**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**







**FORM
      10-KSB**





**ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934**


**For
      the fiscal year ended December 31, 2006**





**Commission
      File No. 000-49891**




**SES
      SOLAR INC.**


**(Name
      of Small Business Issuer in Its Charter)**





**Delaware**
            
            **33-0860242****(State
                or Other Jurisdiction of**
            
            **(I.R.S.
                Employer****Incorporation
                or Organization)**
            
            **Identification
                No.)**


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


**(Address
      of Principal Executive Offices)**





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


**(Issuer's
      Telephone Number, Including Area Code)**





**Securities
      Registered Pursuant To Section 12(b) of The Exchange Act:
      None**


**Securities
      Registered Pursuant To Section 12(g) of the Exchange Act:**




**Common
      Stock, $.001 Par Value Per Share**










Check
      whether the issuer is not required to file reports pursuant to section 13 or
      15(d) of the Exchange Act o





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 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 past 90 days:


Yes x No o





Check
      if
      there is no disclosure of delinquent filers pursuant to Item 405 of Regulation
      S-B contained herein, and no disclosure will be contained, to the best of
      registrant's knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-KSB or any amendment
      to
      this Form 10-KSB: o





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





The
      issuer's revenues for the fiscal year ended December 31, 2006 were
      $129,275.





The
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates of the registrant on March 18, 2007, based on the average of
      the
      bid and asked price on such date was $22,467,308.00.





As
      of May
      10, 2007, the issuer had a total of 73,081,168 shares of common stock
      outstanding.





Transitional
      Small Business Disclosure Format (Check one): Yes o No x










TABLE
      OF
      CONTENTS




PagePART
                IItem
                1. DESCRIPTION OF BUSINESS
            
            
            3Item
                2. DESCRIPTION OF PROPERTY
            
            
            19Item
                3. LEGAL PROCEEDINGS
            
            
            19Item
                4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
            
            
            19PART
                IIItem
                5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
                MATTERS
            
            
            20Item
                6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
                OPERATION
            
            
            21Item
                7. FINANCIAL STATEMENTS
            
            
            27Item
                8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL
                DISCLOSURE
            
            
            27Item
                8A. CONTROLS AND PROCEDURES
            
            
            27Item
                8B. OTHER INFORMATION
            
            
            27PART
                IIIItem
                9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS AND
                CORPORATE GOVERNANCE, COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
                ACT
            
            
            28Item
                10. EXECUTIVE COMPENSATION
            
            
            30Item
                11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
                AND
                RELATED STOCKHOLDER MATTERS
            
            
            32Item
                12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
                INDEPENDENCE
            
            
            34Item
                13. EXHIBITS
            
            
            35Item
                14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
            
            
            37




2


PART
      I





ITEM
      1.
      DESCRIPTION OF BUSINESS





We
      have
      made forward-looking statements in this document, all of which are subject
      to
      substantial risks and uncertainties. You can identify these statements by
      forward-looking words such as "may," "will," "expect," "intend," "anticipate,"
      "believe," "estimate" and "continue" or similar words. Forward-looking
      statements include information concerning possible or assumed future business
      success or financial results. You should read statements that contain these
      words carefully because they discuss our future expectations, contain
      projections of our future results of operations or financial condition or state
      other forward-looking information. We believe that it is important to
      communicate our future expectations to our investors. However, there may be
      events in the future that we are unable to predict or control accurately.
      Accordingly, we do not undertake the obligation to update any forward-looking
      statements for any reason, even if new information becomes available or other
      events occur in the future. The factors listed in the section captioned "Risk
      Factors," as well as any cautionary language in this document, provide examples
      of risks, uncertainties and events that may cause our actual results to differ
      materially from the expectations we describe in our forward-looking statements.
      Before you invest in our common stock, you should be aware that the occurrence
      of the events described in the "Risk Factors" section and elsewhere in this
      document could have a material adverse effect on our business, operating results
      and financial condition.




**DESCRIPTION
      OF BUSINESS**




CORPORATE
      HISTORY




SES
      Solar
      Inc. was incorporated in Nevada on February 3, 1999, under the name "The
      Electric Network.com, Inc.". Effective March 31, 2004, The Electric Network.com,
      Inc. changed its state of domicile from the State of Nevada to the State of
      Delaware. Its change of domicile was effected through the merger of The Electric
      Network.com, Inc. with and into The Electric Network.com, Inc., a Delaware
      corporation, that was formed specifically for this purpose and which, prior
      to
      the merger, was a wholly owned subsidiary of The Electric Network.com Inc.
      (Nevada).




Effective
      June 19, 2006, The Electric Network.com Inc. (Nevada) changed its name from
      "The
      Electric Network.com, Inc." to "Solar Energy Sources Inc." as a result of a
      merger with Solar Energy Sources Inc., a Delaware corporation, a wholly owned
      subsidiary that was incorporated solely to effect the name change. Additionally,
      Solar Energy Sources, Inc. (Delaware) changed its name again on August 10,
      2006,
      from “Solar Energy Sources Inc.” to “SES Solar Inc.” as a result of a merger
      with SES Solar Inc., a Delaware corporation, a wholly owned subsidiary that
      was
      incorporated solely to effect the name change. SES Solar Inc. (Delaware) ("SES
      USA") effected the name change in contemplation of entering into the share
      exchange agreement with Société d’Energie Solaire S.A. (“SES Switzerland”), a
      Swiss corporation, and the stockholders thereof. SES USA and SES Switzerland
      are
      collectively referred to in this Annual Report on Form 10-KSB as the
      "Company".




SES
      USA's
      predecessor commenced the business of operating an internet-based auction
      website over which users advertised and bought and sold goods and services
      for a
      fee. Following several difficulties that SES USA's predecessor faced in the
      execution of its business plan, including the inability to source adequate
      financing, SES USA's predecessor decided to change the composition of its
      management and board of directors and appoint more qualified persons to execute
      its business plan and create stockholder value. On November 8, 2005, SES USA's
      predecessor entered into a share purchase agreement with Brad W. Rudover, its
      former President and director, and Dr. John Veltheer, whereby Mr. Rudover
      transferred all 4,500,000 common shares held in the capital of SES USA's
      predecessor to Mr. Veltheer for a purchase price of $20,000. At the time of
      this
      transaction Mr. Veltheer was already an investor in the predecessor company,
      The
      Electric Network.com, Inc. He initially purchased shares in The Electric
      Network.com, in 2004. Additionally, Mr. Rudover tendered his resignation as
      President and director of SES USA’s predecessor. Following Mr. Rudover's
      resignation, Dr. Veltheer was appointed as President and director of SES USA's
      predecessor. Dr. Veltheer also loaned an aggregate of $30,000 to SES USA’s
      predecessor in November 2005 pursuant to an unsecured promissory note that
      was
      payable upon demand and matured in November 2006. SES USA has repaid the
      loan in full.




SES
      USA’s
      predecessor was not successful in implementing its business plan as an
      internet-based auction website. As management of SES USA's predecessor
      investigated opportunities and challenges in the business of being an
      internet-based auction website company, management realized that the business
      did not present the best opportunity for SES USA’s predecessor to realize value
      for its stockholders. Accordingly, SES USA’s predecessor abandoned its previous
      business plan and focused on the identification of suitable businesses with
      which to enter into a business opportunity or business combination.




3




SES
      USA
      entered into a share exchange agreement dated August 31, 2006, with SES
      Switzerland, and the stockholders of SES Switzerland. The share exchange
      agreement contemplated SES USA acquiring all of the issued and outstanding
      common shares of SES Switzerland in exchange for the issuance by SES USA of
      48,286,817 common shares. The closing of the transactions contemplated in the
      share exchange agreement and the acquisition of all of the issued and
      outstanding shares of SES Switzerland occurred on September 27, 2006. As at
      the
      closing date, the former stockholders of SES Switzerland held approximately
      70%
      of the issued and outstanding common shares of SES USA. The acquisition of
      SES
      Switzerland is deemed to be a reverse acquisition for accounting purposes.
      For
      accounting purposes, SES Switzerland, the acquired entity, is regarded as the
      predecessor entity as of September 27, 2006. Starting with the periodic report
      for the quarter in which the acquisition was consummated, the Company has filed
      annual and quarterly reports based on the December 31 fiscal year end of SES
      Switzerland. Such financial statements depict the operating results of SES
      Switzerland, including all financial statements of the operating company since
      the reverse acquisition on September 27, 2006.




BUSINESS
      SUBSEQUENT TO THE ACQUISITION OF SES SWITZERLAND




*Business
      Summary*




As
      of
      September 27, 2006, the closing date of the share exchange agreement, the
      Company commenced the business of engineering, manufacturing, distributing,
      and
      selling high-performance photovoltaic solar tiles and modules for generating
      electricity and producing and selling turnkey building-integrated systems and
      photovoltaic solar power plants through its subsidiary, SES
      Switzerland.





The
      Company is a renewable energy company that offers products and services that
      are
      focused on the development and commercialization of a portfolio of solar
      products and technologies capable of delivering alternative energy solutions.
      SES Switzerland offers building-integrated photovoltaic roofing materials for
      commercial, industrial, and residential markets. Because of SES Switzerland’s
      current inability to manufacture, SES Switzerland buys modules and equipment
      for
      turnkey installations from several suppliers. SES Switzerland plans to
      manufacture solar modules and solar tiles using cells and other raw materials
      which are supplied to SES Switzerland from third-party manufacturers. As a
      manufacturer, SES Switzerland will produce photovoltaic modules by integrating
      high-quality components from third-party suppliers. In addition to our product
      line, SES Switzerland offers comprehensive engineering services for special
      photovoltaic projects. As an engineering service provider, SES Switzerland
      incorporates its tiles or modules and others’ products, according to client
      needs, into specific architectural and building applications.





SES
      Switzerland engineering services provide:





·
            Design
                of turnkey solar photovoltaic ("PV") installation in the range of
                1 kilowatt ("kW") up to 1 megawatt
                ("MW");·
            Quotation
                and response to RFPs;·
            Detailed
                planning of installations;·
            General
                contractor services for the installation;·
            Follow
                up and monitoring and reporting of electricity production;
                and·
            Maintenance.





Our
      engineering services are currently provided by Jean-Christophe Hadorn, our
      Chief
      Executive Officer, Sandrine Crisafulli, our Chief Financial Officer, and outside
      consultants engaged on a case-by-case basis. SES Switzerland responds from
      time
      to time to RFPs (Requests for Proposals) typically generated by governmental
      entities which are obligated to put projects out to bid.





Currently,
      the Company is unable to produce or manufacture its products and will
      remain so until completion of SES Switzerland's new manufacturing facility.
      The
      photovoltaic projects we have pending involve our purchase of modules for
      turnkey installations.





SES
      Switzerland’s projects will be based on third-party products (including modules,
      cables, and inverters) until our manufacturing facility is completed. We propose
      to our customers the best brands on the market for reliable installations and
      energy efficient results. Our customers are private persons, public authorities,
      such as municipalities and electric utilities, and private companies. We
      anticipate future solar installations will include our own produced solar tiles
      sold under our brands. Modules will also be produced for customers wanting
      to
      sell under their own brands.




4





The
      Company’s business strategy includes the acquisition and development of
      renewable energy technologies linked to photovoltaic products and the
      manufacturing and marketing of innovative photovoltaic or solar products in
      order to provide superior solutions to our customers.





Our
      sales
      strategy is predicated primarily on being a producer of photovoltaic modules
      and
      tiles based on silicon technology; and to a lesser extent, as an engineering
      integrator of photovoltaic systems providing turnkey solutions for our local
      clients. We do not currently assemble, produce, or provide warranties for our
      own products. We plan to sell our modules to businesses via resellers and our
      solar tiles directly to end users in all markets of the world where photovoltaic
      is supported by public policies or where stand-alone PV installations are the
      only way to produce electricity; for example, in remote areas.





SES
      Switzerland's presence in trade publications, such as Photon International,
      Photon Das Solarstrom Magazin, Sun & Wind Energy, Systèmes Solaires, and
      Energia Solare FV, helps to increase awareness of our products and services
      to
      industrial, commercial and private operators in the photovoltaic market. Our
      websites, www.societe-energie-solaire.com and www.sessolar.com and SES
      Switzerland's membership in national and international associations for
      professionals in the solar energy sector also provide us with an excellent
      communication tool. None of the information on or hyperlinked from these
      websites shall be deemed to be incorporated into this Annual Report on Form
      10-KSB.





In
      addition, we will maintain the Company’s profile by participating in
      international conferences on photovoltaic products, either as exhibitors or
      as
      lecturers - particularly conferences where architects and contractors will
      be
      present. Mr. Jean-Christophe Hadorn, our Chief Executive Officer, has been
      lecturing on thermal solar energy, energy storage and renewable energy and
      photovoltaic technology since 1980.





*General
      Information Regarding Photovoltaic Cells*





Photovoltaics
      is a solar power technology that uses solar photovoltaic arrays or solar cells
      to provide electricity. Photovoltaics is also the field of study relating to
      this technology.





The
      market for grid connected photovoltaic power has undergone significant growth
      in
      the last several years. World photovoltaic market installations reached a record
      high of 1,744 MW in 2006 representing growth of 19% over the prior year.
      (Source, Solarbuzz,: http://www.solarbuzz.com/Marketbuzz2007-intro.htm ).





Growth
      in
      installed solar power systems has been stimulated by long-term government
      subsidies, tax incentives and feed-in tariffs (requiring the utilities to buy
      back excess power generated by privately owned photovoltaic systems). According
      to the International Energy Agency, Japan led the world in photovoltaic cell
      production with 833 Megawatts of production capacity in 2005, followed by
      Germany with 250 Megawatts of production capacity. With 30% federal tax credits
      provided by the United States Energy Bill, coupled with state rebates and tax
      incentives, the United States posted a 35% growth in 2005 in photovoltaic system
      installations, and now ranks third in the world. California alone had 75
      Megawatts of installed solar photovoltaic systems as of 2004. Comprehensive
      surveys and studies can be found at: http://www.iea-pvps.org/ .





Photovoltaic
      advantages include security, system reliability, low maintenance, modularity
      and
      flexibility of design, as well as significant environmental benefits (e.g.,
      carbon neutral, fossil fuel independent). Photovoltaic also supports the trend
      toward distributed (point-of-use) power generation. We believe that capacity
      constraints, increased demand for power reliability, and the challenges of
      building new centralized power plants will increase the demand for distributed
      generation. A detailed discussion of PV advantages supported by the U.S.
      Department of Energy can be found at: http://www1.eere.energy.gov/solar/photovoltaics.html ,
      under
      the item “Why PV is important”. None of the information on or hyperlinked from
      these websites is incorporated into this Annual Report on Form 10-KSB.





One
      of
      the most significant drawbacks of photovoltaic is the high initial cost of
      individual systems. Solar power can cost twice as much as grid power. This
      is
      due almost entirely to the high cost of photovoltaic cells which depend upon
      the
      cost and availability of semi-conductor grade silicon. While technical
      developments are underway in thin film, membrane and other non-crystalline
      based
      materials, over 90% of the industry currently relies upon crystalline silicon
      cells. The European PV industry association has numerous documents on this
      topic; see, for example, http://www.epia.org/ .
      See
      also the world PV production by cell technology market data for 2003 at http://www.epia.org/03DataFigures/DataWorld.htm .




5





Our
      products utilize solar power technology to provide electricity. Solar cells
      in
      modules produce direct current electricity from the sun’s rays.





When
      more
      power is required than a single cell can deliver, cells are generally grouped
      together to form photovoltaic modules that may in turn be arranged in solar
      arrays which are often referred to as solar panels. According to Wikipedia,
      as
      stated on their website located at www.wikipedia.org/wiki/Photovoltaics ,
      the
      continual decline of manufacturing costs (dropping at 3 to 5% a year in recent
      years) is expanding the range of cost-effective uses. The information contained
      on the Wikipedia website is not part of this Annual Report on Form 10-KSB.
      None
      of the information on or hyperlinked from these websites is incorporated into
      this Annual Report on Form 10-KSB.




PRODUCTS





We
      currently offer the following two products through our subsidiary, SES
      Switzerland:





*Solar
      Tiles under the brands: Sunslate®, SunTechTile® and
      Swisstile®.*





The
      first
      product is a solar tile, initially called Sunslate® (since 1991). The tile is
      being redesigned and will be sold under our trademarks SunTechTile *®*and Swisstile*®* . Upon
      completion of our manufacturing facility, we intend to manufacture
      the  SunTechTile *®*and Swisstile*®* solar
      tiles from cells provided by different suppliers. We purchase roofing tiles
      manufactured by Eternit, which has been in business for more than 50 years.
      Third-party tests have shown that the tiles can withstand extreme wind
      conditions (rated 120 mph wind speed). We apply our SunTechTile *®*and Swisstile*®* solar
      tiles to the Eternit roofing tiles. Our solar tiles can be easily integrated
      into sloping roofs. The slate is 72 cm x 40 cm in size, weighs approximately
      10
      kg and it is very easy to handle. The Sunslate® tiles are sold in the U.S. by
      Atlantis Energy.





The
      tile’s color depends on the color of the cells and the top glass we use.
      Currently, we produce tiles that are dark blue or deep black.




*High
      Power Rated Modules*





Our
      second product line includes high power-rated modules which incorporate silicon
      cells with contacts on the back side. The cells are manufactured and supplied
      to
      us by several suppliers which are then incorporated into our modules for resale
      or directly distributed by us to the end user.





We
      have
      developed a proprietary technology for the fast and automatic production of
      modules and tiles based on our cells. We expect that our proprietary technology
      will give the Company a competitive advantage over our competitors with respect
      to cost and reliability, although there is no assurance that it will be able
      to
      do so.





The
      modules produced by the Company under original equipment manufacture agreements
      will be the brands of our customers.





MARKET





*Grid
      connected market is expanding worldwide and forecasts are very
      positive.*




Many
      energy experts and associations forecast a high expansion in the solar PV
      market. However, it should be stated that the solar energy market is at a
      relatively early stage of development. Its future progression can be different
      from expectations and the extent to which our products will be adopted is
      uncertain.





World
      solar photovoltaic market installations reached a record high of 1,460
      Megawatts in 2005, representing annual growth of 34%, up from 1,086 MW
      installed during the previous year. In 1985, annual solar installation demand
      was only 21 MW. Cumulative solar energy production accounts for less than 0.01%
      of total global primary energy demand. There appears to be a large potential
      for
      growth. Solar energy demand has grown at about 25% per year over the past 15
      years (hydrocarbon energy demand typically grows between 0-2% per annum).





Solarbuzz
      market demand forecast scenarios show worldwide industry revenues may reach
      $18.6 to $23.1 billion with annual photovoltaic installations between 3.2 and
      3.9 GW in 2010. As the rate of increase in German demand is set to moderate,
      the
      Solarbuzz report highlights the growth in Southern Europe, which has become
      the
      new target for rapid market development ( http://www.solarbuzz.com/Marketbuzz2007-intro.htm ).




6




Target
      customers for our tiles and modules include:





·
            Architects
                and Specifiers;·
            Developers,
                Builders and Construction Companies;·
            Commercial
                and Industrial Building Owners;·
            Engineering
                Firms and Electrical Contractors;·
            Property
                Management Companies;·
            Solar
                Integrators, Distributors and Agents;·
            Roofing
                Companies and Contractors;·
            Public
                Administrators and City Planners;·
            Hotel/Resort
                Owners and Developers;·
            Educational
                Institutions;·
            Government
                Purchasing Officers;·
            International
                Development Agencies; and·
            Individual
                home owners.




We
      will
      promote our building-integrated photovoltaic tiles through a series of focused
      marketing channels that include trade publications, attendance at key industry
      trade shows, direct mail campaigns, online advertising and relationship
      marketing to our expanding network of dealers and solar integrators. Our goal
      is
      to have the SunTechTile*®*andSwisstile *®* solar
      tiles known as the best integrated roofing solutions for tilted tiled
      roofs.





*The
      Manufacturing Process*





We
      currently assemble our products that are manufactured by third parties in a
      1,654 sq. m. facility in Härkingen,
      Solothurn, Switzerland. We believe that we have one of the most versatile
      laminators in the world having the capability to laminate modules larger than
      3
      sqm. This laminator was specially made by Atlantis Energie AG of Switzerland
      and
      has been used for various sizes of modules. The laminator dates from 2001 and
      has been used for low volumes only. Therefore, SES Switzerland has placed an
      order to acquire three new machines for the mass production of modules and
      tiles, reserving our current machine for special purpose module
      orders.





We
      are
      planning to construct a new building for SES Switzerland in Plan-les-Ouates,
      Geneva, Switzerland, which we anticipate to be in operation before the end
      of
      2007. The new building is intended to be 6,400 sqm, with a possible extension
      of
      3,200 sqm.




