares outstanding
                
                
                73,081,168
                
                
                73,081,168Diluted
      weighted average shares outstanding
                
                
                73,081,168
                
                
                73,081,168





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 March 31,
2009 balance sheet date, 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 thus far.




For the
three months ended March 31, 2009 and 2008, the Company had 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 (hereinafter, the “Solar
Plant”) of its new manufacturing facility to a local electricity provider in
Geneva. Revenue 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 Solar 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 of the identifiable assets acquired,
liabilities assumed, and any non-controlling interests in the acquirer. 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. This statement
did not have an effect on the Company's financial statements.





In
February 2008, the FASB issued Staff Position (FSP) FAS 157-2, Effective Date of
FASB Statement No. 157, which defers the implementation for the non-recurring
financial assets and liabilities from fiscal years beginning after November 15,
2007 to fiscal years beginning after November 15, 2008. The provisions of SFAS
157 will be applied prospectively. The statement provisions effective as of
January 1, 2008, do not have a material effect on the Company’s financial
position and results of operations. The adoption of as of January 1, 2009 the
remaining provisions did not have a material effect on the Company’s financial
position and results of operations.





In
December 2007, the FASB issued Financial Accounting Standard No. 160,
Non-controlling Interests in Financial Statements—an amendment of ARB No. 51
(“SFAS 160”). SFAS 160 requires that a non-controlling interest in a subsidiary
be reported as equity and the amount of net income specifically attributable to
the non-controlling interest be identified in the financial statements. It also
calls for consistency in the manner of reporting changes in the parent’s
ownership interest and requires fair value measurement of any non-controlling
equity investment retained in a deconsolidation. SFAS 160 was adopted by the
Company effective January 1, 2009 and did not have a significant effect on the
Company’s financial statements.





In March
2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments
and Hedging Activities, an amendment of FASB Statement No. 133" (“SFAS 161”).
SFAS 161 amends and expands the disclosure requirements of SFAS 133, "Accounting
for Derivative Instruments and Hedging Activities" (“SFAS 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
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 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 161
was adopted by the Company as of January 1, 2009 and did not have an impact on
the Company’s results of operations, cash flows or financial
positions.


6
 Table of
Contents


SES
SOLAR INC. AND SUBSIDIARY


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





5.
Inventory




Inventory
is summarized as follows:




Three
                          Months Ended
                          March 31,
                          2009
                        
                        Twelve
                          Months Ended
                          December 31,
                          2008$
                        
                        $Raw
      Materials and Others
                        
                        
                        228,937
                        
                        
                        1,473,540Finished
      Goods
                        
                        
                        184,434
                        
                        
                        192,159Total
      Inventory
                        
                        
                        413,371
                        
                        
                        1,665,699





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




Short-Term Loans
                                  
                                  Three
                                    Months Ended
                                    March 31,2009
                                  
                                  
                                  Twelve
                                    Months Ended
                                    December 31,2008State
      Department of Energy Geneva (Switzerland)
                                  
                                  
                                  30,397
                                  
                                  
                                  
                                  33,085Banque Cantonale de
      Genève(1)
                                  
                                  
                                  6,007,566
                                  
                                  
                                  
                                  5,137,555State Department of Energy Geneva
      (Switzerland)(1)
                                  
                                  
                                  4,351,700
                                  
                                  
                                  
                                  4,736,550UBS
                                  
                                  
                                  0
                                  
                                  
                                  
                                  010,389,663
                                  
                                  
                                  
                                  9,907,190




Long-Term Loans
                                  
                                  Three
                                    Months Ended
                                    March 31,2009
                                  
                                  
                                  Twelve
                                    Months Ended
                                    December 31, 2008Banque Cantonale de Genève
                                  
                                  
                                  0
                                  
                                  
                                  
                                  0State Department of Energy Geneva
      (Switzerland)
                                  
                                  
                                  843,769
                                  
                                  
                                  
                                  918,389State Department of Energy Geneva
      (Switzerland)
                                  
                                  
                                  810,715
                                  
                                  
                                  
                                  882,4131,654,484
                                  
                                  
                                  
                                  1,800,802Total loans as at March 31,
      2009
                                  
                                  
                                  12,044,147
                                  
                                  
                                  
                                  11,707,992




7
 Table of
Contents


SES
SOLAR INC. AND SUBSIDIARY


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)




Year
                                                    
                                                    Repayments2009Short-term loans(1)
                                                    
                                                    
                                                    10,359,266Long-term loans
                                                    
                                                    
                                                    30,3972010Long-term
      loans
                                                    
                                                    
                                                    875,3822011Long-term
      loans
                                                    
                                                    
                                                    32,8772012Long-term
      loans
                                                    
                                                    
                                                    34,1922013Long-term
      loans
                                                    
                                                    
                                                    35,561Thereafter
                                                    
                                                    
                                                    676,472Total
                                                    
                                                    
                                                    12,044,147





(1) Short term loans relate to
amounts used to finance construction of the Company’s manufacturing facility.
The Company intends to refinance such loans on a long-term basis upon completion
of the facility. Negotiations are presently underway with several banking
institutions interested in granting a long-term mortgage facility.





On
November 3, 2003, SES Switzerland received a loan from the Geneva (Switzerland)
State Department of Energy (“ScanE”) of up to CHF1,000,000 ($870,337). The loan
bears interest at a rate of 4%. SES Switzerland used CHF969,470 ($843,769) of
this loan as of March 31, 2009, and CHF969,470 ($918,389) as of December 31,
2008. 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 Erne,
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
($870,337) 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 ($870,337) on the
manufacturing facility. The loan is reimbursed in 20-equal annual installments
of CHF73,581 (approximately $64,040) which include principal and interest. The
first installment was paid in December 2008 thus reducing the principal to $
841,112.


8
 Table of
Contents


SES
SOLAR INC. AND SUBSIDIARY


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





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
($4,177,618), 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 ($7,397,866). The amended agreement must be drawn down
no later than the date of completion of construction on the new manufacturing
facility planned during the first half of 2009. We used CHF6,902,550
($6,007,566) of the loan as of March 31, 2009 and CHF5,423,310 ($5,137,555) as
of December 31, 2008. The loan bears interest at a rate of 3.75% and is secured
by a second lien exclusive mortgage certificate of CHF9,000,000 ($7,833,035) on
the manufacturing facility.





On
October 27, 2008 we signed a six month credit facility for CHF5,000,000
($4,351,700) with ScanE to finance improvements on the manufacturing facility.
The loan is secured by a 4thrank mortgage on the
building. As of March 31, 2009, the full amount of the loan was used to finance
such construction. The loan bears interest at 4%.  Although the loan
matured on April 27, 2009, the Company filed a formal request with ScanE on May
7, 2009 to renew the loan for a period of 12 months on the same terms and
conditions. The Company expects to receive written confirmation in the following
weeks.  The loan will be reimbursed upon completion of construction
and consolidation of all outstanding construction loans with one financial
institution.





7.
Commitments and Contingencies




Operating Leases - Lease
expenses for the three months ended March 31, 2009 and 2008 were $46,297 and
$36,751, respectively.




The
following table presents future minimum lease commitments (concerning the lease
of vehicles) under operating leases at March 31, 2009:




Operating Leases2009
                      
                      
                      38,9642010
                      
                      
                      40,0522011
                      
                      
                      40,4282012
                      
                      
                      23,771Total
                      
                      
                      143,215




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 CHF54,084 ($47,248) per year. The
lease term ended on February 28, 2009. The lease has been renewed with the same
conditions for the next 12 months.




SES
Switzerland also leased a 1,654 square meter industrial facility in Härkingen,
Switzerland. The lease was terminated on February 28, 2009. The global charge
for the period January 1, to February 28, 2009 was CHF9,434
($8,242).