*Research
      And Development*




Research
      and development expenses consist primarily of salaries and personnel-related
      costs and the cost of products, materials, and outside services used in our
      process and product development activities. In the fiscal year ended December
      31, 2005, the amount spent on research and development was (CHF122,587) $98,363.
      In the fiscal year ended December 31, 2006, the amount spent on research and
      development was (CHF189,398) $151,246. The cost of research and development
      is
      not borne directly by customers.




We
      maintain a number of programs and activities to improve our technology in order
      to enhance the performance of our solar modules and manufacturing processes.
      We
      expect our research and development expense to increase in absolute terms in
      the
      future as we increase personnel and research and development activity. We expect
      basic research and development expense to decline as a percentage of net sales
      and on a cost per Watt basis as a result of economies of scale.




We
      intend
      to devote a substantial amount of our future cash flows into research and
      development due to the new and ever-evolving nature of the photovoltaic industry
      and science.




*Environmental
      Regulation*




We
      may
      use, generate and discharge some toxic, volatile or otherwise hazardous
      chemicals and wastes in our research and development and manufacturing
      activities. We are subject to a variety of foreign, federal, state and local
      governmental laws and regulations related to the purchase, storage, use and
      disposal of hazardous materials. If we fail to comply with present or future
      environmental laws and regulations, we could be subject to fines, suspension
      of
      production or a cessation of operations. In addition, under some foreign,
      federal, state and local statutes and regulations, a governmental agency may
      seek recovery and response costs from operators of property where releases
      of
      hazardous substances have occurred or are ongoing, even if the operator was
      not
      responsible for the release or otherwise was not at fault.




7





We
      believe that we have all environmental permits necessary to conduct our business
      and for our future facility in Plan-les-Ouates. We believe that we have properly
      handled our hazardous materials and wastes and have appropriately remediated
      any
      contamination at any of our premises. We are not aware of any pending or
      threatened environmental investigation, proceeding or action by foreign,
      federal, state or local agencies, or third parties involving our current
      facilities. Any failure by us to control the use of or to restrict adequately
      the discharge of, hazardous substances could subject us to substantial financial
      liabilities, operational interruptions and adverse publicity, any of which
      could
      materially and adversely affect our business, results of operations and
      financial condition.




INTELLECTUAL
      PROPERTY




We
      rely
      on a combination of patent, copyright, trade secret, trademark and contractual
      protection to establish and protect our proprietary rights. Our marks
      Swisstile *®*  and
      SunTechTile *®* are
      registered trademarks in Switzerland. We require our customers to enter into
      confidentiality and nondisclosure agreements before we disclose any sensitive
      aspects of our solar technologies or strategic plans, and our policy is to
      enter
      into proprietary information agreements with employees and consultants as
      needed. Despite our efforts to protect our proprietary rights, unauthorized
      parties may attempt to copy or otherwise obtain and use our technology. It
      is
      difficult to monitor unauthorized use of technology, particularly in foreign
      countries where the laws may not protect our proprietary rights as fully as
      laws
      in Switzerland and the United States. In addition, our competitors may
      independently develop technology similar to ours. Our precautions may not
      prevent misappropriation or infringement of our intellectual property.




*Trademarks*




On
      May
      16, 2006, SES Switzerland filed a trademark application in Switzerland for
      “Swisstile” for products in international class 19 under number 50481/2006. Due
      to the term “Swiss” included in the trademark application, the list of goods was
      limited to products from Switzerland. The Swisstile *®*  trademark
      has been registered in Switzerland, as confirmed by letter from the Swiss
      Federal Institute for Intellectual Property dated July 10, 2006, under
      registration 547827. The registration expires May 16, 2016. Worldwide
      registration is pending in all Madrid Protocol and most Madrid Agreement
      countries.




On
      July
      10, 2006, SES Switzerland filed a trademark application for “SunTechTile” for
      products in international classes 9 and 19 under number 56088/2006. The
      SunTechTile *®* trademark was registered in Switzerland, as confirmed by letter from the Swiss
      Federal Institute of Intellectual Property dated September 18, 2006, under
      registration 550296. Similarly, worldwide registration for this trademark
      is also pending in all Madrid Protocol and most Madrid Agreement
      countries.




*Patent
      Applications*




Our
      subsidiary, SES Switzerland, has the following patent and patent
      applications:




·
            PCT
                application number PCT/IB2006/000367. Filed in the name of SES Switzerland
                on February 22, 2006. The inventors have entered into a royalty agreement
                with SES Switzerland. The PCT application was forwarded to the
                international bureau on July 3, 2006. The search report will be published
                by the European Patent Office. SES Switzerland has requested examination
                of the PCT application in Switzerland (Patent No.
                763/06-06).·
            Patent
                No. 763/06-06. SES Switzerland has received a Certificate of filing
                from
                the Institute of Intellectual Property for the national phase in
                Switzerland and Liechtenstein.




The
      Company is considering seeking a patent for a new tile configuration based
      on
      our patented technology.




No
      assurance can be given that any patents based on pending patent applications
      or
      any future patent applications by us, or any future licensors, will be issued,
      that the scope of any patent protection will exclude competitors or provide
      competitive advantages to us, that any of the provisional patent applications
      that have been or may be issued to us or our licensors will be held valid if
      subsequently challenged or that others will not claim rights in or ownership
      of
      the provisional patent applications and other proprietary rights held or
      licensed by us. Furthermore, there can be no assurance that others have not
      developed or will not develop similar products, duplicate any of our technology
      or design around any patents that may be issued to us or our licensors.




8




Our
      success will also depend in part on our ability to commercialize our technology
      without infringing the proprietary rights of others. We have not conducted
      freedom of use patent searches and no assurance can be given that patents do
      not
      exist or could not be filed which would have an adverse affect on our ability
      to
      market our technology or maintain our competitive position with respect to
      our
      technology. If our technologies or subject matter are claimed under other
      existing United States or foreign patents or are otherwise protected by
      third-party proprietary rights, we may be subject to infringement actions.
      In
      such event, we may challenge the validity of such patents or other proprietary
      rights or we may be required to obtain licenses from such companies in order
      to
      develop, manufacture or market our technology. There can be no assurances that
      we will be able to obtain such licenses or that such licenses, if available,
      may
      be obtained on commercially reasonable terms. Furthermore, the failure to either
      develop a commercially viable alternative or obtain such licenses may result
      in
      delays in marketing our proposed technology or the inability to proceed with
      the
      development, manufacture or sale of products requiring such licenses, which
      may
      have a material adverse affect on our business, financial condition, and results
      of operations. If we are required to defend ourselves against charges of patent
      infringement or to protect our proprietary rights against third parties,
      substantial costs will be incurred regardless of whether we are successful.
      Such
      proceedings are typically protracted with no certainty of success. An adverse
      outcome could subject us to significant liabilities to third parties and force
      us to curtail or cease our development and commercialization of our
      technology.




*Domain
      Names*




We
      own
      and operate the following registered internet domain name: www.societe-energie-solaire.com .
      We also
      own www.sessolar.com and www.sessolarenergy.com .
      The
      information contained on our websites does not form part of this Annual Report
      on Form 10-KSB.





*General*




We
      also
      rely on trade secrets and unpatentable know-how that we seek to protect, in
      part, by confidentiality agreements. We intend to require all future employees,
      consultants, contractors, manufacturers, directors on our board, technical
      review board and other advisors to execute confidentiality agreements upon
      the
      commencement of employment or consulting relationships with us. These agreements
      will provide that all confidential information developed or made known to the
      individual during the course of the individual's relationship with us is to
      be
      kept confidential and not disclosed to third parties except in specific limited
      circumstances. We intend to require signed confidentiality or material transfer
      agreements from any company that receives confidential information from our
      Company. We intend to ensure that, in the case of employees, consultants and
      contractors, any agreements that our Company enters into with such persons
      will
      generally provide that all inventions conceived by the person while rendering
      services to us shall be deemed to be "works for hire" or assigned to us as
      the
      exclusive property of our Company. We can offer no assurance, however, that
      all
      persons who we seek to sign such agreements will sign, or if they do, that
      these
      agreements will not be breached, that we will have adequate remedies for any
      breach, or that our trade secrets or unpatentable know-how will not otherwise
      become known or be independently developed by competitors.




*Employees*




As
      of
      March 1, 2007, our subsidiary had four employees and two external consultants.




Our
      subsidiary works with external photovoltaic consultants and hires additional
      employees from time to time on an as-needed basis. Our subsidiary plans to
      hire
      additional employees upon the completion of our new manufacturing
      facility.




*Customers*




Our
      main
      customers are:




·
            suppliers
                of modules (i.e., either integrator photovoltaic systems or cell
                manufacturers willing to outsource the module production to our Company,
                using our proprietary technology to assemble components in a module)
                to
                end-user consumers;




9




·
            installers,
                distributors or end users of photovoltaic for our solar
                tiles;·
            architects,
                public authorities or end users for our engineering services in
                photovoltaic turnkey installations; and·
            potential
                module manufacturers licensing our
                technology.




*Competition*




We
      face
      competition from domestic and international companies actively engaged in the
      engineering, manufacture and distribution of solar photovoltaic systems, as
      well
      as from emerging technologies that may become viable in the next several years.
      The best funded and most established of these multinational corporations also
      produce photovoltaic cells. They include Sharp Corporation, Kyocera Corporation,
      Sunpower, Suntech, Qcells, Solarworld, Schott Solar, BP Solar, Shell, Tenesol,
      Isofoton, Powerlight and GE Solar (formerly AstroPower). While these competitors
      utilize high efficiency crystalline photovoltaic cells, we believe that our
      building-integrated roofing products have significant advantages over most
      other
      photovoltaic product offerings. For example, in most cases, competitors produce
      modules (framed arrays of photovoltaic cells) that must be rack mounted
      externally to the building, creating potential damage to the structure,
      generating maintenance problems and detracting from their visual
      appearance.




The
      alternate energy industry is highly competitive. Numerous entities in the United
      States, Europe, and elsewhere compete with our efforts to commercialize our
      technologies. Our competitors include the fossil fuel companies such as Exxon,
      Shell, BP, Total and Imperial Oil. We face, and expect to continue to face,
      competition from these entities to the extent that they develop products that
      function similarly or identically to our technologies.




Because
      many of our competitors have substantially greater capital resources and more
      experience in research and development, manufacturing, and marketing than we
      do,
      we may not succeed in the commercialization of our proposed products and
      bringing them to market in a cost-effective and timely manner.





*Government
      Regulation*




Because
      the cost of producing electricity from grid-connected photovoltaic installations
      is higher than the current cost of electricity from fossil or nuclear plants,
      the photovoltaic market relies heavily on government regulation concerning
      independent power producers. These regulations favor photovoltaic electricity
      in
      some, but not all, countries.




RISK
      FACTORS





In
      addition to other information in this Annual Report on Form 10-KSB, the
      following risk factors should be carefully considered in evaluating our business
      because such factors may have a significant impact on our business, operating
      results, liquidity and financial condition. As a result of the risk factors
      set
      forth below, actual results could differ materially from those projected in
      any
      forward-looking statements. If any such risks occur, our business, operating
      results, liquidity and financial condition could be materially affected in
      an
      adverse manner. Under such circumstances, the trading price of our securities
      could decline, and you may lose all or part of your investment.




THE
      PV
      MARKET IS HIGHLY UNPREDICTABLE BECAUSE IT IS HEAVILY SUBSIDIZED, AND THE MARKET
      DEPENDS ON SUCH SUBSIDIES.





Since
      inception, we have incurred aggregate net losses of $2,246,314 from operations.
      We can offer no assurance that we will operate profitably or that we will
      generate positive cash flow in the future. In addition, our operating results
      in
      the future may be subject to significant fluctuations due to many factors not
      within our control, such as the level of competition, general economic
      conditions and most importantly the level of subsidies available for
      photovoltaic installations in the United States, various cantons of Switzerland,
      and in other countries. Because the cost of solar power energy to generate
      electricity remains higher than traditional methods of electricity production,
      such as fossil fuel, the industry is dependent on subsidies of various forms
      including fixed pricing for purchase of solar power and tax incentives for
      installations. Any decrease or elimination of such subsidiaries will adversely
      affect our profitability. The reduction or elimination of government subsidies
      and economic incentives for on-grid solar energy applications, especially those
      in our target markets, could cause our net sales to decline and materially
      and
      adversely affect our business, financial condition and results of
      operations.




10





Our
      Company's operations are subject to all the risks inherent in the establishment
      of a developing enterprise in a new market such as:





·
            lack
                of available skilled people;·
            lack
                of internal experience in setting up a high-volume production
                plant;·
            lack
                of R&D financing;·
            lack
                of diversified customers;·
            lack
                of established distribution channels;·
            lack
                of proof of our totally new process to produce modules;·
            lack
                of marketing resources;·
            lack
                of public support; and·
            lack
                of continuous future interest for solar energy in the public
                opinion.





Due
      to
      the nature of our business and the early stage of our development, our
      securities must be considered highly speculative. We are engaged in the business
      of engineering and producing high-performance photovoltaic solar modules for
      generating electricity and producing turnkey building-integrated systems and
      photovoltaic solar power plants. We have not realized a profit from our
      operations to date due to a very small niche market in Switzerland (less than
      2
      MW per year in total) and no rebuy tariff; that is, a government-imposed price
      at which utilities are obligated to purchase alternative energy generated
      electricity, such as that produced by solar energy technology. There is little
      likelihood that we will realize any profits in the short or medium term. Any
      profitability in the future from our business will be dependent upon the
      successful commercialization or licensing of our core technology, which itself
      is subject to numerous risk factors as set forth herein.





We
      expect
      to continue to incur development costs and operating costs. Consequently, we
      expect to incur operating losses and negative cash flows until our technology
      gains sufficient market acceptance to generate a sustainable level of income
      from the commercialization or licensing of our technology. Purchase decisions
      are very dependant on government subsidies and economic incentives.





THE
      SHORTAGE OF SEMI-CONDUCTOR GRADE SILICON, AND THE PHOTOVOLTAIC CELLS MADE FROM
      THIS MATERIAL, UPON WHICH OUR PRODUCTS DEPEND, MAY LIMIT OUR REVENUE
      GROWTH.





Silicon
      is an essential raw material in the production of our photovoltaic cells. There
      is currently an industrywide shortage of silicon ingots, which has resulted
      in
      significant price increases. Increases in silicon prices may impact our
      manufacturing costs in the future. As demand for photovoltaic cells has
      increased, a number of manufacturers have announced plans to add additional
      capacity. As this manufacturing capacity becomes operational, it will increase
      the demand for silicon and further exacerbate the current shortage. Polysilicon
      is also used in the semiconductor industry generally, and any increase in demand
      from that sector will compound the shortage. The production of silicon is
      capital intensive and adding additional capacity requires significant lead
      time.





WE
      DEPEND
      UPON A LIMITED NUMBER OF THIRD-PARTY SUPPLIERS FOR RAW MATERIALS, AND ANY
      DISRUPTION FROM SUCH SUPPLIERS COULD PREVENT US FROM DELIVERING OUR PRODUCTS
      TO
      OUR CUSTOMERS WITHIN REQUIRED TIMEFRAMES, WHICH COULD RESULT IN ORDER
      CANCELLATIONS AND A DECLINE IN SALES.





Our
      products are manufactured using materials and components procured from
      a limited number of third-party suppliers. We currently purchase the specific
      photovoltaic cells we need for our proprietary technology from a small number
      of
      suppliers. If we fail to maintain our relationships with these suppliers, or
      to
      secure additional supply sources from other cell suppliers, we may be unable
      to have our products manufactured or our products may be available
      only at a higher cost or after a long delay. Any of these factors could prevent
      us from delivering our products to our customers within required timeframes,
      and
      we may experience order cancellations which would adversely affect our business
      operations. To the extent the processes that our suppliers use to manufacture
      materials and components are proprietary we may be unable to obtain comparable
      materials and components from alternative suppliers. Our failure to obtain
      raw
      materials and components that meet our quality, quantity, technological and
      cost
      requirements in a timely manner could interrupt or impair our ability to
      manufacture our solar modules or increase our manufacturing cost.




11





Most
      of
      our key raw materials for example, silicon chips, are either sole-sourced or
      sourced by a limited number of third-party suppliers. As a result, the failure
      of any of our suppliers to perform could disrupt our supply chain and impair
      our
      operations. In addition, many of our suppliers are small companies that may
      be
      unable to supply our increasing demand for raw materials as we implement our
      planned rapid expansion.





We
      may be
      unable to identify new suppliers or qualify their products for use on our
      production lines in a timely manner and on commercially reasonable terms. Raw
      materials from new suppliers may also be less suited for our technology and
      yield solar modules with lower conversion efficiencies than solar modules
      manufactured with the raw materials from our current suppliers.





TECHNOLOGICAL
      CHANGES IN THE SOLAR POWER INDUSTRY COULD RENDER OUR PRODUCTS UNCOMPETITIVE
      OR
      OBSOLETE WHICH COULD PREVENT US FROM ACHIEVING MARKET SHARE AND
      SALES.





Our
      failure to refine our technology and to develop and introduce new products
      could
      cause our products to become uncompetitive or obsolete, which could prevent
      us
      from achieving market share and sales. The solar power industry is rapidly
      evolving and highly competitive. We will need to invest significant financial
      resources in research and development to keep pace with technological advances
      in the solar power industry and to compete in the future and we may be unable
      to
      secure such financing. We believe that a variety of competing solar power
      technologies may be under development by other companies that could result
      in
      lower manufacturing costs or higher product performance than those expected
      for
      our products. Our development efforts may be rendered obsolete by the
      technological advances of others, and other technologies may prove more
      advantageous for the commercialization of solar power products.





Furthermore,
      research and development activities are inherently uncertain, and we could
      encounter practical difficulties in commercializing our research results. Our
      expenditures on research and development may not produce corresponding benefits.
      Other companies are developing a variety of competin *g* photovoltaic
      technologies, including new thin film techniques, quantum dots, dye sensitive,
      copper indium gallium diselenide, cadmium-based solutions, organic processes
      and
      thin film amorphous silicon, that could produce solar modules that prove more
      cost effective or have better performance than our current solar modules. We
      are
      not currently able to manufacture products based on such new PV principles.
      As a
      result, our solar modules may be rendered obsolete by the technological advances
      of others, which could reduce our net sales and market share.





In
      an
      attempt to decrease photovoltaic costs, polysilicon cell makers are searching
      for thinner and bigger cells. Our new processes may not be compatible with
      fragile thin cells or increased cell dimensions that are about to reach market
      and may require additional research and development efforts; and, possibly,
      changes in our production lines.





THE
      REDUCTION OR ELIMINATION OF GOVERNMENT SUBSIDIES AND ECONOMIC INCENTIVES FOR
      ON-GRID SOLAR ELECTRICITY APPLICATIONS COULD REDUCE DEMAND FOR OUR SOLAR
      MODULES, LEAD TO A REDUCTION IN OUR NET SALES AND HARM OUR OPERATING
      RESULTS.





The
      photovoltaic industry depends on government subsidies. The reduction,
      elimination or expiration of government subsidies and economic incentives for
      on-grid solar electricity may result in the diminished competitiveness of solar
      energy relative to conventional and non-solar renewable sources of energy,
      and
      could materially and adversely affect the growth of the solar energy industry
      and our net sales. We believe that the near-term growth of the market for
      on-grid applications, where solar energy is used to supplement the electricity
      a
      consumer purchases from the utility network, depends significantly on the
      availability and size of government and economic incentives. Currently, the
      cost
      of solar electricity substantially exceeds the retail price of electricity
      in
      every significant market in the world. As a result, federal, state and local
      governmental bodies in many countries, most notably Germany, Italy, Spain,
      France, South Korea, Japan and the United States, have provided subsidies in
      the
      form of feed-in tariffs, rebates, tax write-offs and other incentives to
      end-users, distributors, systems integrators and manufacturers of photovoltaic
      products.





For
      example, Germany, a major market for our new products, has been a strong
      supporter of photovoltaic products and systems, and political changes in Germany
      could result in significant reductions or the elimination of incentives. Many
      of
      these government incentives expire, phase out over time, exhaust the allocated
      funding, or require renewal by the applicable authority. Furthermore, German
      subsidies decline at a rate of 5.0% to 6.5% per year (based on the type and
      size
      of the photovoltaic system) and discussions are currently underway about
      modifying the German Renewable Energy Law, or the EEG. If the German government
      reduces or eliminates the subsidies under the EEG, demand for photovoltaic
      products could decline in Germany.




12





In
      addition, the Emerging Renewables Program in California has finite funds that
      may not last through the current program period. California subsidies declined
      from $2.80 to $2.50 per Watt in March 2006, and will continue to decline as
      cumulative installations exceed stated thresholds. Net metering policies in
      California, which currently only require each utility to provide net metering
      up
      to 0.5% of its peak demand, could also limit the amount of solar power installed
      within California.