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


9
 Table of
Contents




SES
SOLAR INC. AND SUBSIDIARY


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





The
following are the lease commitments:




Use of Land$2009
                        
                        
                        47,2182010
                        
                        
                        62,9572011
                        
                        
                        62,9572012
                        
                        
                        62,9572013
                        
                        
                        62,957Thereafter
                        
                        
                        3,305,232Total
                        
                        
                        3,604,278





The
Company 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
March 31, 2009, the Company has an outstanding purchase order of EUR448,600
($592,493) 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 ($355,496) for the purchase of this machine. The
balance due will be paid upon delivery of the machine. At March 31, 2009, the
Company had purchase agreements signed for the building of the new plant for
CHF7,467,483 ($6,499,228). Of the above amount, advance payments totaling
CHF6,105,339 ($5,313,704) have been made as of April 1, 2009, and the remaining
amount will be paid at the end of completion of construction.





8.
Business Segments




As March
31, 2009, all of the Company’s operations were conducted through its wholly
owned subsidiaries, SES Switzerland and SES Prod, and were limited to the
assembly and installation of photovoltaic panels in Switzerland. Commencing
January 2008, the Company began selling electricity produced by its Solar Plant
to a local utility in Geneva. As previously reported, the Solar Plant was sold
in June 2008. As a result, the Company’s operations are again limited to the
assembly and installation of photovoltaic panels.





9. Discontinued
Operations





As noted
above, the Company sold its Solar Plant in June 2008. The balance sheet and
income statement have been retrospectively adjusted to reflect the effects of
discontinued operations. 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 Solar Plant had been operational
since the end of 2007.  For the three months ended March 31, 2009,
revenue totaled $0 due to the sale of this activity in June 2008. For the three
months ended March 31, 2008, this discontinued activity generated revenues of
$83,138. There were no expenses for the presented period.





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.





Treasury Stock - The Company
purchased shares of its common stock, par value $0.001, in the open market. As
of March 31, 2009, the Company repurchased 67,000 shares in the amount of
$16,496.





On
November 22, 2006, the Company issued warrants to purchase 1,500,000 shares of
common stock at an exercise price of $0.90 per share (the “Warrant Shares”). The
Warrants expire four (4) years after the date of issuance.





During
the quarter ended March 31, 2009, no stock purchase warrants were
exercised.


10
 Table of
Contents





SES
SOLAR INC. AND SUBSIDIARY


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS


(Unaudited)





Warrant
transactions consisted of the following during the quarter ended March 31,
2009 :


Exercisable
                                  Warrants
                                
                                Strike PriceWarrants
      Outstanding As of December 31, 2008
                                
                                1,500,000
                                
                                $
                                0.90Warrants
      granted as consideration for agent’s fee
                                
                                0
                                
                                $
                                0Exercise
      of warrants
                                
                                0
                                
                                $
                                0Warrants
      Outstanding As of March 31, 2009
                                
                                1,500,000
                                
                                $
                                0.90





Warrants
outstanding expire as follows:





Warrants
                          
                          
                          StrikeYear
                          
                          Expiring
                          
                          
                          Price2010
                          
                          
                          1,500,000
                          
                          
                          $
                          0.901,500,000




11.
Subsequent Events




Other
than as disclosed herein, no major events have occurred since March 31,
2009.


11
 Table of
Contents




ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSISOF FINANCIAL CONDITION
ANDRESULTS
OF OPERATIONS





The following discussion should be
read in conjunction with the consolidated audited financial statements and
related notes included  in our Annual Report on Form 10-K for the
fiscal year ended December 31, 2008.   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-K.





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 Prod” refer to our wholly owned subsidiaries, unless the
context requires otherwise.





We are 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 tiles 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
assembly lines 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
tiles manufactured and produced by us and third parties and by responding to
quotations for our solar tiles to electric companies, local governmental
agencies and private home owners.





Our
business was commenced in 2001 by SES Société d’Energie Solaire SA (“SES
Switzerland”), a Swiss-based developer of solar panels and solar roof tiles. On
September 27, 2006, our parent company, SES USA, completed a share exchange
agreement with SES Switzerland in which SES Switzerland became our wholly owned
subsidiary. We then abandoned our previous Internet based auction website
business and the SES Switzerland business of designing, engineering, producing,
and installing solar panels or modules and solar tiles became the sole business
of the combined company. In July 2008, we formed a second wholly owned
subsidiary, SES Prod, to conduct our manufacturing operations. Because SES USA
and its subsidiaries on a consolidated basis are the successor business to SES
Switzerland, and because the operations and assets of SES Switzerland and SES
Prod represent our entire business and operations from the closing date of the
share exchange agreement, the following discussion and analysis is based on SES
Switzerland’s and SES Prod’s financial results for the relevant
periods.





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 during the
second quarter of 2009 and commence full scale production and sale of our new
products during the third or fourth quarter of 2009. While we await completion
of our facility and work to bring our fully automated production lines into
operation, we have reconfigured our production capabilities to manufacture our
solar products on a manual and semi-manual production basis and in partnership
with subcontractors.




To date,
we have generated only limited revenue from the sale of solar modules and solar
tiles manufactured by us and 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. We no longer 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 fully operational, we will have available a
product line consisting of our SunTechTile® and SwissTile®solar tiles and, in the
future, PV 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.


12
 Table of
Contents





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.





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 current law. 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. Reductions of the feed-in tariff in Germany by
8% per year could affect our sales. Spain decreased its subsidies by 75% during
2008. 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 is 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.




Due to
overwhelming demand, final subsidy decisions by the relevant Swiss grid
authority regarding remuneration for electricity generated by solar power
installations have been delayed. As a result of this delay, many of our
prospective and potential solar power production customers have postponed new
solar power installations as they await determination by the Swiss grid
authority whether their respective installations will qualify for remuneration.
While we expect that decisions will be made during 2009 and that we will have at
least one large installation approved by the Swiss grid authority in 2009, any
additional significant delays could impact our projected growth plans. 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 4.0GW in
2008, and cumulative installed capacity reached approximately 12GW at the end of
2008.  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 markets. 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 sector,
it is possible that developments in thin films or nanoscience could reduce the
cost of PV cells or that future 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 new manufacturing facility, which is expected to be
operational during the summer of 2009.


13
 Table of
Contents


During
the three month period ended March 31, 2009, we incurred capital expenditures of
$1,227,464 to construct our new manufacturing facility. We also continued sales
of our custom solar panels and SwissTile® solar tiles to customers during the
three month period ended March 31, 2008, generating revenue of $1,022,416 and a
net loss of $626,377.





Based
on current and planned projects that will be completed during fiscal year 2009,
we believe that our cash flows used in operating activities for the remainder of
fiscal year 2009 will be greater than our cash flows used in operating
activities during 2008. In light of these operating activities, we believe that
our operating expenses in fiscal year 2009 will be approximately $2 million,
which we anticipate financing through revenue generated from operating income
and with available cash and credit facilities. Management anticipates total
capital expenditures of approximately $18 million for the new manufacturing
facility, of which we have already financed $13.8 million, and $2 million for
the assembly lines and related machinery, of which we have already financed
$355,000. Depending on our production requirements, we may also require up to an
additional $11 million during fiscal year 2009 to finance the purchase of raw
materials to be used in the production of 2MW of solar tiles. We anticipate
financing the remaining capital expenditures on the manufacturing facility and
assembly lines using available cash, loans and lines of credit, as well as a
planned debt consolidation and refinancing of the construction loans owed
on the facility. We will also require additional financing in order to
purchase raw materials and expand our operations once our manufacturing facility
is fully operational. We do not presently have any definitive agreements in
place to secure any such financings or debt consolidation.