France,
      after a long period of hesitation, implemented on July 26, 2006, a new subsidy
      scheme for photovoltaic installations. Integrated installations will get a
      higher value than non-integrated photovoltaic projects. The administrative
      procedure for any applicant is long and complex, and subject to regulatory
      rule
      changes. This may negatively impact French consumer confidence in photovoltaic
      installations.





In
      addition, if any of these statutes or regulations is found to be
      unconstitutional, or is reduced or discontinued for other reasons, sales of
      our
      solar modules in these countries could decline significantly, which could have
      a
      material adverse effect on our business and results of operations. For example,
      the predecessor to the German EEG was challenged in Germany on constitutional
      grounds and in the European Court of Justice as impermissible state aid. At
      any
      time, new proceedings challenging the German Renewable Energy Law or comparable
      minimum price regulations in other countries in which we currently operate
      or
      intend to operate may be initiated.




ELECTRIC
      UTILITY COMPANIES TEND TO PROTECT THEIR CURRENT REVENUE STREAMS BASED ON FOSSIL
      FUELS.





The
      market for electricity generation products is heavily influenced by foreign,
      federal, state and local government regulations and policies concerning the
      electric utility industry, as well as policies promulgated by electric
      utilities. These regulations and policies often relate to electricity pricing
      and technical interconnection of customer-owned electricity generation. In
      the
      United States and in a number of other countries, these regulations and policies
      are being modified and may be modified again in the future. These regulations
      and policies could deter those in our target from purchases of photovoltaic
      products.





For
      example, without a mandated regulatory exception for photovoltaic systems,
      utility customers are often charged interconnection or standby fees for putting
      distributed power generation on the electric utility grid. These fees could
      increase the cost to our end users of using photovoltaic systems and make them
      less desirable, thereby harming our business, prospects, results of operations
      and financial condition.





In
      addition, electricity generated by photovoltaic systems mostly competes with
      expensive peak hour electricity, rather than the less expensive average price
      of
      electricity. Modifications to the peak hour pricing policies of utilities,
      such
      as flat rate pricing, would require photovoltaic systems to achieve lower prices
      in order to compete with the price of electricity. Accordingly, electric utility
      companies have a strong interest in lobbying to protect their revenue streams.





GOVERNMENT
      REGULATION CAN RESULT IN SIGNIFICANT ADDITIONAL EXPENSE THUS REDUCING DEMAND
      FOR
      SOLAR MODULES.





We
      anticipate that our solar modules and their installation will be subject to
      oversight and regulation in accordance with national and local ordinances
      relating to building codes, safety, environmental protection, utility
      interconnection and metering, and related matters. It is difficult to track
      the
      requirements of individual jurisdictions and design equipment to comply with
      the
      varying standards. Any new government regulations or utility policies pertaining
      to our solar modules may result in significant additional expenses to us, our
      resellers and their customers; and, as a result, could cause a significant
      reduction in demand for our solar modules.




IF
      PHOTOVOLTAIC TECHNOLOGY IS NOT SUITABLE FOR WIDESPREAD ADOPTION, OR IF
      SUFFICIENT DEMAND FOR SOLAR MODULES DOES NOT DEVELOP OR TAKES LONGER TO DEVELOP
      THAN WE ANTICIPATE, OUR NET SALES MAY FLATTEN OR DECLINE, AND WE MAY BE UNABLE
      TO ACHIEVE AND THEN SUSTAIN PROFITABILITY.





The
      solar
      energy market remains at a relatively early stage of development, and the extent
      to which solar modules will be widely adopted is uncertain. If photovoltaic
      technology proves unsuitable for widespread adoption or if demand for solar
      modules fails to develop sufficiently, we may be unable to grow our business
      or
      generate sufficient net sales to achieve and then sustain profitability. In
      addition, demand for solar modules in our targeted markets, including Germany,
      France, the United States and Spain, may not develop or may develop to a lesser
      extent than we anticipate. Many factors may affect the viability or widespread
      adoption of photovoltaic technology and demand for solar modules, including
      the
      following:




13





·
            cost-effectiveness
                of solar modules compared to conventional and other non-solar renewable
                energy sources and products;·
            performance
                and reliability of solar modules and thin film technology compared
                to
                conventional and other non-solar renewable energy sources and
                products;·
            availability
                and substance of government subsidies and incentives to support the
                development of the solar energy industry;·
            success
                of other renewable energy generation technologies, such as hydroelectric,
                wind, geothermal, solar thermal, concentrated photovoltaic and
                biomass;·
            fluctuations
                in economic and market conditions that affect the viability of
                conventional and non solar renewable energy sources, such as increases
                or
                decreases in the prices of oil and other fossil fuels;·
            fluctuations
                in capital expenditures by end users of solar modules, which tend
                to
                decrease when the economy slows and interest rates increase;
                and·
            deregulation
                of the electric power industry and the broader energy
                industry.




CERTAIN
      OF OUR MANUFACTURING EQUIPMENT WILL BE CUSTOMIZED AND SOLE-SOURCED; AND IF
      OUR
      MANUFACTURING EQUIPMENT FAILS, WE COULD EXPERIENCE PRODUCTION DISRUPTIONS AND
      BE
      UNABLE TO SATISFY OUR CONTRACTUAL REQUIREMENTS.





Certain
      of our manufacturing equipment is customized to our production line based on
      designs or specifications we provide the equipment manufacturer. Following
      construction, each piece of equipment is qualified to ensure it meets our
      production standards. As a result, such equipment is not readily available
      from
      multiple vendors and would be difficult to repair or replace if it were to
      become damaged or stop working. If any piece of equipment fails, production
      along the entire line could be interrupted and we could be unable to satisfy
      our
      contractual requirements.





WE
      CURRENTLY DEPEND ON A SMALL NUMBER OF CUSTOMERS FOR SUBSTANTIALLY ALL OF OUR
      SALES AND THE LOSS OF, OR A SIGNIFICANT REDUCTION IN ORDERS FROM, ANY OF THESE
      CUSTOMERS COULD SIGNIFICANTLY REDUCE OUR SALES AND HARM OUR OPERATING
      RESULTS.





We
      currently sell substantially all of our products and services to a few customers
      in Switzerland. The loss of any of our customers or their default in payment
      could significantly reduce our revenues and harm our operating results. Our
      customer relationships have been developed over a relatively short period of
      time, and we cannot guarantee that we will have good relations with our
      customers in the future. Several of our competitors have more established
      relationships with our customers and may gain a larger share of our customers'
      business over time.





CURRENCY
      TRANSLATION AND TRANSACTION RISK MAY NEGATIVELY AFFECT OUR NET SALES, COST
      OF
      SALES AND GROSS MARGINS, AND COULD RESULT IN EXCHANGE LOSSES.





Although
      our reporting currency is the United States dollar ($), we conduct substantially
      all our business and incur costs in Swiss francs ("CHF"). As a result, we are
      subject to currency translation risk. For example, 100% of our net sales were
      outside the United States and denominated in Swiss francs in the fiscal year
      ended December 31, 2006, and we expect a large percentage of our sales to be
      outside the United States and denominated in foreign currencies in the future.
      Changes in exchange rates between foreign currencies and the United States
      dollar could affect our sales and cost of sales figures, and could result in
      exchange losses. In addition, we incur currency transaction risk whenever we
      enter into either a purchase or a sales transaction using a currency different
      from our reporting currency. For example, some of our contracts could specify
      fixed pricing in Euros and may not adjust for changes in the United States
      dollar to Euro or CHF exchange rate. We cannot accurately predict the impact
      of
      future exchange rate fluctuations on our results of operations. Currently,
      we do
      not engage in any exchange rate hedging activities; and, as a result, any
      volatility in currency exchange rates may have an immediate adverse effect
      on
      our financial condition and results of operations.




14





WE
      FACE
      TECHNOLOGICAL COMPETITION FROM MANUFACTURERS OF CRYSTALLINE SILICON SOLAR
      MODULES, THIN FILM SOLAR MODULES AND SOLAR THERMAL AND CONCENTRATED PHOTOVOLTAIC
      SYSTEMS. BEST TECHNOLOGIES HAVE NOT YET EMERGED SINCE THE MARKET IS YOUNG.
      COST
      OF COMPETING TECHNOLOGIES LIKE FOSSIL FUELS IS A STRONG DRIVER TO MOVE RAPIDLY
      TO NEW LOW-COST TECHNOLOGIES.





The
      solar
      energy and renewable energy industries are both highly competitive and
      continually evolving as participants strive to distinguish themselves within
      their markets and compete with the larger electric power industry. We believe
      that our main sources of competition are crystalline silicon solar module
      manufacturers, other thin film solar module manufacturers and companies
      developing solar thermal and concentrated photovoltaic
      technologies.





At
      the
      end of 2005, the global photovoltaic industry consisted of more than 100
      manufacturers of photovoltaic cells and solar modules. Within the photovoltaic
      industry, we face competition from crystalline silicon photovoltaic cell and
      solar module manufacturers, including BP Solar, Evergreen Solar, Kyocera,
      Motech, QCells, Renewable Energy Corporation, Sanyo, Schott Solar, Sharp,
      Mitsubishi, SolarWorld, GE Energy, Sunpower, Photowatt, Isofoton and Suntech.
      We
      also face competition from thin film solar module manufacturers, including
      Antec, Alwitra, UNI-Solar, Kaneka, Mitsubishi Heavy Industries, Shell Solar,
      United Solar and several crystalline silicon manufacturers who are developing
      thin-film technologies. We may also face competition from semiconductor
      manufacturers and semiconductor equipment manufacturers, or their customers,
      several of which have already announced their intention to start production
      of
      photovoltaic cells, solar modules or turnkey production lines. In addition
      to
      manufacturers of photovoltaic cells and solar modules, we face competition
      from
      companies developing solar thermal and concentrated photovoltaic
      technologies.





SOME
      CELL
      MANUFACTURERS WHICH WERE TRADITIONALLY OUR SUPPLIERS ARE INTEGRATING DOWN THE
      MANUFACTURING CHAIN AND ARE ENTERING INTO MODULE MANUFACTURING, WHICH IS OUR
      CORE BUSINESS. THIS COULD NEGATIVELY AFFECT OUR ABILITY TO SOURCE CELLS FROM
      THESE MANUFACTURERS AND INCREASE COMPETITION IN OUR INDUSTRY.





Many
      of
      our existing and potential competitors have substantially greater financial,
      technical, manufacturing and other resources than we do. Our competitors’
greater size in some cases provides them with a competitive advantage because
      they can realize economies of scale and purchase certain raw materials at lower
      prices. Many of our competitors also have greater brand name recognition, more
      established distribution networks and larger customer bases. In addition, many
      of our competitors have well-established relationships with our current and
      potential distributors and have extensive knowledge of our target markets.
      As a
      result of their greater size, some of our competitors may be able to devote
      more
      resources to the research, development, promotion and sale of their products
      or
      respond more quickly to evolving industry standards and changes in market
      conditions than we can. In addition, a significant increase in the supply of
      silicon feedstock or a significant reduction in the manufacturing cost of
      crystalline silicon solar modules could lead to pricing pressures for solar
      modules. Our failure to adapt to changing market conditions and to compete
      successfully with existing or new competitors may materially and adversely
      affect our financial condition and results of operations.




OUR
      SUBSTANTIAL INTERNATIONAL OPERATIONS SUBJECT US TO A NUMBER OF RISKS, INCLUDING
      UNFAVOURABLE POLITICAL, REGULATORY, LABOR AND TAX CONDITIONS IN FOREIGN
      COUNTRIES.





Significantly,
      all of our manufacturing, marketing and distribution operations are outside
      the
      United States and we expect this to continue for the near future. In the fiscal
      year ended December 31, 2006, 100% of our sales were generated from customers
      in
      Switzerland. In the future, we expect to make sales worldwide and, as a result,
      we will be subject to the legal, political, social and regulatory requirements
      and economic conditions of many jurisdictions. Risks inherent to international
      operations, include, but are not limited to, the following:





·
            difficulty
                in enforcing agreements in foreign legal systems;·
            foreign
                countries may impose additional withholding taxes or otherwise tax
                our
                foreign income, impose tariffs or adopt other restrictions on foreign
                trade and investment, including currency exchange
                controls;·
            fluctuations
                in exchange rates may affect product demand and may adversely affect
                our
                profitability in United States dollars to the extent the price of
                our
                solar modules and cost of raw materials and labor is denominated
                in a
                foreign currency;·
            inability
                to obtain, maintain or enforce intellectual property
                rights;




15




·
            changes
                in general economic and political conditions in the countries in
                which we
                operate;·
            unexpected
                adverse changes in foreign laws or regulatory requirements, including
                those with respect to environmental protection, export duties and
                quotas;·
            difficulty
                with staffing and managing widespread operations;·
            trade
                barriers such as export requirements, tariffs, taxes and other
                restrictions and expenses, which could increase the prices of our
                solar
                modules and make us less competitive in some countries;
                and·
            difficulty
                of and costs relating to compliance with the different commercial
                and
                legal requirements of the markets in which we offer and sell our
                solar
                modules.





Our
      business in foreign markets will require us to respond to rapid changes in
      market conditions in these countries. Our overall success as a global business
      depends, in part, on our ability to succeed in differing legal, regulatory,
      economic, social and political conditions. We may not be able to develop and
      implement policies and strategies that will be effective in each location where
      we do business. In addition, each of the foregoing risks is likely to take
      on
      increased significance if we implement our plans to expand into foreign
      manufacturing operations.





OUR
      INABILITY TO COMPLETE OUR PRODUCT DEVELOPMENT ACTIVITIES MAY SEVERELY LIMIT
      OUR
      ABILITY TO OPERATE AND FINANCE OPERATIONS.





Commercialization
      of our core technology will require significant additional research and
      development. We may not be able to complete the development of our core
      technology, or successfully market our technology in a timely and cost effective
      manner. We, and any of our potential collaborators, may encounter problems
      and
      delays relating to research and development, regulatory approval and
      intellectual property rights relating to our technology. Any delays in the
      commercialization could potentially adversely affect our financial
      condition.





WE
      MAY
      LOSE OUR COMPETITIVENESS IF WE ARE NOT ABLE TO PROTECT OUR PROPRIETARY
      TECHNOLOGY AND INTELLECTUAL PROPERTY RIGHTS AGAINST INFRINGEMENT, AND ANY
      RELATED LITIGATION MAY BE TIME CONSUMING AND COSTLY.





Our
      success and ability to compete depends to a significant degree on our
      proprietary technology. If any of our competitors copy or otherwise gain access
      to our proprietary technology or develop similar technologies independently,
      we
      may not be able to compete as effectively. The measures we have implemented
      to
      protect our proprietary technology and other intellectual property rights are
      currently based upon a combination of trademark, patents and trade secrets.
      These measures, however, may not be adequate to prevent the unauthorized use
      of
      our proprietary technology and our other intellectual property
      rights.





Further,
      the laws of foreign countries may provide inadequate protection of such
      intellectual property rights. We may need to bring legal claims to enforce
      or
      protect such intellectual property rights. Any litigation, whether successful
      or
      unsuccessful, may result in substantial costs and a diversion of our company's
      resources. In addition, notwithstanding our rights to our intellectual property,
      other persons may bring claims against us alleging that we have infringed their
      intellectual property rights or claims that our intellectual property rights
      are
      not valid. Any claims against us, with or without merit, could be time consuming
      and costly to defend or litigate, divert our attention and resources, result
      in
      the loss of goodwill associated with our business or require us to make changes
      to our technology.





WE
      HAVE
      NOT GENERATED ANY REVENUES FROM OPERATIONS USING OUR NEW PROPRIETARY TECHNOLOGY;
      AND IF WE ARE UNABLE TO DEVELOP MARKET SHARE AND GENERATE SIGNIFICANT REVENUES
      FROM THE COMMERCIALIZATION OR LICENSING OF OUR TECHNOLOGY, OUR BUSINESS MAY
      FAIL.





We
      operate in a highly competitive industry and our failure to compete effectively
      and generate income through the commercialization or licensing of our technology
      may adversely affect our ability to generate revenue. The business of
      engineering and producing high-performance photovoltaic modules for generating
      electricity is highly competitive and subject to frequent technological
      innovation with improved price or performance characteristics. There can be
      no
      assurance that our new or existing technologies will gain market acceptance.
      Management is aware of similar technologies against which our technology will
      compete. Many of our competitors have greater financial, technical, sales and
      marketing resources, better name recognition and a larger customer base than
      ours. In addition, many of our large competitors may offer customers a broader
      or superior range of services and technologies. Some of our competitors may
      conduct more extensive promotional activities and offer lower commercialization
      and licensing costs to customers than we do, which could allow them to gain
      greater market share or prevent us from establishing and increasing our market
      share. Increased competition in the alternative energy industry may result
      in
      significant price competition, reduced profit margins or loss of market share,
      any of which may have a material adverse effect on our ability to generate
      revenues and successfully operate our business. Our competitors may develop
      technologies superior to those that our Company is currently developing. In
      the
      future, we may need to decrease our prices if our competitors lower their
      prices. Our competitors may be able to respond more quickly to new or changing
      opportunities, technologies and customer requirements. Such competition will
      potentially affect our chances of achieving profitability, and ultimately affect
      our ability to continue as a going concern.




16





IF
      WE
      FAIL TO EFFECTIVELY MANAGE THE GROWTH OF OUR COMPANY AND THE COMMERCIALIZATION
      OR LICENSING OF OUR TECHNOLOGY, OUR FUTURE BUSINESS RESULTS COULD BE HARMED
      AND
      OUR MANAGERIAL AND OPERATIONAL RESOURCES MAY BE STRAINED.





As
      we
      proceed with the development of our technology and the expansion of our
      marketing and commercialization efforts, we expect to experience significant
      growth in the scope and complexity of our business. We will need to add staff
      to
      market our services, manage operations, handle sales and marketing efforts
      and
      perform finance and accounting functions. We anticipate that we will be required
      to hire a broad range of additional personnel in order to successfully advance
      our operations. This growth is likely to place a strain on our management and
      operational resources. The failure to develop and implement effective systems,
      or to hire and retain sufficient personnel for the performance of all of the
      functions necessary to effectively service and manage our potential business,
      or
      the failure to manage growth effectively, could have a material adverse effect
      on our business and financial condition.





OUR
      ABILITY TO HIRE AND RETAIN KEY PERSONNEL WILL BE AN IMPORTANT FACTOR IN THE
      SUCCESS OF OUR BUSINESS AND FAILURE TO HIRE AND RETAIN KEY PERSONNEL MAY RESULT
      IN OUR INABILITY TO MANAGE AND IMPLEMENT OUR BUSINESS PLAN.





We
      are
      highly dependent upon our management personnel such as Jean-Christophe Hadorn,
      our Chief Executive Officer, and Sandrine Crisafulli, our Chief Financial
      Officer and Chief Operating Officer, because of their experience developing
      photovoltaic modules for generating electricity. The loss of the services of
      either or both of these individuals may impair management's ability to operate
      our Company. We have not purchased key man insurance on any of these
      individuals, which insurance would provide us with insurance proceeds in the
      event of death. Without key man insurance, we may not have the financial
      resources to develop or maintain our business until we could replace such
      individual or to replace any business lost by his or her death. The competition
      for qualified personnel in the markets in which we operate is intense. In
      addition, in order to manage growth effectively, we must implement management
      systems and recruit and train new employees. We may not be able to attract
      and
      retain the necessary qualified personnel. If we are unable to retain or to
      hire
      qualified personnel as required, we may not be able to adequately manage and
      implement our business plan.





ALL
      OF
      OUR ASSETS AND A MAJORITY OF OUR DIRECTORS AND OFFICERS RESIDE OUTSIDE THE
      UNITED STATES, WITH THE RESULT THAT IT MAY BE DIFFICULT FOR INVESTORS TO ENFORCE
      WITHIN THE UNITED STATES ANY JUDGMENTS OBTAINED AGAINST SES SWITZERLAND OR
      ANY
      OF OUR DIRECTORS OR OFFICERS.