We expect
to continue to experience losses from operations until we can generate
significant 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. See “Liquidity and Capital
Resources.”


14
 Table of
Contents




Selected
Financial Data




Balance
      Sheets
                                      
                                      March 31,
                                        2009
                                      
                                      December 31,
                                        2008(unaudited)
                                      
                                      (audited)in
      $Total
      current assets
                                      
                                      
                                      1,339,670
                                      
                                      2,958,153Total
      long-term assets
                                      
                                      
                                      14,322,678
                                      
                                      13,999,944Total
      current liabilities
                                      
                                      
                                      11,156,088
                                      
                                      11,881,948Total
      long-term liabilities
                                      
                                      
                                      1,654,484
                                      
                                      1,800,802Total
      liabilities and stockholders' equity
                                      
                                      
                                      15,662,348
                                      
                                      16,958,097





Statement
of Operations (unaudited)




For
      the three months ended
                                                                                                              March
      31,2009
                                                                                                            
                                                                                                            
                                                                                                            2008in
      $Revenues
                                                                                                            
                                                                                                            
                                                                                                            1,022,416
                                                                                                            
                                                                                                            
                                                                                                            0Total
      cost of goods sold (exclusive of depreciation, shown separately
      below)
                                                                                                            
                                                                                                            
                                                                                                            (706,912
                                                                                                            )
                                                                                                            
                                                                                                            (0
                                                                                                            )Personnel
                                                                                                            
                                                                                                            
                                                                                                            154,644
                                                                                                            
                                                                                                            
                                                                                                            138,427Rent
      and lease expenses
                                                                                                            
                                                                                                            
                                                                                                            46,297
                                                                                                            
                                                                                                            
                                                                                                            36,751Research
      and development
                                                                                                            
                                                                                                            
                                                                                                            61,039
                                                                                                            
                                                                                                            
                                                                                                            152,832Depreciation
      and amortization
                                                                                                            
                                                                                                            
                                                                                                            23,690
                                                                                                            
                                                                                                            
                                                                                                            66,656General
      and administrative expenses
                                                                                                            
                                                                                                            
                                                                                                            155,144
                                                                                                            
                                                                                                            
                                                                                                            201,042Interest
      expense
                                                                                                            
                                                                                                            
                                                                                                            (8,636
                                                                                                            )
                                                                                                            
                                                                                                            (118,143
                                                                                                            )Interest
      income
                                                                                                            
                                                                                                            
                                                                                                            0
                                                                                                            
                                                                                                            
                                                                                                            22,645Foreign
      exchange gain  (loss)
                                                                                                            
                                                                                                            
                                                                                                            (492,431
                                                                                                            )
                                                                                                            
                                                                                                            395,543Total
      other income (expense)
                                                                                                            
                                                                                                            
                                                                                                            (501,067
                                                                                                            )
                                                                                                            
                                                                                                            300,045Loss
      before taxes from continuing operations before taxes
                                                                                                            
                                                                                                            
                                                                                                            (626,377)
                                                                                                            
                                                                                                            
                                                                                                            (295,663)Income
      Taxes
                                                                                                            
                                                                                                            
                                                                                                            (0
                                                                                                            )
                                                                                                            
                                                                                                            (0
                                                                                                            )Net
      Income (Loss) from continuing operations
                                                                                                            
                                                                                                            
                                                                                                            (626,377
                                                                                                            )
                                                                                                            
                                                                                                            (295,663)
                                                                                                            )Income
      from discontinued operations before taxes
                                                                                                            
                                                                                                            
                                                                                                            0
                                                                                                            
                                                                                                            
                                                                                                            83,138Income
      Taxes
                                                                                                            
                                                                                                            
                                                                                                            0
                                                                                                            
                                                                                                            
                                                                                                            0Net
      Income (Loss) from discontinued operations
                                                                                                            
                                                                                                            
                                                                                                            0
                                                                                                            
                                                                                                            
                                                                                                            83,138Net
      Income (Loss)
                                                                                                            
                                                                                                            
                                                                                                            (626,377)
                                                                                                            
                                                                                                            
                                                                                                            (212,525)Other
      comprehensive income: translation adjustment
                                                                                                            
                                                                                                            
                                                                                                            219,302
                                                                                                            
                                                                                                            
                                                                                                            (352,703
                                                                                                            )Comprehensive
      loss
                                                                                                            
                                                                                                            
                                                                                                            (407,075
                                                                                                            )
                                                                                                            
                                                                                                            (565,228
                                                                                                            )


15
 Table of
Contents




RESULTS
OF OPERATIONS - COMPARISON OF THREE MONTHS ENDED MARCH 31, 2009 AND
2008




Net
Loss




Our
net loss for the three months ended March 31, 2009 was $626,377 compared to a
net loss of $212,525 for the three months ended March 31, 2008. The increase in
net loss during the period ended March 31, 2009 was due to $887,974 of adverse
foreign exchange rate conditions between the Swiss franc and the U.S. dollar,
partially offset by a reduction in interest expense during the period. The
company generated revenue from discontinued operations for the three months
ended March 31, 2008 of $83,138 (See Note 9 to the unaudited financial
statements attached hereto).





Revenue
and Cost of Goods Sold




We
recognize revenue on the completed-contract method, and therefore when projects
are completed. During the three months ended March 31, 2009, we completed one
project and generated total revenue of $1,022,416 compared to $0 for the three
months ended March 31, 2008.





Cost of
goods sold for the three months ended March 31, 2009 was $706,912 compared to
cost of goods sold of $0 for the three months ended March 31,
2008.  The increase in cost of good sold for the three months ended
March 31, 2009 is entirely attributable to the project completed during the
period.





Operating
Expenses




Operating
expenses for the three months ended March 31, 2009 were $440,814 compared
to $595,708 for the three months ended March 31, 2008, which represents a
26% decrease. Personnel, rent, research and development, general and
administrative expenses, and depreciation and amortization expenses constitute
the components of our operating expenses.




The
majority of the decrease resulted from reduced research and development expenses
(decrease of $91,793), general and administrative expenses (decrease of
$45,898), and depreciation and amortization expenses (decrease of $42,966),
offset by a slight increase in personnel costs to develop the activities of our
new subsidiary (increase of $16,217).




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




Other
Income (Expense)




Interest
expense decreased to $8,636 for the three months ended March 31, 2009 compared
to $118,143 for the three months ended March 31, 2008. The decrease resulted
from the receipt of $50,000 in proceeds from the sale of the Solar Plant, which
had remained outstanding since such sale, approximately $24,000 to our cancelled
credit line with UBS, and $20,000 to interest on a construction loan that has
now been capitalized.




Interest
income for the three months ended March 31, 2009 was $0 compared to $22,645 for
the three months ended March 31, 2008.  Interest income earned during
the three months ended March 31, 2008 was received from time
deposits.




Foreign
exchange loss for the three months ended March 31, 2009 was $492,431 compared to
a foreign exchange gain of $395,543 for the three months ended March 31, 2008.
Our wholly owned subsidiaries conduct substantially all of their business and
incur substantially all of their costs in Swiss francs.  The foreign
exchange loss is due to adverse currency exchange rate conditions between the
Swiss franc and the U.S. dollar, which is the company’s reporting
currency.  See Note 4 to the accompanying unaudited financial
statements.





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





We sold
the Solar Plant, which was housed on the roof of our manufacturing facility, in
June 2008. For the three months ended March 31, 2008, sales of electricity
generated by the Solar Plant resulted in revenue of $83,138.  For the
three months ended March 31, 2009, revenue totaled $0 due to the sale of the
Solar Plant. There were no expenses for the presented period.