Although
      we are organized under the laws of the State of Delaware, United States, our
      principal business office is located in Plan-les-Ouates, Switzerland. Outside
      the United States, it may be difficult for investors to enforce judgements
      against SES Switzerland that are obtained in the United States in any action,
      including actions predicated upon civil liability provisions of federal
      securities laws. In addition, the majority of our directors and officers reside
      outside the United States, and nearly all of the assets of these persons and
      the
      Company’s assets are located outside of the United States. As a result, it may
      not be possible for investors to effect service of process within the United
      States upon such persons or to enforce against us or such persons judgments
      predicated upon the liability provisions of United States securities laws.
      There
      is doubt as to the enforceability against SES Switzerland or any of our
      directors and officers located outside the United States in original actions
      or
      in actions of enforcement of judgments of United States courts or liabilities
      predicated on the civil liability provisions of United States federal securities
      laws. In addition, as the majority of our assets are located outside of the
      United States, it may be difficult to enforce United States bankruptcy
      proceedings against SES Switzerland. Under bankruptcy laws in the United States,
      courts typically have jurisdiction over a debtor's property, wherever it is
      located, including property situated in other countries. Courts outside of
      the
      United States may not recognize the United States bankruptcy court's
      jurisdiction. Accordingly, it may be difficult to administer a United States
      bankruptcy case involving a Delaware company as debtor with most of its property
      located outside the United States. Any orders or judgments of a bankruptcy
      court
      in the United States may not be enforceable against SES
      Switzerland.




17





RISKS
      RELATED TO OUR COMMON STOCK





*A
      decline in the price of our common stock could affect our ability to raise
      further working capital and adversely impact our ability to continue
      operations.*





A
      prolonged decline in the price of our common stock could result in a reduction
      in the liquidity of our common stock and a reduction in our ability to raise
      capital. Because a significant portion of our operations have been and will
      be
      financed through the sale of equity securities, a decline in the price of our
      common stock could be especially detrimental to our liquidity and our
      operations. Such reductions may force us to reallocate funds from other planned
      uses and may have a significant negative effect on our business plan and
      operations, including our ability to develop new products and continue our
      current operations. If our stock price declines, we can offer no assurance
      that
      we will be able to raise additional capital or generate funds from operations
      sufficient to meet our obligations. If we are unable to raise sufficient capital
      in the future, we may not be able to have the resources to continue our normal
      operations.





The
      market price for our common stock may also be affected by our ability to meet
      or
      exceed expectations of analysts or investors. Any failure to meet these
      expectations, even if minor, may have a material adverse effect on the market
      price of our common stock.





*If
      we
      issue additional shares in the future, it will result in the dilution of our
      existing stockholders.*





Our
      certificate of incorporation authorizes the issuance of up to 100,000,000 shares
      of common stock with a par value of $0.001. Our board of directors may choose
      to
      issue some or all of such shares to acquire one or more businesses or to provide
      additional financing in the future. The issuance of any such shares will result
      in a reduction of the book value and market price of the outstanding shares
      of
      our common stock. If we issue any such additional shares, such issuance will
      cause a reduction in the proportionate ownership and voting power of all current
      stockholders. Further, such issuance may result in a change of control of the
      Company.





*Trading
      of our stock may be restricted by the Securities Exchange Commission's penny
      stock regulations, which may limit a stockholder's ability to buy and sell
      our
      stock.*





The
      Securities and Exchange Commission has adopted regulations which generally
      define "penny stock" to be any equity security that has a market price (as
      defined) of less than $5.00 per share or an exercise price of less than $5.00
      per share, subject to certain exceptions. Our securities are covered by the
      penny stock rules, which impose additional sales practice requirements on
      broker-dealers who sell to persons other than established customers and
      "accredited investors". The term "accredited investor" refers generally to
      institutions with assets in excess of $5,000,000 or individuals with a net
      worth
      in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
      with their spouse. The penny stock rules require a broker-dealer, prior to
      a
      transaction in a penny stock not otherwise exempt from the rules, to deliver
      a
      standardized risk disclosure document in a form prepared by the Securities
      and
      Exchange Commission, which provides information about penny stocks and the
      nature and level of risks in the penny stock market. The broker-dealer also
      must
      provide the customer with current bid and offer quotations for the penny stock,
      the compensation of the broker-dealer and its salesperson in the transaction
      and
      monthly account statements showing the market value of each penny stock held
      in
      the customer's account. The bid and offer quotations, and the broker-dealer
      and
      salesperson compensation information, must be given to the customer orally
      or in
      writing prior to effecting the transaction and must be given to the customer
      in
      writing before or with the customer's confirmation. In addition, the penny
      stock
      rules require that prior to a transaction in a penny stock not otherwise exempt
      from these rules, the broker-dealer must make a special written determination
      that the penny stock is a suitable investment for the purchaser and receive
      the
      purchaser's written agreement to the transaction. These disclosure requirements
      may have the effect of reducing the level of trading activity in the secondary
      market for the stock that is subject to these penny stock rules. Consequently,
      these penny stock rules may affect the ability of broker-dealers to trade our
      securities. We believe that the penny stock rules discourage investor interest
      in and limit the marketability of our common stock.





*NASD
      sales practice requirements may also limit a stockholder's ability to buy and
      sell our stock.*





In
      addition to the "penny stock" rules described above, the National Association
      of
      Securities Dealers ("NASD") has adopted rules that require that in recommending
      an investment to a customer, a broker-dealer must have reasonable grounds for
      believing that the investment is suitable for that customer. Prior to
      recommending speculative low-priced securities to their non-institutional
      customers, broker-dealers must make reasonable efforts to obtain information
      about the customer's financial status, tax status, investment objectives and
      other information. Under interpretations of these rules, the NASD believes
      that
      there is a high probability that speculative low priced securities will not
      be
      suitable for at least some customers. The NASD requirements make it more
      difficult for broker-dealers to recommend that their customers buy shares of
      common stock, which may limit a stockholder’s ability to buy and sell shares of
      stock and have an adverse effect on the market for shares of the Company’s
      stock.




18





*Shares
      of our common stock are illiquid and the price of a share of our common stock
      may be negatively impacted by factors which are unrelated to our
      operations.*





Shares
      of
      our common stock currently trade on a limited basis on the OTC Bulletin Board.
      Trading of our stock through the OTC Bulletin Board is frequently thin and
      highly volatile. There is no assurance that a sufficient market will develop
      in
      shares of SES USA’s stock, in which case it could be difficult for stockholders
      to sell their shares of SES USA stock. The market price of shares of SES USA
      common stock could fluctuate substantially due to a variety of factors,
      including market perception of our ability to achieve our planned growth,
      quarterly operating results of our competitors, trading volume in our common
      stock, changes in general conditions in the economy and the financial markets
      or
      other developments affecting our competitors or us. In addition, the stock
      market is subject to extreme price and volume fluctuations. This volatility
      has
      had a significant effect on the market price of securities issued by many
      companies for reasons unrelated to their operating performance and could have
      the same effect on shares of SES USA common stock.




*We
        may be subject to liability because we did not timely file registration
        statements as required by our subscription agreements.*
 
 Pursuant
        to the subscription agreements we entered into in connection with the private
        placement in September 2006 and the private placement in November 2006, we
        granted registration rights to the investors. In each case, we agreed to
        file a
        registration statement within ninety (90) days after the closing of the private
        placement and we agreed to use reasonable commercial efforts to cause the
        registration statement to be declared effective.
 
 We
        filed
        the registration statement on February 23, 2007. Because we failed to timely
        file the registration statement, holders of the registrable securities may
        claim
        that we are in breach of their subscription agreements and are liable for
        any
        damages that the holders may have suffered as a result of our breach. As
        of the
        date of this Annual Report on Form 10-KSB, no claim of that nature has been
        threatened or asserted against us. There can be no assurance that the
        registration statement will be declared effective. A successful claim against
        us
        could have a material adverse effect on our business and results of
        operations.




ITEM
      2.
      DESCRIPTION OF PROPERTY




Our
      principal office is located in Plan-les-Ouates, near Geneva,
      Switzerland.




Our
      company had been granted leasehold rights to land in Plan-les-Ouates, for which
      we paid a reservation cost of CHF9,053 ($7,195) per quarter, and which we paid
      for the last eight quarters for a total of CHF72,420 ($57,561). Rent for the
      entire 60-year term of the lease is CHF72,065 ($57,279) per year, commencing
      on
      July 1, 2006. We received authorization to build a manufacturing facility on
      the
      property from the State of Geneva on May 27, 2005 and the official right to
      use
      the land in February 2007.




We
      rent a
      1,654 square meter building in Härkingen,
      Switzerland, from Drei Linden AG pursuant to a lease agreement for a monthly
      cost of CHF7,232 ($5,775). The lease agreement may be terminated with six
      months’ notice.




We
      also
      rent a 154 square meter building in Plan-les-Ouates from Cool SA pursuant to
      a
      lease agreement dated March 23, 2001 which was subsequently cancelled and
      replaced by a lease agreement dated February 20, 2002, for an annual cost of
      CHF51,204 ($40,889). The lease agreement was for a five-year term and may be
      terminated with six months’ notice. The lease agreement was renewed in February
      2007 on the same terms and conditions.




ITEM
      3.
      LEGAL PROCEEDINGS





We
      are
      not currently a party to, nor is any of our property currently the subject
      of, any pending legal proceeding. None of our directors, officers, or affiliates
      is involved in a proceeding adverse to our business or has a material interest
      adverse to our business.




ITEM
      4.
      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.





There
      was
      no matter submitted to our security holders during the fourth quarter of the
      fiscal year ended December 31, 2006.


19





PART
      II




ITEM
      5.
      MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS.





Our
      common stock has traded on the OTC Bulletin Board under the symbol "SESI" since
      June 21, 2006. From January 4, 2006 to May 16, 2006, our common stock had been
      quoted on the OTC Bulletin Board under our prior name The Electric Network.com,
      Inc. and traded under the symbol "ETNW" and from May 17, 2006 to June 20, 2006,
      our common stock had been quoted on the OTC Bulletin Board under our prior
      name
      Solar Energy Sources Inc. under the symbol "SOES".





As
      of May
      14, 2007, there were 37 holders of record. This does not reflect those shares
      held in "street" name.





The
      table
      below sets forth the high and low bid prices per share of the common stock
      for
      each full quarterly period in the last two fiscal years as reported on the
      OTC
      Bulletin Board. With respect to OTC Bulletin Board quotes, these prices reflect
      inter-dealer prices, without retail mark-up, markdown or commissions and may
      not
      represent actual transactions. No prediction can be made as to the effect,
      if
      any, that future sales of shares of our common stock or the availability of
      our
      common stock for future sale will have on the market price of our common stock
      prevailing from time-to-time.





On
      March
      18, 2007, the last high and low bid prices for the common stock on the OTC
      Bulletin Board was H $.91 - L $.91.




Quarter
                Ended
            
            High
            
            LowDecember
                31, 2006
            
            
            $0.88
            
            
            $0.85September
                30, 2006
            
            
            $1.70
            
            
            $1.70June
                30, 2006
            
            
            $1.24
            
            
            $1.22March
                31, 2006
            
            
            $0.65
            
            
            $0.45




*Dividend
      Policy*





It
      is our
      present policy not to pay cash dividends and to retain future earnings to
      support our growth. We do not anticipate paying any cash dividends in the
      foreseeable future.




*Equity
      Compensation Plan Information*





The
      Company does not currently have any equity compensation plan.





*Recent
      Issuances of Unregistered Securities.*





On
      May
      30, 2006, we issued an aggregate of 5,050,000 common shares to three off-shore
      investors at an issue price of $0.20 per share for total proceeds of $1,010,000
      in accordance with the terms of three private placement agreements dated May
      30,
      2006. We paid a finder's fee of $3,636. We issued the common shares in reliance
      upon Regulation S and/or Section 4(2) of the Securities Act of 1933 in an
      offshore transaction to non-U.S. persons (as that term is defined in Regulation
      S of the Securities Act of 1933).





On
      September 18, 2006, we issued an aggregate of 4,976,350 common shares to
      nineteen investors at an issue price of $0.80 per share for total proceeds
      of
      $3,981,080 in accordance with the terms of private placement agreements dated
      September 8, 2006. We issued 4,626,350 common shares in reliance upon Regulation
      S and/or Section 4(2) of the Securities Act of 1933 in an offshore transaction
      to non-U.S. persons. We issued an aggregate of 350,000 common shares in reliance
      upon Rule 506 of Regulation D and/or Section 4(2) of the Securities Act of
      1933
      to four (4) U.S. investors, each of whom represented that they were accredited
      investors. We paid a commission of approximately $418,013 to a placement agent.
      Pursuant to the Subscription Agreement, we granted registration rights to the
      investors. We agreed to file a registration statement within ninety (90) days
      after the closing of the placement and to use reasonable commercial efforts
      to
      cause the registration statement to be declared effective. However, the Company
      did not timely file the Registration Statement and the Registration Statement
      has not yet been declared effective by the Securities and Exchange Commission.




20





In
      connection with the closing of the share exchange agreement on September 27,
      2006, our Company issued an aggregate of 48,286,817 shares of our common stock
      to the three former stockholders of SES Switzerland. We issued the common shares
      in an offshore transaction in reliance upon Regulation S and/or Section 4(2)
      of
      the Securities Act of 1933 to non-U.S. persons. We paid a commission of
      approximately $228,000 to a placement agent.





On
      November 22, 2006, the Company issued an aggregate of 4,100,001 common shares
      (the “Shares”) to three investors at a price of $0.90 per share for gross
      proceeds of $3,690,000 (the “Transaction”) pursuant to private placement
      subscription agreements (the “Subscription Agreements”). The Shares were issued
      in reliance upon Regulation S and/or Section 4(2) of the Securities Act of
      1933
      by issuing the shares to non-U.S. persons in an offshore transaction. We paid
      approximately $369,001 to a placement agent. Pursuant to the Subscription
      Agreements, we granted registration rights to the investors. We agreed to file
      a
      registration statement within ninety (90) days after the closing of the
      Transaction and to use reasonable commercial efforts to cause the registration
      statement to be declared effective. However, the Company did not timely file
      the
      Registration Statement and the Registration Statement has not yet been declared
      effective by the Securities and Exchange Commission.





In
      connection with the Transaction, the Company entered into an agreement (the
      “Agreement”) with Lansing Securities Corp. (“Lansing”) pursuant to which we
      issued to Lansing warrants to purchase 1,500,000 shares of common stock at
      an
      exercise price of $.90 per share (the “Warrants”). The Warrants expire on
      November 22, 2010. The Warrants were issued to Lansing in reliance upon
      Regulation S and/or Section 4(2) of the Securities Act of 1933. We also granted
      registration rights to Lansing covering the shares of common stock issuable
      upon
      exercise of the Warrants (the “Warrant Shares”). We agreed to include the
      Warrant Shares in the next registration statement our Company filed with the
      Securities and Exchange Commission. The Warrant Shares were included in a
      registration statement filed in February 2007. As of the date of this Annual
      Report, the registration statement has not been declared effective by the
      Securities and Exchange Commission.




ITEM
      6.
      MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION




*Overview*




You
      should read the following discussion of our financial condition and results
      of
      operations together with the audited financial statements and the notes to
      the
      audited financial statements included in this Annual Report on Form 10-KSB.
      This
      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.




We
      are
      engaged in the business of engineering, producing, distributing, and selling
      high-performance photovoltaic modules for generating electricity, and producing
      turnkey building-integrated systems and photovoltaic solar power
      plants.




On
      September 27, 2006, SES USA completed a share exchange agreement with SES
      Switzerland. As a result of the share exchange agreement, SES USA abandoned
      its
      previous internet-based auction website business and commenced the business
      of
      engineering, manufacturing and distributing high-performance photovoltaic solar
      tiles and modules for generating electricity and producing turnkey
      building-integrated systems and photovoltaic solar power plants. Because SES
      USA
      is the successor business to SES Switzerland and because the operations and
      assets of SES Switzerland represent our entire business and operations from
      the
      closing date of the share exchange agreement, our management's discussion and
      analysis and plan of operations are based on SES Switzerland's financial results
      for the relevant periods.




21




*Selected
      Financial Data*




*Balance
        Sheets*




December
                312006
            
            2005$Total
                current assets
            
            
            6,545,993
            
            
            561,220Total
                long-term assets
            
            
            761,677
            
            
            219,574Total
                current liabilities
            
            
            862,816
            
            
            547,495Total
                long-term liabilities
            
            
            794,810
            
            
            735,539Total
                liabilities and stockholders’ equity
            
            
            7,307,670
            
            
            780,794




*Statement
      Of Operations*


Year
                  ended December 312006
              
              2005$Total
                  revenues
              
              
              129,275
              
              
              1,100,474Total
                  cost of goods sold (exclusive of depreciation shown separately
                  below)
              
              
              (95,333
              )
              
              (1,018,490
              )Depreciation
                  and amortization
              
              
              45,090
              
              
              52,614General
                  and administrative expenses
              
              
              1,246,268
              
              
              492,479Interest
                  expense
              
              
              (56,757
              )
              
              (42,302
              )Interest
                  Income
              
              
              19,384
              
              
              —Foreign
                  exchange gain
              
              
              55,281
              
              
              —Total
                  other income (expense)
              
              
              17,908
              
              
              (42,302
              )Taxes
              
              
              —
              
              
              —Net
                  (loss)/profit
              
              
              (1,239,507
              )
              
              (505,411
              )Other
                  compensative income: translation adjustment
              
              
              (309,709
              )
              
              29,476Comprehensive
                  loss
              
              
              (1,549,216
              )
              
              (475,935
              )


*Material
      Trends and Uncertainties*




Periodic
      changes occur in our Company’s industry and business making it reasonably likely
      that aspects of our future operating results could be materially different
      from
      our historical operating results. Sometimes these matters have not occurred,
      but
      their existence is sufficient to raise doubt regarding the likelihood that
      historical operating results are an accurate gauge of future performance. Our
      Company attempts to identify and describe these trends, events, and
      uncertainties to assist stockholders in assessing the likely future performance
      of our Company. Stockholders should understand that these matters typically
      are
      new, sometimes unforeseen, and often are fluid in nature. Moreover, the matters
      described below are not the only issues that may result in variances between
      past and future performance nor are they necessarily the only material trends,
      events, and uncertainties that will affect our Company. As a result,
      stockholders are encouraged to use this and other information to judge for
      themselves the likelihood that past performance will be indicative of future
      performance.




22




The
      trends, events, and uncertainties set out in the remainder of this section
      have
      been identified by our Company as those 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
      expect
      that the world photovoltaic market will increase approximately 20 to 30% per
      year based on the history of the market. However, there is uncertainty as to
      where and how the increase will occur.




Regulations
      in Germany, a major European market for our products and services, may change
      unfavorably with regard to photovoltaic electricity. Any unfavorable regulation
      in Germany would have a major impact on the photovoltaic market. However, other
      countries may establish incentives to increase solar photovoltaic energy
      production. The market is heavily dependent on public policies and, as a result,
      such policies present the greatest uncertainties for our products. In addition,
      breakthrough technologies might emerge in thin films or nanoscience, which
      reduce the cost of photovoltaic cells. Shortages in the supply of polysilicon
      in
      2007 may also affect the increase in the photovoltaic market.





*Liquidity*





The
      ability of our Company to meet our financial commitments is primarily dependent
      upon the continued extension of credit by our creditors, the continued financial
      support of our directors and stockholders, the continued issuance of equity
      to
      new stockholders, and our ability to achieve and maintain profitable operations.





*Capital
      Expenditures*





We
      anticipate capital expenditures during the fiscal year ending December 31,
      2007
      to construct a new manufacturing facility CHF10,500,000 ($8,608,321) and to
      purchase new machinery CHF3,000,000 ($2,459,520). We anticipate financing these
      expenditures through current debt financing and available cash.




RESULTS
      OF OPERATIONS - COMPARISON OF FISCAL YEARS ENDED DECEMBER 31, 2006 AND
      2005




*Net
      Loss*




Our
      company’s net loss for the year ended December 31, 2006 was $1,239,507, as
      compared to a net loss of $505,411 for the year ended December 31, 2005. The
      increase in net loss during the year ended December 31, 2006 was the result
      of
      very limited margins on revenue, personnel costs to develop the new activities
      of our subsidiary ($184,710), new research expenses ($151,246) and placement
      expenses in connection with the private placements of our securities
      ($594,286).




*Revenues
      and Cost of Goods Sold*




Total
      revenue for the year ended December 31, 2006 was $129,275, which represents
      an
      approximately 88.2% decrease from the total revenue of $1,100,474 for the year
      ended December 31, 2005. The decrease in revenues was primarily attributable
      to
      the fact that our two main projects during 2006 could not be completed
      prior to year-end. We recognize revenue on the completed-contract method, and
      therefore when the projects are completed.




Cost
      of
      goods sold for the year ended December 31, 2006 was $95,333, which represents
      a
      decrease of $923,157 as compared with cost of goods sold of $1,018,490 for
      the
      year ended December 31, 2005. The decrease in cost of goods sold was primarily
      attributable to the fact that our two main projects during 2006 could not be
      completed prior to year-end. Cost of goods sold for the year ended December
      31,
      2006 was approximately 74% of total revenues compared with approximately 92.6%
      of total revenues for the year ended December 31, 2005. The decrease in our
      cost
      of goods sold as a percentage of revenues was due to a decrease in the cost
      of
      goods we used in production. Cost of goods sold is highly dependent on
      quantities being purchased from suppliers.