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
March 31, 2009, we had negative working capital of $9,816,418 compared with a
negative working capital of $8,923,795 as of December 31, 2008, and our cash and
cash equivalents decreased to $404,707 as of March 31, 2009 compared to $765,694
as of December 31, 2008. This increase in negative working capital is partially
the result of decreased billings in excess of cost and estimated earnings over
the comparable periods and use of available funds to finance our new
manufacturing facility.


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As of
March 31, 2009, we had accounts payable of $727,053 compared to $526,168 as of December 31,
2008. This increase is the result of amounts owed to creditors for construction
costs relating to our manufacturing facility.


17
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At March
31, 2009, we had short-term debt in the amount of $4,382,097 compared to
$4,769,635 as of December 31, 2008.





We
believe that our negative working capital situation is temporary, as we expect
in the near term to restructure our capital financing arrangements into longer
term loans with more favorable terms.




We
currently have several loans outstanding with ScanE. On November 3, 2003, SES
Switzerland received a loan from the Geneva (Switzerland) State Department of
Energy (“ScanE”) of up to CHF1,000,000 ($870,337). The loan bears interest at a
rate of 4%. SES Switzerland used CHF969,470 ($843,769) of this loan as of March
31, 2009, and CHF969,470 ($918,389) as of December 31, 2008. This loan matures
March 31, 2010. Pursuant to the Canton Geneva Escrow Agreement dated September
15, 2006, Christiane Erne, 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 us a credit facility of CHF1million ($870,337)
to finance the construction of our new manufacturing facility. Release of these
loan proceeds was contingent upon us satisfying certain conditions, which were
satisfied as of November 13, 2007. As of January 8, 2008, we had utilized the
full amount of this 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 ($870,337) on the manufacturing facility. The loan is paid in
20-equal annual installments of CHF73,581 (approximately $64,040) which include
principal and interest. The first installment was paid in December 2008 thus
reducing the principal to $841,112.





On
October 27, 2008, we signed a six month credit facility for CHF5,000,000
($4,351,700) with ScanE to finance improvements on the manufacturing facility.
The loan is secured by a 4thrank mortgage on the
building. As of March 31, 2009, the full amount of the loan was used to finance
construction. The loan bears interest at of 4%.  Although the loan
matured on April 27, 2009, we filed a formal request with ScanE on May 7, 2009
to renew the loan for a period of 12 months on the same terms and conditions. We
expect to receive written confirmation within the next several
weeks.  The loan will be reimbursed upon completion of construction
and consolidation of all outstanding construction loans with one financial
institution.





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
($4,177,618), 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 ($7,397,866). The amended agreement must be drawn down
no later than the date of completion of construction on the new manufacturing
facility planned during the first half of 2009. We used CHF6,902,550
($6,007,566) of the loan as of March 31, 2009 and CHF5,423,310 ($5,137,555) as
of December 31, 2008. The loan bears interest at a rate of 3.75% and is secured
by a second lien exclusive mortgage certificate of CHF9,000,000 ($7,833,035) 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
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.





If we
are unable to secure additional financing and successfully implement our
planned debt consolidation and refinancing of the construction loans owed on our
new facility, management does not believe that our cash and cash equivalents,
cash provided by operating activities, and the cash available from existing
loans will be sufficient to meet our working capital requirements for the next
12 months, and we will not be able to continue as a going concern.  If
our future revenues do not increase significantly to a level sufficient to cover
our net losses, we will continue to need to raise additional funds to expand our
operations. In addition, we may need to raise 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 $836,879 for the three months ended March 31,
2009 compared to $111,558 of net cash used in operating activities for the three
months ended March 31, 2008. In local currency, use of funds for operating
activities was larger during this period compared to the same period in 2008.
However, exchange rate volatility has greatly offset the difference. Billings in
excess of cost and estimated earnings decreased by $1,364,533 due to completion
of projects and the resulting recognition of revenue. Inventory of our
SwissTile® product decreased by $1,121,185 for the same reason.