*Operating
      Expenses*




Operating
      expenses for the twelve months ended December 31, 2006 were $1,291,358, which
      represents a 137% increase in operating expenses of $545,093 for the twelve
      months ended December 31, 2005. Personnel, rent, research and development,
      general and administrative, and depreciation and amortization expenses
      constitute the components of our Company’s operating expenses.




23




Personnel
      and rent expenses for the twelve months ended December 31, 2006 were $184,710
      and $138,163, respectively, compared to $121,867 and $113,590, respectively,
      for
      the twelve months ended December 31, 2005. Our personnel and rent expenses
      were
      higher for the twelve months ended December 31, 2006, because of the
      increase in personnel needed to develop SES Switzerland's business.




*General
      and Administrative Expenses*




General
      and administrative expenses for the twelve months ended December 31, 2006 were
      $772,149 compared to $158,659 for the twelve months ended December 31, 2005,
      representing an increase of approximately 387%. The increase was mainly due
      to
      consultant fees in connection with the private placements of our
      securities.




*Other
      Income (Expense)*




Interest
      expense increased to $56,757 for the twelve months ended December 31, 2006
      as
      compared to $42,302 for the twelve months ended December 31, 2005, representing
      an increase of approximately 34%. The increase in interest expense was primarily
      attributable to the increase in the amount of the loan from the State of Geneva.
      On March 22, 2006, the loan from the State of Geneva was increased from
      CHF969,470 ($794,810) to CHF1,469,470 ($1,204,730) (using the 2006 exchange
      rate
      of $1.00 = CHF1.21975 as per Note 3 to the Consolidated Financial Statements
      hereto). Accordingly interest expense increased.




Interest
      income for the year ended December 31, 2006 was $19,384 as compared to $0 for
      the year ended December 31, 2005. The interest income earned in the year ended
      December 31, 2006, was received from time deposits.




Foreign
      exchange gain for the year ended December 31, 2006 was $55,281 as compared
      to $0
      for the year ended December 31, 2005. The historical financial statements prior
      to September 27, 2006 are those of SES Switzerland, which conducts substantially
      all its business and incurs costs in Swiss Francs ("CHF").




Liquidity
      and Capital Resources




Our
      company’s principal cash requirements for 2006 were for operating expenses,
      including consultancy costs, placement fees, staff costs, and accounts
      payable.




As
      of
      December 31, 2006, our company had working capital of $5,683,177 compared with
      working capital of $13,725 as of December 31, 2005. The cash and cash
      equivalents of our company increased to $6,016,666 as at December 31, 2006,
      as
      compared to $35,170 as of December 31, 2005 as a result of our private
      placements and proceeds from loans.




The
      ability of our company to meet our financial commitments is primarily dependent
      upon the continued extension of credit by our creditors, the continued financial
      support of our directors and stockholders, the continued issuance of equity
      to
      new stockholders, and our ability to achieve and maintain profitable operations.
      Our company raised and received additional capital of $8,681,081 between May
      30,
      2006, and November 22, 2006, in connection with the closing of the three private
      placement transactions.




Management
      believes that our Company's cash and cash equivalents, cash provided by
      operating activities, and the cash received in the equity financings will be
      sufficient to meet our working capital requirements for the next twelve
      months.




*Operating
      Activities*





Operating
      activities used net cash of $1,781,847 for the year ended December 31, 2006,
      as
      compared to $529,060 of net cash used in operating activities for the year
      ended
      December 31, 2005. The net cash used in operating activities was mainly
      attributable to consultant fees, salaries, rents, and other general and
      administrative expenses.  The variation between 2006 and 2005 is due to the
      higher net loss for 2006.





*Investing
      Activities*




Net
      cash provided by investing activities was $17,443 during the year
      ended December 31, 2006, as compared to $48,822 used in investing
      activities during the year ended December 31, 2005. The increase in
      investing activities was largely due to cash raised by the Company in connection
      with the private placements and investments made in the new facility
      development. We expect capital expenditures of approximately CHF13,500,000
      ($11,067,841) (using the exchange rate of $1.00 - CHF1.21975 as per Note 3
      to
      the Consolidated Financial Statements hereto) in 2007 as we construct our new
      manufacturing facility and purchase additional equipment.




24





*Financing
      Activities*




Net
      cash
      provided by financing activities was $8,011,229 for the year ended December
      31,
      2006, as compared to financing activities which provided cash of $50,482 for
      the
      year ended December 31, 2005.




The
      cash
      received in 2006 was mainly the result of private placement transactions net
      of
      transaction costs and proceeds of loans. As for the year 2005, cash provided
      by
      financing activities was due to proceeds from loans.




*Capital
      Expenditures*




As
      of
      December 31, 2006, our Company did not have any material commitments for capital
      expenditures other than the purchase of new machinery and the completion of
      the
      new facility. Management anticipates capital expenditures during 2007 and 2008
      of approximately CHF10,500,000 ($8,608,321) for the new building and
      CHF3,000,000 ($2,459,520) for new machinery.




*Off-Balance
      Sheet Arrangements*




Our
      Company has no outstanding derivative financial instruments, off-balance sheet
      guarantees, interest rate swap transactions or foreign currency contracts.
      Our
      Company does not engage in trading activities involving non-exchange traded
      contracts.




QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK




*Foreign
      Exchange Risk*




Our
      Swiss
      operations accounted for 100% of our sales in fiscal year 2006, and 100% of
      our
      sales in fiscal year 2005. In such periods, all of our international sales
      were
      denominated in Swiss Francs (CHF).





*Interest
      Rate Risk*




Our
      exposure to market risks for changes in interest rates relates primarily to
      our
      outstanding loan obligations and any possible construction loan. If the interest
      rate ultimately fixed by our bankers for the construction loan financing is
      higher than we currently anticipate this will increase the cash used
      for operating activities.




CRITICAL
      ACCOUNTING POLICIES





Financial
      Reporting Release No. 60 requires all companies to include a discussion of
      critical accounting policies or methods used in the preparation of financial
      statements. Our accounting policies are described in Note 3 of the Notes to
      our
      Consolidated Financial Statements included in this Form 10-KSB for the fiscal
      year ended December 31, 2006. The methods, estimates and judgments we use in
      applying our most critical accounting policies have a significant impact on
      the
      results we report in our financial statements. We evaluate our estimates and
      judgments on an ongoing basis. We base our estimates on historical experience
      and on assumptions that we believe to be reasonable under the circumstances.
      Our
      experience and assumptions form the basis for our judgments about the carrying
      value of assets and liabilities that are not readily apparent from other
      sources. Actual results may vary from what we anticipate, and different
      assumptions or estimates about the future could materially change our reported
      results. We believe the following accounting policies are the most critical
      to
      us, in that they are important to the portrayal of our financial statements
      and
      they require our most difficult, subjective or complex judgments in the
      preparation of our financial statements. The Consolidated Financial Statements
      include the accounts of SES USA and its wholly owned subsidiary, SES
      Switzerland. All significant inter-company accounts and transactions have been
      eliminated in the consolidation.




*Foreign
      Currency Translation*




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




25




*Cash
      Equivalents*




We
      consider all highly liquid debt securities purchased with an original maturity
      of three months or less to be cash equivalents.




*Receivables
      and Credit Policies*




Our
      accounts receivable primarily consist of trade receivables. Management reviews
      accounts receivable on a monthly basis to determine if any receivables will
      potentially be uncollectible. We use estimates to determine the amount of the
      allowance for doubtful accounts necessary to reduce accounts receivable and
      unbilled receivables to their expected net realizable value. We estimate the
      amount of the required allowance by reviewing the status of past-due receivables
      and analyzing historical bad debt trends. Actual collection experience has
      not
      varied significantly from estimates, due primarily to credit policies,
      collection experience and our stability as it relates to our current customer
      base.  We recorded no bad debt expense during the years ended
      December 31, 2006 and 2005 for trade receivables.




*Product
      Inventory*




Our
      product inventory is stated at the lower of cost or market. Cost is determined
      using the first-in, first-out (FIFO) method and includes certain charges
      directly and indirectly incurred in bringing product inventories to the point
      of
      sale. Inventory is accounted for at the lower of cost or market, and as a
      result, write-offs/write-downs occur due to damage, deterioration, obsolescence,
      changes in prices and other causes.




*Property
      and Equipment*





Property
      and equipment is stated at cost. Depreciation is computed using the
      straight-line method over estimated useful lives of 3 to 10 years. Expenditures
      for maintenance and repairs, which do not materially extend the useful lives
      of
      property and equipment, are charged to operations as incurred. When property
      or
      equipment is retired or otherwise disposed of, the property accounts are
      relieved of costs and accumulated depreciation and any resulting gain or loss
      is
      recognized.





*Warranties*





Since
      our
      commencement we have had no warranty claims. Our production has been low and
      components have been purchased for photovoltaic installations, all of which
      have
      their own warranties. Since we have not yet started producing our own
      photovoltaic cells and warranty claims can be thus exercised against our
      suppliers, we do not believe that discussion of warranties is a
      critical accounting policy, currently, but this may become so in the
      future.




*Revenue
      Recognition*





We
      recognize revenue in accordance with SEC Staff Accounting Bulletin No. 104,
      "Revenue Recognition" ("SAB 104"). SAB 104 requires that four basic criteria
      must 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, and repairs. 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
      Prepayments. Any anticipated losses on contracts are charged to operations
      as
      soon as they are determinable. No unbilled revenue has been recognized so
      far.




For
      the
      fiscal years ended 2006 and 2005, we had no billed or unbilled amount
      representing claims or other similar items subject to uncertainty concerning
      their determination or ultimate realization. Amounts outstanding as at year
      end
      are expected to be collected during the current period.




26




ITEM
      7.
      FINANCIAL STATEMENTS





The
      full
      text of our audited Consolidated Financial Statements for the years ended
      December 31, 2006, and December 31, 2005 begins on page F-1 of this Annual
      Report on Form 10-KSB.




ITEM
      8.
      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS OR ACCOUNTING AND FINANCIAL
      DISCLOSURE





We
      changed accountants from Manning Elliot LLP to BDO Visura on November 2, 2006,
      and there has been no change of accountants nor any disagreement with
      accountants on any matter of accounting practices or financial statement
      disclosure or auditing scope or procedure required to be reported under this
      item.




ITEM
      8A.
      CONTROLS AND PROCEDURES





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 prior
      to
      the completion of the financial statements included in this Annual Report on
      Form 10-KSB there were material weaknesses regarding financial reporting under
      U.S. generally accepted accounting principles primarily attributable to SES
      Switzerland's accounting being subject to Swiss law and not U.S. generally
      accepted accounting principles, but that now the Company has in place disclosure
      controls and procedures effective to provide reasonable assurance that all
      material 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. In
      addition the Company is in the process of hiring people experienced with U.S.
      generally accepted accounting principles to cure prior weaknesses. There
      has been no significant change in our internal controls over financial reporting
      that materially affected, or are reasonably likely to materially affect, the
      internal control over financial reporting subsequent to December 31,
      2006.




ITEM
      8B.
      OTHER INFORMATION





None.


27


PART
      III




**MANAGEMENT**




ITEM
      9.
      DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS AND CORPORATE
      GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.




The
      following individuals serve as the directors and executive officers of our
      Company and our subsidiary. All directors of our Company and our subsidiary
      hold
      office until the next annual meeting of our stockholders or until their
      successors have been elected and qualified. The executive officers of our
      Company and our subsidiary are appointed by their respective boards of directors
      and hold office until their death, resignation or removal from
      office.


**Name**
              
              **Position
                  Held with our Company**
              
              **Age**
              
              **Date
                  First Elected or Appointed**
              
              **Expiration
                  of Current Term 2007**Jean-Christophe
                  Hadorn
              
              Chief
                  Executive Officer
                and
                Director
                  of SES USA
                President
                  and Director of SES Switzerland
              
              51
              
              September
                  27, 2006
                
                
                August
                  20, 2004
              
              2007
                
                
                2007Sandrine
                  Crisafulli
              
              Chief
                  Financial Officer
                and
                Chief
                  Operating Officer
                of
                  SES USA
                Managing
                  Director and Chief Financial Officer of SES Switzerland
              
              48
              
              September
                  27, 2006
                
                
                
                October
                  1, 2001
              
              2007
                
                
                
                2007Daniel
                  Erné
              
              Director
                  of SES USA
                Director
                  and Secretary of SES Switzerland
              
              51
              
              September
                  27, 2006
              
              2007Christiane
                  Erné
              
              Director
                  of SES USA
              
              53
              
              September
                  27, 2006
              
              2007Michael
                  D. Noonan
              
              Director
                  of SES USA
              
              48
              
              September
                  27, 2006
              
              2007Dr.
                  John Veltheer
              
              Director
                  of SES USA
              
              41
              
              November
                  7, 2005
              
              2007




The
      following is a brief account of the education and business experience during
      at
      least the past five years of each director and executive officer of our Company
      and the executive officer and director of our subsidiary, indicating the
      person's principal occupation during that period, and the name and principal
      business of the organization in which such occupation and employment were
      carried out.




*Jean-Christophe
      Hadorn, Chief Executive Officer and Director of SES USA, President and Director
      of SES Switzerland*




Mr.
      Hadorn received his Civil Engineering Master’s degree from the Swiss Federal
      Institute of Technology in Lausanne in 1979 and his Master’s in Business
      Administration from HEC University of Lausanne in 1997. Mr. Hadorn began his
      career in 1979-1981 as a researcher on large scale storage of solar heat in
      deep
      aquifiers and then, in 1981-1985, moved to work with a solar energy and
      engineering company SORANE SA, Lausanne, Switzerland where he advised architects
      and designed energy concepts for buildings. Mr. Hadorn worked for 10 years
      from
      1986 to 1995 as a project leader with BSI Engineering, Lausanne, on a
      geographical information system software product for the design and management
      of energy networks, code named HyperBird. He worked 4 years as an independent
      energy consultant while studying for his MBA at HEC Lausanne. Since 1995 Mr.
      Hadorn has worked with BASE Consultants SA, Geneva, a strategy and management
      consulting company which advises public and private businesses. Since 1985
      Mr.
      Hadorn has lead national solar energy and heat storage research programs by
      the
      Swiss government. From 2003 to 2005 he was asked by the French government to
      set
      up the National Institute of Solar Energy in France. Mr. Hadorn has participated
      in several IEA (International Energy Agency) tasks within the Solar Heating
      and
      Cooling Program of this IEA(Task 7, Task 26, and Task 32, which he currently
      leads as an Operating Agent since 2003 and 2007). Mr. Hadorn is also one of
      the
      directors of our wholly owned subsidiary, SES Switzerland.




28




*Sandrine
      Crisafulli, Chief Financial Officer and Chief Operating Officer of SES USA,
      Managing Director and Chief Financial Officer of SES
      Switzerland*




Ms.
      Crisafulli received a certificate of commerce in commercial studies in Lausanne.
      Ms. Crisafulli has experience in financial and administrative management. Ms.
      Crisafulli has been in charge of production control and human resources and
      has
      been the Chief Financial Officer of SES Switzerland since October 2001. Before
      joining SES Switzerland, Ms. Crisafulli worked as an administrative director
      and
      was responsible for finance for N.E. Achille (1995). Ms. Crisafulli also
      occupied administrative positions at Noth in 1983 and Inasco in
      1980.




*Daniel
      Erné, Director of SES USA, Director and Secretary of SES
      Switzerland*




Mr.
      Erné
has more than 25 years of experience in international trade. Mr. Erné manages
      several different private companies in France and acts as a consultant to
      companies active in international trading including Daniel L (1980-1992), Delta
      Automobiles (1992-1999) and Securiguard since 2000.




*Christiane
      Erné, Director of SES USA*




In
      1979
      Ms. Erné worked in public relations and then as hotel director for Societe
      d'Exploitation et Gestion Hoteliere from 1981 to 1984. Since 2001, Ms. Erné has
      been active in the development of renewable energies and associated technologies
      through SES Switzerland. Ms. Erné received a diploma in economics from the
      University of Geneva in 1974.




*Michael
      D. Noonan, Director of SES USA*




Mr.
      Noonan has more than 15 years of investor relations, corporate finance and
      corporate governance experience. Mr. Noonan has served as the Vice President,
      Corporate and a director of Sky Petroleum, Inc., a company quoted on the OTC
      Bulletin Board in the United States since August 25, 2005. Prior to joining
      Sky
      Petroleum, Mr. Noonan worked for Forgent Networks for four years (2002-2006)
      where he most recently served as the Senior Director of Investor Relations.
      Prior to working at Forgent Networks, Mr. Noonan was employed for two years
      (2000-2002) by Pierpont Communications, an investor and public relations firm,
      where he was a Senior Vice President. Mr. Noonan has also served as director
      of
      investor relations and corporate communications at Integrated Electrical
      Services (1999-2000), an electrical services company, and manager of investor
      relations and public affairs for Sterling Chemicals (1997-1999), a manufacturer
      of commodity chemicals. Mr. Noonan is currently a director of Bonanza Resources
      Corporation. Mr. Noonan received a Master of Business Administration degree
      from
      Athabasca University in Alberta, Canada (1999); a Bachelor of Arts degree in
      Business Administration and Economics from Simon Fraser University in British
      Columbia, Canada in 1986; and an Executive Juris Doctorate from Concord School
      of Law in Los Angeles, California in 2006.




*Dr.
      John Veltheer, Director of SES USA*




Dr.
      John
      Veltheer has had experience at the president, officer and director levels for
      the past eight years. From 1999 to 2000, Dr. Veltheer was President and director
      of SUMmedia.com Inc., a company quoted on the OTC Bulletin Board in the United
      States, where, in addition to fundraising activities, Dr. Veltheer oversaw
      the
      running of one of the internet's first eCoupon portals. From 2002 to 2003,
      Dr.
      Veltheer was the President and a director of Rapidtron, Inc., a company quoted
      on the OTC Bulletin Board in the United States, a leading provider of Radio
      Frequency Smart access control and ticketing/membership systems, where Dr.
      Veltheer was responsible for compliance with U.S. securities laws and corporate
      governance. From 2003 to 2005, Dr. Veltheer was Vice-President, Business
      Development and later Chief Operating Officer and director of House of Brussels
      Chocolates, Inc., a company quoted on the OTC Bulletin Board in the United
      States, whose primary business was gourmet chocolate wholesaling. From November
      8, 2005, to September 27, 2006, Dr. Veltheer was President and Chief Executive
      Officer of SES USA. Dr. Veltheer is currently the Chief Executive Officer,
      Secretary, Treasurer and a director of Vecten Corporation, a startup private
      equity fund. Dr. Veltheer is currently the President, Secretary and Treasurer
      of
      Texada Ventures Inc., a company quoted on the OTC Bulletin Board in the United
      States, whose primary business is mining. Dr. Veltheer continues to serve as
      the
      President and a director of Iridium Capital Inc., a private Canadian company
      that provides its clients with start-up consulting services. Dr. Veltheer
      received his B.Sc. (Honours) from Queen's University in 1988 and his Ph.D.
      from
      the University of British Columbia in 1993.




29




*Committees
      of the Board*




Our
      Company currently does not have nominating, compensation or audit committees
      or
      committees performing similar functions nor does our Company have a written
      nominating, compensation or audit committee charter. Our board of directors
      does
      not believe that it is necessary to have such committees because it believes
      that the functions of such committees can be adequately performed by the board
      of directors.





*Family
      Relationships*





Except
      for Daniel Erné and Christiane Erné, who are husband and wife, there are no
      family relationships between any of our directors, executive officers and
      proposed directors or executive officers.





*Code
      of Ethics*





We
      have
      adopted a code of ethics that is applicable to our officers, directors and
      employees, including our principal executive officer, principal financial
      officer, principal accounting officer or controller, or persons performing
      similar functions. The code of ethics can be found as an Exhibit to this Annual
      Report on Form 10-KSB and under the heading “Policy on Business Ethics for
      Directors, Officers and Employees” on our website at www.sessolar.com .




*Stockholder
      Communications*




A
      stockholder who wishes to communicate with our board of directors may do so
      by
      directing a written request addressed to our Chief Executive Officer, at the
      address appearing on the first page of this Report.




*Audit
      Committee*





The
      Company does not have a separately designated standing audit committee or
      committee performing similar functions. The entire board of directors is acting
      as the Company's audit committee.





*Audit
      Committee Financial Expert*




Our
      board
      of directors has determined that we do not have a board member that qualifies
      as
      an "audit committee financial expert" as defined in Item 401(e) of Regulation
      S-B.




We
      believe that our board of directors is capable of analyzing and evaluating
      our
      financial statements and understanding internal controls and procedures for
      financial reporting. The board of directors of our Company does not believe
      that
      it is necessary to have an audit committee because our Company believes that
      the
      functions of an audit committee can be adequately performed by our board of
      directors. In addition, we believe that retaining an independent director who
      would qualify as an "audit committee financial expert" would be overly costly
      and burdensome and is not warranted in our circumstances given the early stages
      of our development.





*Section
      16(a) Beneficial Ownership Reporting Compliance*





John
      Veltheer, a director of the Company, failed to file timely a report on Form
      4 as
      required by Section 16(a) of the Exchange Act during the most recent fiscal
      year. The Form 4 was subsequently filed on February 26, 2007. Mr. Veltheer
      filed
      only one late report, relating to only one transaction.





ITEM
      10.
      EXECUTIVE COMPENSATION




The
      particulars of compensation paid to the following persons: (i) our principal
      executive officer; (ii) each of our two most highly compensated executive
      officers other than the principal executive officer, who were serving as
      executive officers at the end of the most recently completed financial year
      ended December 31, 2006; and (iii) up to two additional individuals for whom
      disclosure would have been provided under (ii) but for the fact that the
      individual was not serving as an executive officer at the end of the most
      recently completed financial year who we will collectively refer to as the
      named
      executive officers, for our two most recently completed fiscal years ended
      December 31, 2006, are set out in the following summary compensation
      table.




30




**SUMMARY
      COMPENSATION TABLE**


**Name
                  and Principal**
                **Position**
              
              **Year**
              
              **Salary**
                **($)**
              
              **Bonus**
                **($)**
              
              **Stock
                  Awards**
                **($)**
              
              **All
                  Other Compensation**
                **($)**
              
              **Total**
                **($)**John
                  Veltheer(1)
                past
                  president, chief executive officer of SES USA and current director
                  of SES
                  USA
              
              
              2006
                2005
              
              
              36,000
                3,500
              
              
              —
                —
              
              
              —
                —
              
              
              
              
              
              36,000
                3,500Jean-Christophe
                  Hadorn(2)
                chief
                  executive officer and director of SES USA, president and director
                  of SES
                  Switzerland
              
              
              2006
                2005
              
              
              —
                __
              
              
              —
                __
              
              
              —
                __
              
              
              95,827
                7,141
              
              
              95,827
                7,141Sandrine
                  Crisafulli(3)
                chief
                  financial officer and chief operating officer of SES USA, managing
                  director and chief financial officer of SES Switzerland
              
              
              2006
                2005
              
              
              23,957(4
                66,759(4
              )
                )
              
              —
              
              
              —
              
              
              1,996
              
              
              25,953(4
                66,759(4
              )
                )Daniel
                  Erné
                Director
                  and Secretary of SES Switzerland
              
              
              2006
              
              
              23,957(4
              )
              
              —
              
              
              —
              
              
              1,996
              
              
              25,953(4
              )







(1)
            Dr.
                John Veltheer was appointed as our President, Chief Executive Officer
                and
                a director of SES USA on November 7, 2005. We paid Dr. Veltheer $2,000
                per
                month from the date of appointment through our fiscal year end on
                December
                31, 2005. From January 1, 2006 to May 31, 2006, Dr. Veltheer was
                paid
                $2,000 per month; from June 1, 2006 to November 30, 2006, he was
                paid
                $4,000 per month; and he was paid $2,000 during December 2006. The
                Company
                ceased paying compensation to Dr. Veltheer as of December 31, 2006.
                Dr.
                Veltheer resigned as President of SES USA on September 27,
                2006.




(2)
            Mr.
                Hadorn became the Company's Chief Executive Officer on September
                27, 2006.
                Effective January 1, 2006, SES Switzerland entered into a consulting
                agreement with Base Consulting. The consulting agreement terminated
                on
                December 31, 2006, but SES Switzerland has renewed the agreement
                for an
                additional year on the same terms and conditions. Base Consulting
                is paid
                a daily consulting fee of CHF1,500 with a guarantee of 680 hours
                for an
                annual consulting fee of CHF120,000 ($95,827), calculated using an
                exchange rate of 1.25225 as per Note 3 to the Consolidated Financial
                Statements. The services provided by Base Consulting are performed by
                Mr. Jean Christophe Hadorn, Chief Executive Officer and Director
                of SES
                USA and President and Director of SES Switzerland. Mr. Hadorn was
                paid the
                sum of CHF8,900 ($7,141) in consulting fees for
                2005.




(3)
            Pursuant
                to the terms of an employment agreement dated October 1, 2006 between
                Ms.
                Crisafulli and our subsidiary SES Switzerland, Ms. Crisafulli became
                the
                Company's Chief Financial Officer and Chief Operating Officer on
                September
                27, 2006




(4)
            Ms.
                Crisafulli, Mr. Erné, and Base Consulting were paid in Swiss Francs. The
                dollar figures were calculated using the exchange rate of 1.25225
                as per
                Note 3 to the Consolidated Financial Statements
                hereto.




No
      executive officer of our Company received annual salary and bonus in excess
      of
      $100,000 for our Company's prior fiscal year ended December 31, 2005 before
      the
      reverse acquisition of our Company nor has an executive officer of our Company
      received annual salary and bonus in excess of $100,000 for our Company's fiscal
      year ended December 31, 2006.




31


*Employment
      Contracts and Termination of Employment Arrangements*




SES
      Switzerland has entered into an employment agreement with Sandrine Crisafulli
      dated October 1, 2006. Mrs. Crisafulli receives an annual salary of CHF130,000
      ($108,333) (as per exchange rate of 1.25225 set forth in Note 3 to the
      Consolidated Financial Statements hereto) in consideration for management
      services for five years. Upon the termination of employment SES Switzerland
      is
      obligated to pay Mrs. Crisafulli an amount equal to two years' salary for each
      completed three years of service. Mrs. Crisafulli is the Chief Financial Officer
      of SES USA and SES Switzerland.




SES
      Switzerland has entered into an employment agreement with Daniel Erné effective
      October 1, 2006. Mr. Erné receives an annual salary of CHF130,000 ($108,333) in
      consideration for management services. Mr. Erné is the husband of Christiane
      Erné, the Company’s principal stockholder, and a director of SES USA and SES
      Switzerland.




In
      addition, there are no compensatory plans or arrangements with any executive
      officer of SES Switzerland, other than Mrs. Crisafulli, for payments to be
      made
      to such officers following the retirement, resignation or termination of any
      executive officer's employment or change in the executive officer’s
      responsibilities following a change in control with SES
      Switzerland.




*Stock
      Option Plan*




Currently,
      our Company does not have a stock option plan in favor of any director, officer,
      consultant or employee of our Company.




*Stock
      Options/Stock Awards*




Our
      Company has not granted any options or stock awards during our prior fiscal
      year
      (either before or after the reverse acquisition).




*Director
      Compensation*




We
      reimburse our directors for expenses incurred in connection with attending
      board
      meetings but did not pay directors’ fees or other cash compensation for services
      rendered as a director during our prior fiscal year before the reverse
      acquisition ended December 31, 2005, nor during our fiscal year ended December
      31, 2006 other than to Mr. Jean-Christophe Hadorn in the amount of CHF10,000
      ($8,024) for 2005 as a directors’ fee.




ITEM
      11.
      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS





*Equity
      Compensation Plan Information*




The Company
      does not have an equity compensation plan.




32


*Principal
      Stockholders*




The
      following table sets forth, as of May 14, 2007, certain information with respect
      to the beneficial ownership of our common stock by each stockholder known by
      us
      to be the beneficial owner of more than 5% of our common stock, as well as
      by
      each of the individuals named in the Summary Compensation Table,"
      each current director and all of our current directors and executive
      officers as a group. Beneficial ownership consists of a direct interest in
      the
      shares of common stock, except as otherwise indicated.


**Name
                  and Address of**
                **Beneficial
                  Owner**
              
              **Amount
                  and Nature of**
                **Beneficial
                  Ownership****(1)**
              
              **Percentage**
                **of
                  Class****(1)**Christiane
                  Erné
                c/o
                  129 Route de Saint-Julien, Plan-les-Ouates
                Geneva,
                  Switzerland
              
              
              48,286,817(2
              )
              
              66.1
              %Jean-Christophe
                  Hadorn
                c/o
                  129 Route de Saint-Julien, Plan-les-Ouates
                Geneva,
                  Switzerland
              
              
              2,414,341(3
              )
              
              3.30
              %Dr.
                  John Veltheer
                c/o
                  129 Route de Saint-Julien, Plan-les-Ouates
                Geneva,
                  Switzerland
              
              
              105,000(4
              )
              
              *Daniel
                  Erné
                c/o
                  129 Route de Saint-Julien, Plan-les-Ouates
                Geneva,
                  Switzerland
              
              
              0
              
              
              0Michael
                  D. Noonan
                c/o
                  129 Route de Saint-Julien, Plan-les-Ouates
                Geneva,
                  Switzerland
              
              
              0
              
              
              0Sandrine
                  Crisafulli
                c/o
                  129 Route de Saint-Julien, Plan-les-Ouates
                Geneva,
                  Switzerland
              
              
              0
              
              
              0SG
                  Private Banking (Suisse) S.A.
                Avenue
                  de Rumine 20
                Case
                  Postale 220
                Ch-1001
                  Lausanne
                Switzerland
              
              
              6,779,167
              
              
              9.28
              %Directors
                  and Executive Officers as a Group (6 persons)
              
              
              48,391,817
              
              
              66.22
              %







*
            less
                than 1%




(1)
            Based
                on 73,081,168 shares of common stock issued and outstanding as of
                May 14,
                2007. Except as otherwise indicated, we believe that the beneficial
                owners
                of the common stock listed above, based on information furnished
                by such
                owners, have sole investment and voting power with respect to such
                shares,
                subject to community property laws where applicable. Beneficial ownership
                is determined in accordance with the rules of the Securities and
                Exchange
                Commission and generally includes voting or investment power with
                respect
                to securities.




(2)
            Mrs.
                Erné holds 43,458,135 shares directly and indirectly holds 2,414,341
                shares held by Claudia Rey pursuant to a voting trust agreement and
                indirectly holds 2,414,341 shares held by Jean-Christophe Hadorn
                pursuant
                to a voting trust agreement. Of the 43,458,135 shares held directly
                by Ms.
                Erné 9,000,000 shares are pledged as security for repayment of a loan
                made
                by Service Cantonale de l'Energie to SES and 12,729,067 shares are
                pledged
                pursuant to the terms of the Credit Line Agreement. All of the 48,286,817
                shares are held in escrow as more fully described in Item
                12.




(3)
            500,000
                shares are pledged as security for repayment of a loan made by Service
                Cantonale de l'Energie to SES Switzerland and 707,170 shares are
                pledged
                pursuant to the terms of the Credit Line Agreement. All 2,414,341
                shares
                are held indirectly by Ms. Erné pursuant to a voting trust
                agreement.




33




(4)
            Dr.
                Veltheer holds 102,500 shares directly and indirectly he holds 2,500
                shares through his wife.




ITEM
      12.
      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
      INDEPENDENCE




On
      August
      31, 2006, we entered into a share exchange agreement with SES Switzerland,
      a
      private Swiss corporation and the former stockholders of SES Switzerland;
      namely, Christiane Erné, Director of SES USA, Jean-Christophe Hadorn, Chief
      Executive Officer and Director of SES USA, and Claudia Rey. The closing of
      the
      transactions contemplated in the share exchange agreement and the acquisition
      of
      all of the issued and outstanding common shares of SES Switzerland occurred
      on
      September 27, 2006. In accordance with the closing of the share exchange
      agreement, we issued 48,286,817 shares of common stock to the former
      stockholders of SES Switzerland in exchange for the acquisition, by our company,
      of all of the 39,500 issued and outstanding common shares of SES Switzerland
      on
      the basis of 1,222.451 shares of common stock for every one common share of
      SES
      Switzerland.




In
      connection with the closing of the share exchange agreement, SES USA entered
      into the Canton Geneva escrow agreement dated September 15, 2006, with
      Christiane Erné, a Director, Jean-Christophe Hadorn, our Chief Executive Officer
      and Director and President and Director of SES Switzerland, Claudia Rey, Service
      Cantonal de L’Energie and Clark Wilson LLP. Pursuant to the terms of the escrow
      agreement, we agreed to appoint Clark Wilson LLP as escrow agent to accept,
      hold
      and deliver 10,000,000 shares of common stock in the capital of our company,
      issuable to Christiane Erné, Jean-Christophe Hadorn and Claudia Rey pursuant to
      the share exchange agreement, in order to secure the repayment of a loan made
      by
      Service Cantonal De L’Energie to SES Switzerland, all of the issued and
      outstanding capital stock of which was held by Christiane Erné, Jean-Christophe
      Hadorn and Claudia Rey. The 10,000,000 shares of common stock are to be
      delivered from escrow by the escrow agent as follows:




(a)
      upon
      repayment of the loan to Service Cantonal De L’Energie:




(i)
                if within two years from the closing of the share exchange agreement,
                to
                the escrow agent under the long term escrow agreement (as discussed
                below), or




(ii)
                if after two years from the closing of the share exchange agreement,
                to
                Christiane Erné, Jean-Christophe Hadorn and Claudia Rey;
                or




(b)
      upon
      default of the loan, to Service Cantonal De L’Energie,




as
      more
      particularly described in the Canton Geneva escrow agreement.




In
      connection with the closing of the share exchange agreement, we entered into
      a
      credit line escrow agreement dated September 1, 2006, with Christiane Erné,
      Jean-Christophe Hadorn, Claudia Rey and Clark Wilson LLP. Pursuant to the terms
      of the credit line escrow agreement, we agreed to appoint Clark Wilson LLP
      as
      escrow agent to accept, hold and deliver 24,143,410 shares of common stock
      of
      our Company issuable to Christiane Erné, Jean-Christophe Hadorn and Claudia Rey
      pursuant to the share exchange agreement. The credit line escrow agreement
      was
      amended on October 27, 2006, and November 30, 2006, to extend the deadline
      for
      obtaining the credit line financing from October 31, 2006, to November 30,
      2006,
      and then to November 30, 2007. The 24,143,410 shares of common stock are to
      be
      delivered from escrow by the escrow agent as follows:




34




(a)
      into
      subsequent escrow in accordance with the terms of the long term escrow agreement
      (as described below) if our Company closes a financing of at least CHF12,000,000
      ($9,537,960) on or before November 30, 2007; or




(b)
      to
      our Company for immediate cancellation if we do not close a financing of at
      least CHF12,000,000 ($9,537,960) on or before November 30, 2007,




as
      more
      particularly described in the credit line escrow agreement.




In
      connection with the closing of the share exchange agreement, we entered into
      a
      long term escrow agreement dated September 1, 2006, with Christiane Erné,
      Jean-Christophe Hadorn, Claudia Rey and Clark Wilson LLP. Pursuant to the terms
      of the long term escrow agreement, we agreed to appoint Clark Wilson LLP as
      escrow agent to accept, hold and deliver:




(a)
      14,143,407 shares of common stock of our Company issuable to Christiane Erné,
      Jean-Christophe Hadorn, and Claudia Rey pursuant to the share exchange
      agreement; and




(b)
      24,143,410 shares of common stock of our Company issuable to Christiane Erné,
      Jean-Christophe Hadorn, and Claudia Rey pursuant to the share exchange agreement
      which are released but not cancelled from escrow pursuant to the terms of the
      credit line escrow agreement.




(c)
      10,000,000 shares of common stock of our Company
      issuable to Christiane Erné, Jean-Christophe Hadorn, and Claudia Rey pursuant
      to the Canton Geneva escrow agreement which are released upon
      repayment of the loan to Service Cantonale de l'Energie if within two years
      of the closing of the share exchange agreement.




The
      shares of common stock of our Company held in escrow pursuant to the terms
      of
      the long term escrow agreement are to be delivered from escrow by the escrow
      agent to Christiane Erné, Jean-Christophe Hadorn and Claudia Rey on the second
      anniversary of the closing of the share exchange agreement, as more particularly
      described in the long term escrow agreement.





Flannel
      Management sarl has a consulting agreement with SES Switzerland effective
      October 1, 2006. Flannel Management sarl receives a monthly consulting fee
      of
      CHF20,000 ($15,971.25) (using the exchange rate set forth in Note 3 to the
      Consolidated Financial Statements hereto). The contract is for a 10-year term
      and if earlier terminated, the Company nevertheless pays the consulting fees
      for
      the full term. Flannel Management’s consulting services are rendering by
      Philippe Crisafulli, the husband of Sandrine Crisafulli, Chief Operating
      Officer and Chief Financial Officer of SES USA and Chief Financial Officer
      of
      SES Switzerland.





On
      December 20, 2006, SES Switzerland executed a construction loan with Ms.
      Christine Erné, the Company’s principal stockholder, to enable SES Switzerland
      to commence construction of a new manufacturing facility near Geneva,
      Switzerland during 2007. The construction loan is in the amount of
      CHF2,700,000 ($2,205,090). The Company will pay interest of 4.5% per annum.
      The
      funds will be disbursed as soon as construction has begun. The Company now
      anticipates construction to begin in the second quarter of 2007.





*Director
      Independence*





The
      Company’s Board of Directors consists of Jean-Christophe Hadorn, Daniel Erné,
      Christiane Erné, Michael Noonan and Dr. John Veltheer. Of such directors, only
      Michael D. Noonan is “independent” as such term is defined in the Marketplace
      Rules of the Nasdaq Stock Market.




ITEM
      13.
      EXHIBITS




**Exhibits**




Copies of the following documents are included as exhibits to this Annual Report
      on Form 10-KSB pursuant to Item 601 of Regulation S-B:









**Exhibit****Number**
            
            **Description**2.1
            
            Share
                Exchange Agreement dated August 31, 2006, among our Company, SES
                Switzerland and the stockholders of SES Switzerland (incorporated
                by
                reference from our Current Report on Form 8-K filed on September
                1,
                2006)3.1
            
            Articles
                of Incorporation (incorporated by reference from our Registration
                Statement on Form 10-SB filed on June 27, 2002)3.2
            
            Bylaws
                (incorporated by reference from our Registration Statement on Form
                10-SB
                filed on June 27, 2002)3.3
            
            Certificate
                of Ownership (incorporated by reference from our Current Report on
                Form
                8-K filed on June 21, 2006)3.4
            
            Certificate
                of Ownership (incorporated by reference from our Current Report on
                Form
                8-K filed on August 25, 2006)10.1
            
            Services
                Agreement dated May 1, 2004 between The Electric Network.com, Inc.
                and
                Binary Environments Ltd. (incorporated by reference from our Quarterly
                Report on Form 10-QSB filed on May 17, 2004)10.2
            
            Promissory
                Note dated November 2, 2005 between The Electric Network.com Inc.
                and Dr.
                John Veltheer (incorporated by reference from our Current Report
                on Form
                8-K filed on November 28, 2005)




35




10.3
            
            Promissory
                Note dated January 19, 2006 between The Electric Network.com Inc.
                and IFG
                Trust Services Inc. (incorporated by reference from our Annual Report
                on
                Form 10-KSB filed on February 21, 2006)10.4
            
            Term
                Sheet with SES Switzerland, dated May 15, 2006 (incorporated by reference
                from our Current Report on Form 8-K filed on May 16,
                2006)10.5
            
            Amendment
                to Term Sheet dated June 15, 2006, among Electric Network.com Inc.,
                SES
                Switzerland and the shareholders of SES Switzerland (incorporated
                by
                reference from our Current Report on Form 8-K filed on June 19,
                2006)10.6
            
            Amendment
                to Term Sheet dated August 15, 2006, among SES USA, SES Switzerland
                and
                the shareholders of SES Switzerland (incorporated by reference from
                our
                Current Report on Form 8-K filed on August 18, 2006)10.7
            
            Finder's
                Fee Agreement dated August 31, 2006, between SES USA. and Standard
                Atlantic (Suisse) S. A. (incorporated by reference from our Current
                Report
                on Form 8-K filed on October 4, 2006)10.8
            
            Canton
                Geneva Escrow Agreement dated September 15, 2006, among SES USA.,
                Christiane Erné, Jean-Christophe Hadorn, Claudia Rey, Service Cantonal De
                L'Energie and Clark Wilson LLP (incorporated by reference from our
                Current
                Report on Form 8-K filed on October 4, 2006)10.9
            
            Credit
                Line Escrow Agreement dated September 1, 2006, among SES USA.,
                Christiane Erné, Jean-Christophe Hadorn, Claudia Rey and Clark Wilson LLP
                (incorporated by reference from our Current Report on Form 8-K filed
                on
                October 4, 2006)10.10
            