Investing
Activities




Net cash
used in investing activities was $1,227,464 during the three months ended
March 31, 2009 compared to $3,772,295 during the three months ended March
31, 2008. The decrease in investing activities is mostly due to reduced
investments for the construction of the manufacturing facility.


18
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During
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 $13.8 million, and $2 million for the assembly lines and
related machinery, of which we have already financed $355,000.  In
addition, and depending on our production requirements, 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 MWs of solar
tiles.





Financing
Activities




Net cash
provided by financing activities was $1,275,783 for the three months ended March
31, 2009 compared to $4,219,578 for the three months ended March 31,
2008.   The decrease in financing activities is due to bank loans
received from BCGE and ScanE to build the new facility. During three months
ended March 31, 2009, the Company utilized $1,292,279 of such
financing.  In addition, we also used $16,496 of available cash during
the three months ended March 31, 2009 to repurchase 67,000 shares of our common
stock on the open market.





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 March
31, 2009, the company had an outstanding purchase order of EUR448,600 ($592,493)
for the future construction of a new machine to be used in the manufacturing
facility for solar module production. The company has made an advance
payment of EUR269,160 ($355,496) for the purchase of this machine. The
balance due will be paid upon delivery of the machine. At March 31, 2009, the
company had purchase agreements signed for the building of the new plant for
CHF7,467,483 ($6,499,228). Of this amount, advance payments totaling
CHF6,105,339 ($5,313,704) had been made as of April 1, 2009, with the remaining
amount to be paid upon completion of construction, currently projected to be
during the first half of 2009.





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 SEC’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.


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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 was
no change in our internal control over financial reporting that occurred during
the quarter ended March 31, 2009 that has materially affected, or is reasonably
likely to materially affect, our internal control over financial
reporting.




PART
II – OTHER
INFORMATION





ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND
USE OF PROCEEDS





A summary
of our repurchases of shares of our common stock for the three months ended
March 31, 2009 is as follows:





Maximum Numberof Shares (orTotal Number of
                                
                                ApproximateShares Purchased
                                
                                Dollar Value)Total Number
                                
                                
                                Average
                                
                                as Part of Publicly
                                
                                that Mayof Shares
                                
                                
                                Price Paid
                                
                                Announced Plans
                                
                                Yet be PurchasedPurchased(1)
                                
                                
                                per Share
                                
                                or Programs
                                
                                Under the PlansJanuary
      1 — January 31, 2009
                                
                                
                                1,000
                                
                                
                                
                                0.2373
                                
                                —
                                
                                
                                —February
      1 — February 28, 2009
                                
                                
                                35,000
                                
                                
                                
                                0.2676
                                
                                —
                                
                                
                                —March
      1 — March 31, 2009
                                
                                
                                31,000
                                
                                
                                
                                0.2223
                                
                                —
                                
                                
                                —Total
                                
                                
                                67,000
                                
                                
                                
                                0.2462
                                
                                —
                                
                                $
                                —




(1)
                
                During
      the three month period ended March 31, 2009, the company, through a
      broker, repurchased 67,000 shares of its common stock, par value $0.001,
      in open-market transactions.  The company may, in its
      discretion, engage in future share repurchases, although no formal
      repurchase plan or program has been adopted by the company at this
      time.





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ITEM
6. EXHIBITS




Exhibits31.1
              
              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.


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SIGNATURES




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




Dated:
      May 15, 2009
                
                SES
      SOLAR INC.
                  (Registrant)Dated:
      May 15, 2009
                By:
                /s/
      SANDRINE CRISAFULLISandrine
      Crisafulli
                  Chief
      Financial Officer and Chief Operating Officer
                  (principal
      financial officer and principal accounting
                  officer)


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