            Long-Term
                Escrow Agreement dated September 1, 2006, among SES USA., Christiane
                Erné, Jean-Christophe Hadorn, Claudia Rey and Clark Wilson LLP
                (incorporated by reference from our Current Report on Form 8-K filed
                on
                October 4, 2006)10.11
            
            Employment
                Agreement dated September 14, 2006 between SES Switzerland and Sandrine
                Crisafulli (incorporated by reference from our Current Report on
                Form 8-K
                filed on October 4, 2006)10.12
            
            Loan
                Agreement dated October 10, 2003 and November 6, 2003 between SES
                Switzerland and Fonds Pour le Development des Energies Renouvelables
                et
                les Economies d'Energie (incorporated by reference from our Current
                Report
                on Form 8-K/A filed on November 16, 2006)10.13
            
            Co-operation
                Agreement dated October 13, 2003 between SES Switzerland and Schott
                Solar
                GmbH (incorporated by reference from our Current Report on Form 8-K/A
                filed on November 16, 2006)10.14
            
            Employment
                Agreement dated October 1, 2001 between SES Switzerland and Sandrine
                Crisafulli (incorporated by reference from our Current Report on
                Form
                8-K/A filed on November 16, 2006)10.15
            
            Loan
                Agreement dated January 21, 2004 between SES Switzerland and Fonds
                Pour le
                Developpement des Energies Renouvelables et les Economies d'Energie
                (incorporated by reference from our Current Report on Form 8-K/A
                filed on
                November 16, 2006)10.16
            
            Loan
                Agreement dated April 7, 2004 and April 10, 2004 between SES Switzerland
                and UBS SA (incorporated by reference from our Current Report on
                Form
                8-K/A filed on November 16, 2006)10.17
            
            Partnership
                Agreement dated September 29, 2004 between SES Switzerland and Suntechnics
                Fabrisolar AG (incorporated by reference from our Current Report
                on Form
                8-K/A filed on November 16, 2006)10.18
            
            Consulting
                Agreement dated January 16, 2005 between Jean-Christophe Hadorn and
                SES
                Switzerland (incorporated by reference from our Current Report on
                Form
                8-K/A filed on November 16, 2006)10.19
            
            Development
                Contract dated June 17, 2005 between SES Switzerland and Karl Steiner
                S.A.
                (incorporated by reference from our Current Report on Form 8-K/A
                filed on
                November 16, 2006)10.20
            
            Co-operation
                Agreement dated July 19, 2005 between SES Switzerland and Firstec
                S. A.
                (incorporated by reference from our Current Report on Form 8-K/A
                filed on
                November 16, 2006)10.21
            
            Voting
                Trust Agreement dated September 12, 2005 between Christian Erne and
                Claudia Rey (incorporated by reference from our Current Report on
                Form
                8-K/A filed on November 16, 2006)




36




10.22
            
            Voting
                Trust Agreement dated February 22, 2006 between Christiane Erne and
                Jean-Christophe Hadorn (incorporated by reference from our Current
                Report
                on Form 8-K/A filed on November 16, 2006)10.23
            
            Employment
                Agreement dated May 1, 2006 between SES Switzerland and Bernard Balmer
                (incorporated by reference from our Current Report on Form 8-K/A
                filed on
                November 16, 2006)10.24
            
            Assignment
                of Rights Agreement dated August 31, 2006 between SES Switzerland
                and
                Jean-Cristophe Hadorn (incorporated by reference from our Current
                Report
                on Form 8-K/A filed on November 16, 2006)10.25
            
            Assignment
                of Rights Agreement dated August 31, 2006 between SES Switzerland
                and
                Olivier Ouzilou (incorporated by reference from our Current Report
                on Form
                8-K/A filed on November 16, 2006)10.26
            
            Assignment
                of Rights Agreement dated August 31, 2006 between SES Switzerland
                and
                Sandrine Crisafulli (incorporated by reference from our Current Report
                on
                Form 8-K/A filed on November 16, 2006)10.27
            
            Assignment
                of Rights Agreement dated September 15, 2006 between SES Switzerland
                and
                Sylvere Leu (incorporated by reference from our Current Report on
                Form
                8-K/A filed on November 16, 2006)10.28
            
            Amendment
                No. 1 to Credit Line Escrow Agreement dated October 27, 2006 (incorporated
                by reference from our Current Report on Form 8-K filed on Novemeber
                2,
                2006)10.29
            
            Amendment
                No. 2 to Credit Line Escrow Agreement dated November 30, 2006
                (incorporated by reference from our Current Report on Form 8-K filed
                on
                December 8, 2006)10.30
            
            Form
                of Employment Agreement dated October 1, 2006 between SES Switzerland
                and
                Sandrine Crisafulli*10.31
            
            Form
                of Employment Agreement dated October 1, 2006 between SES Switzerland
                and
                Daniel Erné*10.32
            
            Form
                of Consulting Agreement dated October 1, 2006 between SES Switzerland
                and
                Flannel Management Sarl*10.33
            
            Construction
                Credit Contract dated December 20,
                2006 between SES Switzerland and Banque Cantonale de
                Geneve*10.34
            
            Construction
              loan dated November 30, 2006 between SES Switzerland and Christiane
              Erné*11
            
            Statement
                re: computation of per share earnings (incorporated herein by reference
                to
                Note 3 of the Consolidated Financial Statements)*14.1
            
            Code
                of Ethics (incorporated by reference from our Annual Report on Form
                10-KSB
                filed on March 31, 2005)16.1
            
            Letter
                on change in certifying accountants (incorporated by reference from
                our
                Current Report on Form 8-K filed on November 8, 2006)21.1
            
            List
                of Subsidiaries*31.1
            
            Rule
                13a-14(a)/15d-14(a) Certification*31.2
            
            Rule
                13a-14(a)/15d-14(a) Certification*32.1
            
            Section
                1350 Certification*32.2
            
            Section
                1350 Certification*





*
            Filed
                herewith




ITEM
      14.
      PRINCIPAL ACCOUNTANT FEES AND SERVICES





*Audit
      Fees*





The
      aggregate fees billed for professional services rendered by our principal
      accountants BDO Visura for the audits of our financial statements included
      in
      Form 8-K/A and 10-QSB and for the financial statements included in our Annual
      Report on Form 10-KSB as well as services related to responding to SEC
      comment letters on our Form 8-K/A and 10-QSB were approximately $91,621
      (CHF114,800) for the year ended December 31, 2006. BDO Visura did not perform
      any audit work for 2005 before the reverse merger in 2006.




37





The
      aggregate fees billed for professional services rendered by our predecessor
      principal accountants Manning Elliott for the audits of our financial statements
      included in Form 8-K/A and 10-QSB were approximately $9,200 for the year ended
      December 31, 2006. The aggregate fees billed by our principal accountants for
      professional services rendered for the audit of our annual financial statements
      for the year ended December 31, 2005 were approximately $8,250.




*Audit-Related
      Fees*





The
      aggregate fees billed for assurance and related services by our principal
      accountants, BDO Visura, that are reasonably related to the performance of
      the
      audit and review of the Company's financial statements were $0 and $0 for 2005
      and 2006, respectively.





The
      aggregate fees billed for assurance and related services by our principal
      accountants, Manning Elliott, that are reasonably related to the performance
      of
      the audit and review of the Company's financial statements were $0 and $0 for
      2005 and 2006, respectively.




*Tax
      Fees*





The
      aggregate fees billed for tax compliance, tax advice and tax planning and other
      products and services by our principal accountants, BDO Visura, were $0 and
      $0
      for 2005 and 2006, respectively.





The
      aggregate fees billed for tax compliance, tax advice, and tax planning and
      other
      products and services by our predecessor accountants, Manning Elliot, were
      $2,500 for 2004, 2005 and 2006. The nature of the services were for preparation
      of tax returns for years ended December 31, 2003, 2004 and 2005.





*All
      Other Fees*





Neither
      BDO Visura nor Manning Elliott rendered any professional services other than
      those covered in the Sections captioned “Audit Fees”, “Audit-Related Fees” and
“Tax Fees” for the Company’s 2006 and 2005 fiscal years, respectively.





*Audit
      Committee Pre-Approval Policies and Procedures*





The
      Company does not have an Audit Committee. The Board of Directors approves all
      audit, audit-related and permissible non-audit services provided by the
      independent auditors in order to assure that the provision of such services
      does
      not impair the auditor's independence. These services may include audit
      services, audit-related services, tax services and other
      services.


38


SIGNATURES





In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.


SES
              SOLAR
              INC.Date:
              May 14, 2007
            By:
            /s/ Jean-Christophe
              HadornJean-Christophe
                Hadorn
              Chief
                Executive Officer




POWER
      OF
      ATTORNEY




KNOW
      ALL
      PERSONS BY THESE PRESENTS, that each person whose signature appears below
      constitutes and appoints Jean-Christophe Hadorn, Chief Executive Officer, and
      Sandrine Crisafulli, Chief Financial Officer, and each of them, his or her
      true
      and lawful attorney-in-fact and agent, with the full power of substitution
      and
      resubstitution, for him or her and in his or her name, place, and stead, in
      any
      and all capacities therewith, to sign any and all amendments to this report
      on
      Form 10-KSB, and to file the same, with all exhibits thereto, and other
      documents in connection therewith, with the Securities and Exchange Commission,
      granting unto each said attorney-in-fact and agent full power and authority
      to
      do and perform each and every act in person, hereby ratifying and confirming
      all
      that each said attorney-in-fact and agent, or either of them, or their or his
      or
      her substitute or substitutes, may lawfully do or cause to be done by virtue
      hereof.





In
      accordance with the Exchange Act, this report has been signed below by the
      following persons on behalf of the registrant and in the capacities and on
      the
      dates indicated.





NAME
            
            TITLE
            
            DATE/s/
                Jean-Christophe HadornJean-Christophe
                Hadorn
            
            Chief
                Executive Officer and
            
            May
                14 , 2007Director(Principal
                Executive Officer)/s/
                Sandrine CrisafulliSandrine
                Crisafulli
            
            Chief
                Financial Officer
            
            May
                14, 2007(Principal
                Accounting Officer)/s/
                John VeltheerJohn
                Veltheer
            
            Director
            
            May
                14, 2007/s/
                Christine ErnéChristine
                Erné
            
            Director
            
            May
                14, 2007/s/
                Daniel ErnéDaniel
                Erné
            
            Director
            
            May
                14, 2007/s/
                Michael D. NoonanMichael
                D. Noonan
            
            Director
            
            May
                14, 2007





39


**SES
      SOLAR INC.**





**CONSOLIDATED
      FINANCIAL STATEMENTS**





FOR
      THE
      YEARS ENDED DECEMBER 31, 2006 AND 2005





**INDEX
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


PageReport
                  of Independent Registered Public Accounting Firm
              
              
              F-2Consolidated
                  Balance Sheet - December 31, 2006 and 2005
              
              
              F-3Consolidated
                  Statements of Operations and Comprehensive Loss
              
              
              F-4for
                  the Years Ended December 31, 2006 and 2005Consolidated
                  Statements of Changes in Stockholders’ Equity (Deficit)
              
              
              F-5for
                  the Years Ended December 31, 2006 and 2005Consolidated
                  Statements of Cash Flows
              
              
              F-6for
                  the Years Ended December 31, 2006 and 2005Notes
                  to the Consolidated Financial Statements
              
              
              F-7




F-1




**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**





Board
      of
      Directors and Stockholders


SES
      Solar
      Inc.




We
      have
      audited the accompanying consolidated balance sheets of SES Solar Inc. (the
      "Company") as of December 31, 2006 and 2005 and the related consolidated
      statements of operations and comprehensive losses, changes in stockholders'
      equity (deficit) and cash flows for each of the two years in the period ended
      December 31, 2006. These financial statements are the responsibility of the
      Company's management. Our responsibility is to express an opinion on these
      financial statements based on our audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. The Company is not required to
      have, nor were we engaged to perform, an audit of its internal control over
      financial reporting. Our audit included consideration of internal control over
      financial reporting as a basis for designing audit procedures that are
      appropriate in the circumstances, but not for the purpose of expressing an
      opinion on the effectiveness of the Company's internal control over financial
      reporting. Accordingly, we express no such opinion. An audit includes examining,
      on a test basis, evidence supporting the amounts and disclosures in the
      financial statement, assessing the accounting principles used and significant
      estimates made by management, as well as evaluating the overall financial
      statement presentation. We believe that our audits provide a reasonable basis
      for our opinion.





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of SES Solar Inc. at December
      31, 2006 and 2005, and the results of its operations and its cash flows for
      each
      of the two years in the periods ended December 31, 2006, in conformity with
      accounting principles generally accepted in the United States of America.





As
      described in Note 5 to the financial statements, the company has restated its
      financial statements to correct various errors in classification.






Zurich,
      May 7,
      2007.




BDO
      Visura





/s/ Andreas
              Wyss
            
            /s/ Christian
              FellerAndreas
                Wyss
              Auditor
                in Charge
              
              Swiss
                Certified Accountant / CPA
            
            ppa.Christian Feller
              
              
              Swiss
                Certified Accountant




F-2


**SES
      SOLAR INC. AND SUBSIDIARY**


**CONSOLIDATED
      BALANCE SHEET**


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




**December**
                **31st**
                **2006**
              
              **December**
                **31st**
                **2005****ASSETS
                  (in $)**
              
              
              
              
              
              
              
              
              (As
                  Restated
              )Current
                  Assets:Cash
                  and cash equivalents
              
              
              6
              
              
              6,016,666
              
              
              35,170Receivables,
                  net of allowance for doubtful accounts of $ 0 for the years ended
                  2006 and
                  2005.
              
              
              7
              
              
              10,386
              
              
              221,957Due
                  from related party
              
              
              23
              
              
              78,386
              
              
              72,540Inventory
              
              
              8
              
              
              237,275
              
              
              219,580Other
                  current assets
              
              
              
              
              
              203,280
              
              
              11,973**Total
                  current assets**
              
              
              
              
              
              **6,545,993**
              
              
              **561,220**Long-Term
                  Assets:Deferred
                  Expense
              
              
              15
              
              
              **420,000**
              
              
              **0**Property
                  and Equipment, at cost,
              
              
              
              
              
              376,837
              
              
              335,943Less
                  accumulated depreciation and amortization
              
              
              
              
              
              (254,779
              )
              
              (192,939
              )Building
                  development
              
              
              
              
              
              219,619
              
              
              76,570**Total
                  fixed assets**
              
              
              9
              
              
              **341,677**
              
              
              **219,574****Total
                  long-term assets**
              
              
              
              
              
              **761,677**
              
              
              **219,574****Total
                  Assets**
              
              
              
              
              
              **7,307,670**
              
              
              **780,794****LIABILITIES
                  AND STOCKHOLDERS’ EQUITY (DEFICIT)**Current
                  Liabilities:Short-term
                  loan
              
              
              10,
                  12
              
              
              409,920
              
              
              50,482Accounts
                  payable
              
              
              
              
              
              329,323
              
              
              390,036Billings
                  in excess of cost and estimated earnings
              
              
              11
              
              
              123,573
              
              
              106,977Total
                  current liabilities
              
              
              
              
              
              **862,816**
              
              
              **547,495**Long-Term
                  Liabilities:Loan
                  payable
              
              
              12
              
              
              794,810
              
              
              735,539Total
                  long-term liabilities
              
              
              
              
              
              **794,810**
              
              
              **735,539**Stockholders'
                  Equity:
              
              
              15Common
                  stock, $0.001 par value; authorized
              
              
              
              
              
              73,081
              
              
              42,287100,000,000
                  shares, issued and outstanding;73,081,168
                  and 48,286,817 sharesAdditional
                  paid in Capital
              
              
              
              
              
              8,050,093
              
              
              373,387Accumulated
                  other comprehensive income  (loss)Translation
                  Adjustment
              
              
              
              
              
              (226,816
              )
              
              82,893Year
                  end Accumulated Deficit
              
              
              
              
              
              (2,246,314
              )
              
              (1,006,807
              )Total
                  stockholders' equity (deficit)
              
              
              
              
              
              **5,650,044**
              ****
              ****
              **(502,240**
              **)**Total
                  Liabilities and Stockholders' Equity
              
              
              
              
              
              **7,307,670**
              ****
              ****
              **780,794**(Deficit)




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




F-3


**SES
      SOLAR INC. AND SUBSIDIARY**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS**


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


**Year
                  Ended December 31, 2006**
              
              **Year
                  Ended December 31, 2005**(As
                  Restated)Revenue:Revenue
              
              
              7
              
              
              129,275
              
              
              1,100,474Cost
                  of goods sold (exclusive of depreciation shown separately
                  below)
              
              
              
              
              
              (95,333
              )
              
              (1,018,490
              )Costs
                  and Expenses:Personnel
              
              
              
              
              
              184,710
              
              
              121,867Rent
                  and Leases Expenses
              
              
              13
              
              
              138,163
              
              
              113,590Research
                  and Development
              
              
              
              
              
              151,246
              
              
              98,363Other
                  G+A
              
              
              
              
              
              772,149
              
              
              158,659Depreciation
                  and amortization
              
              
              
              
              
              45,090
              
              
              52,614Total
                  costs and expenses
              
              
              
              
              
              **1,291,358**
              
              
              **545,093**Other
                  Income and Expense:Interest
                  expense
              
              
              20
              
              
              (56,757
              )
              
              (42,302
              )Interest
                  income
              
              
              17
              
              
              19,384
              
              
              0Foreign
                  Exchange Gain
              
              
              
              
              
              55,281
              
              
              0Total
                  Other Income
              
              
              
              
              
              **17,908**
              
              
              **(42,302**
              **)**Loss
                  before taxes
              
              
              
              
              
              (1,239,507
              )
              
              (505,411
              )Income
                  taxes
              
              
              18
              
              
              0
              
              
              0Net
                  Loss
              
              
              
              
              
              **(1,239,507**
              **)**
              
              **(505,411**
              **)**Other
                  Comprehensive Loss/Income:
              
              
              
              
              
              0
              
              
              0Translation
                  adjustment
              
              
              
              
              
              (309,709
              )
              
              29,476Comprehensive
                  loss
              
              
              
              
              
              (1,549,216
              )
              
              (475,935
              )Basic
                  and diluted Weighted Average Shares
              
              
              
              
              
              30,294,665
              
              
              24,143,410Basic
                  and diluted Net Loss Per Share
              
              
              
              
              
              **(0.041**
              **)**
              
              **(0.021**
              **)**




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




F-4


**SES
      SOLAR INC. AND SUBSIDIARY**


**CONSOLIDATED
      STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)**


**FOR
      THE YEARS ENDED DECEMBER 31, 2006 AND 2005**


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




**Common
                  Stock**
              
              
              
              
              
              **Accumulated
                  Other Comprehensive Income****Shares**
              
              
              
              **Amount**
              
              **Paid-in
                  Capital**
              
              **Retained
                  Earnings**
              
              **Translation
                  Adjustment**
              
              **Total
                  Shareholders' Equity**Balance
                  at January 01, 2005 (as restated)
              
              
              48,286,817
              
              
              **a**
              
              
              48,287
              
              
              373,387
              
              
              (501,396
              )
              
              53,417
              
              
              (26,305
              )Net
                  Loss
              
              
              0
              
              
              
              
              
              0
              
              
              0
              
              
              (505,411
              )
              
              
              
              
              (505,411
              )Translation
                  Adjustment
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              29,476
              
              
              29,476Balance
                  at December 31, 2005 (as restated)
              
              
              48,286,817
              
              
              
              
              
              48,287
              
              
              373,387
              
              
              (1,006,807
              )
              
              82,893
              
              
              (502,240
              )Net
                  Loss
              
              
              0
              
              
              
              
              
              0
              
              
              0
              
              
              (1,239,507
              )
              
              0
              
              
              (1,239,507
              )Translation
                  Adjustment
              
              
              0
              
              
              
              
              
              0
              
              
              0
              
              
              0
              
              
              (309,709
              )
              
              (309,709
              )Shares
                  issued in an offering
              
              
              5,050,000
              
              
              **b**
              
              
              5,050
              
              
              1,001,314
              
              
              
              
              
              0
              
              
              1,006,364Shares
                  issued in an offering
              
              
              4,976,350
              
              
              **c**
              
              
              4,976
              
              
              3,558,091
              
              
              0
              
              
              0
              
              
              3,563,067Shares
                  Acquired in the Public shell (Note 20)
              
              
              10,668,000
              
              
              
              
              
              10,668
              
              
              28,401
              
              
              0
              
              
              0
              
              
              39,069Shares
                  issued in an offering
              
              
              4,100,001
              
              
              **d**
              
              
              4,100
              
              
              3,316,900
              
              
              0
              
              
              0
              
              
              3,321,000Finder's
                  Fee
              
              
              
              
              
              **b**
              
              
              
              
              
              (228,000
              )
              
              
              
              
              
              
              
              (228,000
              )Net
                  shares activity
              
              
              24,794,351
              
              
              
              
              
              24,794
              
              
              7,676,706
              
              
              0
              
              
              0
              
              
              7,701,500Balance
                  at December 31, 2006
              
              
              73,081,168
              
              
              
              
              
              73,081
              
              
              8,050,093
              
              
              (2,246,314
              )
              
              (226,816
              )
              
              5,650,044
  **a** The
        number of shares has been retroactively restated to show the correct par
        value
        of shares.
  **b** On
        May
        30, 2006, SES USA issued 5,050,000 shares to 3 off-shore investors at an
        issue
        price of $0.20 per share for total proceeds of $1,010,000, less a finders
        fees
        of $3,636. The issuance of the common shares was made in reliance upon
        Regulation S and/or Section 4(2) of the Securities Act of 1933 in an offshore
        transaction to non-U.S. persons (as that term is defined in Regulation S
        of the
        Securities Act of 1933). In connection with the reverse acquisition the company
        paid a commission of $228,000 to the outside consultant who found the Public
        shell and arranged this transaction (finder's fee). This share issuance was
        contingent.
  **c** On
          September 18, 2006, SES USA issued 4,976,350 additional shares to 19 investors
          at an issue price of $0.80 per share for total proceeds of $3,981,080,
          less
          finders fees $418,013, 4,626,350 of which were issued in reliance upon
          Regulation S and/or Section 4(2) of the Securities Act of 1933 in an offshore
          transaction to non-US persons. The remaining 350,000 were issued in accordance
          with Rule 506 of Regulation D and/or Section 4(2) of the Securities Act
          of 1933
          to US investors, each of whom represented that he, she or it was an accredited
          investor.
 **d** On
          November 22, 2006, SES USA issued an aggregate of 4,100,001 common shares
          to
          three (3) investors at a price of $0.90 per share for gross proceeds of
          $3,690,000, less finder's fees of $369,001 pursuant to private placement
          subscription agreements. The shares were issued in reliance upon Regulation
          S
          and/or Section 4(2) of the Securities Act of 1933 by issuing the shares
          to
          non-U.S. persons (as that term is defined in Regulation S of the Securities
          Act
          of 1933) in an offshore transaction.




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




F-5


**SES
      SOLAR INC. AND SUBSIDIARY**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


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


**YEARS
                  ENDED****December
                  31st**
                **2006**
              
              **December
                  31st**
                **2005**Cash
                  Flows from Operating Activities:
              
              
              
              (As
                  Restated)Net
                  loss
              
              
              (1,239,507
              )
              
              (505,411
              )Adjustments
                  to reconcile net loss to cash used in operating
                  activities:Depreciation
                  and amortization
              
              
              45,091
              
              
              52,614Changes
                  in operating assets and liabilities:
              
              
              0
              
              
              0(Increase)
                  decrease in:Receivables,
                  including Due from Related Party
              
              
              223,500
              
              
              (159,836
              )Inventory
              
              
              0
              
              
              (22,761
              )Other
                  current assets
              
              
              (185,405
              )
              
              20,099Deferred
                  Expenses
              
              
              (420,000
              )
              
              0Increase
                  (decrease) in:Accounts
                  payable and accrued expenses
              
              
              (213,294
              )
              
              201,805Billings
                  in excess of cost and estimated earnings
              
              
              7,768
              
              
              (115,570
              )**Net
                  cash used in operating activities**
              
              
              **(1,781,847**
              **)**
              
              **(529,060**
              **)**Cash
                  Flows from Investing Activities:Property,
                  plants and equipment
              
              
              (146,791
              )
              
              (48,822
              )Net
                  cash Acquired in a reverse Acquisition
              
              
              164,234
              
              
              0**Net
                  cash provided/used in investing activities**
              
              
              **17,443**
              
              
              **(48,822**
              **)**Cash
                  Flows from Financing Activities:Repayment/Proceed
                  of loans
              
              
              (50,482
              )
              
              50,482Bank
                  loan
              
              
              399,280
              
              
              0Proceeds
                  from the issuance of common stock, net of finders fees
              
              
              7,662,431
              
              
              0**Net
                  cash provided by financing activities**
              
              
              **8,011,229**
              
              
              **50,482**Increase
                  (decrease) in cash and cash equivalents
              
              
              6,246,825
              
              
              (527,400
              )Effect
                  of exchange rate changes on cash
              
              
              (265,329
              )
              
              (4,245
              )Cash
                  and cash equivalents, beginning of year
              
              
              35,170
              
              
              566,815Cash
                  and cash equivalents, end of year
              
              
              6,016,666
              
              
              35,170Supplemental
                  Cash Flow Information:Cash
                  paid for interest
              
              
              56,757
              
              
              42,302




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




F-6





**SES
      SOLAR INC. AND SUBSIDIARY**




**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**




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




Organization
      - SES SOLAR INC., (the “Company” or "SES USA") 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 are
      those
      of SES Switzerland. The reverse acquisition resulted in a change of control
      of
      SES USA, with the former stockholders of SES Switzerland owning approximately
      70% of SES USA and SES Switzerland becoming SES USA's wholly owned
      subsidiary.




SES
      Switzerland was formed in 2001 for the purpose of researching, developing,
      manufacturing and selling innovative products to the solar photovoltaic market.
      From its inception, SES Switzerland has focused primarily on manufacturing
      and
      installing silicon photovoltaic solar cells 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 companies, local governmental agencies and private house
      owners.




On
      November 30, 2006, the company entered into an amended agreement with Mrs.
      Erné,
      Mr. Hadorn, Mr. Rey and Clark Wilson LLP as escrow agent to amend the terms
      of a
      credit line agreement dated September 1, 2006, as amended, which was entered
      into among the same parties. Pursuant to the terms of the amendment agreement,
      the parties agreed to extend the date by which the company must close a
      financing of at least CHF12,000,000 from November 30, 2006 until November 30,
      2007. Per the agreement, 24,143,410 shares were delivered into a subsequent
      escrow in accordance with the agreement. If the company does not close the
      financing before November 30, 2007, the shares will be delivered to SES USA
      for
      immediate cancellation. This agreement was amended. Since the company has not
      yet formally closed the financing, the shares have not been released from
      escrow. The
      shares of common stock of the Company held in escrow pursuant to the terms
      of
      the long term escrow agreement are to be delivered from escrow by the escrow
      agent to Christiane Erné, Jean-Christophe Hadorn and Claudia Rey on the second
      anniversary of the closing of the share exchange agreement.




SES
      USA
      was engaged in a second round of financing on November 7, 2006. SES USA issued
      4,100,001 shares to third parties resulting in a further dilution of the
      historical and former shareholders of SES Switzerland to approximately
      66%.




**2.**  **Future
      Operations**




SES
      Switzerland has experienced losses from operations and anticipates incurring
      losses in the near future. SES Switzerland has, however, developed and is in
      the
      process of patenting a new assembly technology for solar panels, which the
      Company believes will allow higher quality electrical contacts, better
      performance and highly reduced costs resulting from the increased automation
      processes.




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




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





**3.**  **Summary
      of Significant Accounting Policies:**




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





The
      preparation of financial statements in conformity with United States generally
      accepted accounting principles requires management to make estimates and
      assumptions that affect the amounts reported in the financial statements and
      accompanying disclosures of the Company.  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.




F-7




**SES
      SOLAR INC. AND SUBSIDIARY**





**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**




*Foreign
      Currency Translation* —The
      currency of SES USA is the U.S. dollar whereas the wholly owned subsidiary's
      functional currency is the Swiss Franc. The financial statements of the
      Company's wholly owned subsidiary, SES Switzerland, are translated to U.S.
      dollar equivalents under the current method in accordance with SFAS No. 52,
      "Foreign Currency Translation." Assets and liabilities are translated into
      U.S.
      dollar equivalents at rates of exchange in effect at the balance sheet date.
      Average rates for the year are used to translate revenues and expenses. The
      cumulative translation adjustment is reported as a component of accumulated
      other comprehensive income (loss). Foreign currency differences from
      intercompany 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
              
              2006
              
              2005CHF
              
              CHF$
              
              
              1.25225
              
              
              1.24626
  Balance
                  Sheet year-end rates
              
              2006
              
              2005CHF
              
              CHF$
              
              
              1.21975
              
              
              1.31804


*Cash
      Equivalents* —The
      Company considers all highly liquid debt securities purchased with an original
      maturity of three months or less to be cash equivalents.




*Receivables
      and Credit Policies* —
The
      Company's accounts receivables primarily consists of trade receivables.
      Management reviews accounts receivables on a monthly basis to determine if
      any
      receivables will potentially be uncollectible. The Company uses estimates to
      determine the amount of the allowance for doubtful accounts necessary to reduce
      accounts receivable and unbilled receivables to their expected net realizable
      value. The Company estimates the amount of the required allowance by reviewing
      the status of past-due receivables and analyzing historical bad debt trends.
      Actual collection experience has not varied significantly from estimates, due
      primarily to credit policies, collection experience and the Company's stability
      as it relates to its current customer base. Receivables consist of revenues
      billed to customers upon achievement of contractual obligations. Based on the
      information available, the Company believes its allowance for doubtful accounts
      as of December 31, 2006 is adequate.





*Product
      Inventory* —Product
      inventory is stated at the lower of cost or market. Cost is determined using
      the
      first-in, first-out (FIFO) method and includes certain charges directly and
      indirectly incurred in bringing product inventories to the point of sale.
      Inventory is accounted for at the lower of cost or market, and as a result,
      write-offs/write-downs occur due to damage, deterioration, obsolescence, changes
      in prices and other causes.




*Property
      and Equipment* —Property
      and equipment is stated at cost. Depreciation is computed using straight-line
      method over estimated useful lives of 3 to 10 years. Expenditures for
      maintenance and repairs, which do not materially extend the useful lives of
      property and equipment, are charged to operations as incurred. When property
      or
      equipment is retired or otherwise disposed of, the property accounts are
      relieved of costs and accumulated depreciation and any resulting gain or loss
      is
      recognized.




*Warranties* —Since
      the Company’s commencement it has had no warranty claims. The Company’s
      production was low and components were purchased for photovoltaic installations,
      all of which have their own warranties. Since the Company has not yet started
      producing its own photovoltaic cells and warranty claims can be thus exercised
      against its suppliers, the Company does not believe that discussion of
      warranties is a critical accounting policy currently, but this may become so
      in
      the future.




F-8





**SES
      SOLAR INC. AND SUBSIDIARY**





**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**




*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 must be met before revenue can be recognized: (1) persuasive
      evidence of an arrangement exists; (2) delivery has occurred or services
      rendered; (3) the seller's price to the buyer is fixed and determinable;
      and (4) collection is reasonably assured.





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




For
      the
      years ended 2006 and 2005, the Company has no billed or unbilled amount
      representing claims or other similar items subject to uncertainty concerning
      their determination or ultimate realization. Amounts outstanding as at year
      end
      are expected to be collected in 2007.





*Income
      Taxes* —The
      Company follows Statement of Financial Accounting Standards (SFAS) No. 109,
      "Accounting for Income Taxes", which requires an asset and liability approach
      to
      financial accounting and reporting for income taxes. Deferred income tax assets
      and liabilities are computed annually for differences between the financial
      statement and tax bases of assets and liabilities that will result in taxable
      or
      deductible amounts in the future based on enacted tax laws and rates applicable
      to the period in which the differences are expected to affect taxable income.
      Valuation allowances are established when necessary to reduce deferred tax
      assets to the amount expected to be realized. Income tax expense (benefit)
      is
      the tax payable or refundable for the period plus or minus the change during
      the
      period in deferred tax assets and liabilities. The Company's tax basis for
      assets and liabilities is identical for the financial statements and tax
      reporting. Accordingly, the only deferred tax position is the benefit with
      respect to the net operating loss. The Company records a valuation allowance
      to
      reduce the deferred tax asset to the amount that is estimated to be more likely
      than not to be realized.





*Comprehensive
      Income* -
      The
      Company accounts for comprehensive income according to Statement of Financial
      Accounting Standards (SFAS) No. 130 "Reporting Comprehensive Income". Effective
      for fiscal years beginning after December 15, 1997, FAS 130 states that
      comprehensive income is net income, plus certain other items that are recorded
      directly to shareholders' equity such as foreign currency translation
      adjustments and unrealized gains (losses) on marketable securities.





*Loss
      Per Share* —Loss
      per
      share is presented in accordance with the provisions of SFAS No. 128,
      "Earnings Per Share". Basic earnings per share does not include the effects
      of
      potentially dilutive stock options 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 stock options for periods in which the options'
      exercise price is lower than the Company's average share price for the period.
      As per an agreement dated September 1, 2006 (as amended), related to the reverse
      acquisition, the Company is required to obtain additional financing in the
      amount of CHF12,000,000 no later than November 30, 2007 to build a manufacturing
      plant in Plan-les-Ouates. Otherwise, 24,143,410 escrowed shares will be
      cancelled. The escrowed shares are not included in the calculation of Earnings
      per Share since they are anti-dilutive.


**2006**
            
            **2005**Basic
                Weighted average shares outstanding
            
            
            30,294,665
            
            
            24,143,410Diluted
                weighted average shares outstanding
            
            
            30,294,665
            
            
            24,143,410




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 selling 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 December 31, 2006 balance sheet date, the warrants were not yet
        exercised. Also, they are not included inthe
        computation of diluted loss per share because their effect was
        anti-dilutive.
  F-9




**SES
      SOLAR INC. AND SUBSIDIARY**





**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**





*Long-Lived
      Assets* -
      Long-lived assets, other than goodwill, are evaluated for impairment when events
      or changes in business circumstances indicate that the carrying amount of the
      assets may not be fully recoverable. An impairment loss would be recognized
      when
      estimated undiscounted future cash flows expected to result from the use of
      these assets and their eventual disposition is less than their carrying amount.
      The determination of whether or not long-lived assets have become impaired
      involves a significant level of judgment in the assumptions underlying the
      approach used to determine the estimated future cash flows expected to result
      from the use of those assets. Changes in the Company's strategy, assumptions
      and/or market conditions could significantly impact these judgments and require
      adjustments to recorded amounts of long-lived assets.





*Research
      and Development Costs* —Research
      and development costs are expensed as incurred. Research and development costs
      are not disclosed separately in the Notes to the Financial Statements, but
      are
      disclosed separately in the Income Statement.




*Fair
      Value of Financial Instruments* —The
      estimated fair values for financial instruments are determined at discrete
      points in time based on relevant market information. These estimates involve
      uncertainties and cannot be determined with precision. The carrying amounts
      of
      receivables, inventory, accounts payable and accrued liabilities approximate
      fair value because of the short-term maturities of these instruments. The fair
      value of the long-term debt is estimated based on anticipated interest rates
      which management believes would currently be available to the Company for
      similar issues of debt, taking into account the current credit risk of the
      Company and the other market factors. The fair value approximates carrying
      value
      of the long-term debt.




**Impact
      of Recently Issued Accounting Pronouncements**




*SFAS
      No. 123(R), "Share-Based Payment."* In
      December 2004, the Financial Accounting Standards Board (FASB) issued Statement
      of Financial Accounting Standards (SFAS) No. 123(R), "Share-Based Payment",
      which is a revision of SFAS No. 123, "Accounting for Stock-Based
      Compensation". SFAS 123(R) supersedes APB Opinion No. 25, "Accounting for
      Stock Issued to Employees", and amends SFAS 95, "Statement of Cash Flows".
      SFAS
      123(R) requires all share-based payments to employees, including grants of
      employee stock options, to be recognized in the income statement based on their
      fair values. Pro-forma disclosure is no longer an alternative. The new standard
      applies to the Company since January 1, 2006. The Company does not provide
      share-based compensation to its employees or executives. There is, therefore,
      no
      impact in the financial statements resulting from the adoption of SFAS 123(R).





*SFAS
      No. 151, "Inventory Costs."* In
      November 2004, the FASB issued SFAS No. 151, "Inventory Costs", which
      revised ARB 43, relating to inventory costs. This revision is to clarify the
      accounting for abnormal amounts of idle facility expense, freight, handling
      costs and wasted material (spoilage). SFAS 151 requires that these items be
      recognized as a current period charge regardless of whether they meet the
      criterion specified in ARB 43. In addition, SFAS 151 requires the allocation
      of
      fixed production overhead to the costs of conversion be based on normal capacity
      of the production facilities. SFAS 151 is effective for inventory costs incurred
      during fiscal years beginning after June 15, 2005. The adoption of SFAS 151
      did not have a material impact on the Company's financial statements.




*SFAS
      No. 154, "Accounting Changes and Error Corrections."* In
      May
      2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
      Corrections—a replacement of APB No. 20 and FASB Statement No. 3".
      SFAS 154 requires that a voluntary change in accounting principle be applied
      retrospectively with all prior period financial statements presented on the
      basis of the new accounting principle. SFAS 154 also requires that a change
      in
      method of depreciating or amortizing a long-lived non-financial asset be
      accounted for prospectively as a change in estimate, and corrections of errors
      in previously issued financial statements should be termed a restatement. SFAS
      154 is effective for accounting changes and correction of errors made in fiscal
      years beginning after December 15, 2005. The adoption of SFAS 154 did not
      have a material impact on the Company's financial statements.


F-10





**SES
      SOLAR INC. AND SUBSIDIARY**





**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**





In
      June
      2006, the Financial Accounting Standard Board issued interpretation No. 48
      ("FIN
      48"), "Accounting for Uncertainty in Income Taxes". FIN 48 establishes the
      minimum threshold for recognizing, and a system for measuring, the benefits
      of
      tax-return positions in financial statements. FIN 48 will be effective for
      the
      Company's year ending December 31, 2007. Management is in the process of
      analyzing the Company's tax positions for purposes of implementing FIN 48.
      Based
      on preliminary analysis, the Company does not believe the adoption of FIN 48
      will result in a material impact on the Company's financial statements. The
      interpretation was not in effect for fiscal 2006.





In
      September 2006, the Securities and Exchange Commission issued Staff Accounting
      Bulletin No. 108, "Considering the Effects of Prior Year Misstatements when
      Quantifying Misstatements in Current Year Financial Statements, "(SAB 108).
      SAB
      108 was issued to provide interpretive guidance on how the effects of the
      carryover or reversal of prior year misstatements should be considered in
      quantifying a current year misstatement. The effective date of SAP 108 is for
      fiscal years ended on or before November 15, 2006. This pronouncement did not
      have any impact on the Company's consolidated financial statements.





Warrants
      issued in connection with financing activities are subject to the provisions
      of
      Emerging Issues Task Force Issue 00-19 ("EITF 00-19"), *Accounting
      for Derivative Financial Instruments Indexed To, and Potentially Settled in,
      a
      Company's Own Stock* .
      In
      December 2006, FASB issued FASB Staff Position ("FSP") No. EITF 00-19-2 ("EITF
      00-19-2"), *Accounting
      for Registration Payment Arrangements* which
      changed the way that a contingent obligation under a registration payment
      arrangement was recorded. EITF 00-19 describes the criteria under which warrants
      should be classified as either equity or as a liability. If the warrant is
      determined to be a liability under method described in EITF 00-19, the liability
      is fair valued each reporting period with the changes recorded through earnings
      in the consolidated statements of operations. Under the new guidance provided
      in
      FSP EITF 00-19-2 the contingent obligation under a registration payment
      arrangement should be separately recognized and measured in accordance with
      SFAS
      No. 5, *Accounting
      for Contingencies* .
      For
      registration payment arrangements and financial instruments subject to those
      arrangements that were entered into prior to the issuance of FSP 00-19-2, this
      is effective for financial statements issued for fiscal years beginning after
      December 15, 2006 and interim periods within those fiscal years. The Company
      has
      determined that the adoption of FSP 00-19-2 will not have a material effect
      on
      its financial statements since the warrants issued and the granted registration
      rights are scoped out from FSP00-19-2.


F-11





**SES
      SOLAR INC. AND SUBSIDIARY**




**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**




**4.**  **Sales
      Contracts under Completed-Contract Method (CCM)**




SES
      Switzerland enters into contracts for installation of solar cells panels with
      public or private building owners. The timeframe between the contract's
      signature and the connection to the electrical network (grid), being the due
      date for the contract's completion, can vary between 6 months and 2 years.
      SES
      Switzerland recognizes revenues on the Cost of Completion Method, based on
      contractual obligations and deliveries. Until completion of the contract,
      advances from customers and advances to suppliers are recorded separately in
      the
      balance sheet.





All
      sales
      recognized during the years 2006 and 2005 are project revenues.




**5.**  **Restatement
      and Reclassification of Certain Items on previous years Balance Sheet /
      Statement of Operation / Comprehensive Loss and Cash Flow Statement and
      Statement of Changes Stockholders' Equity.**





Restatement
      January 1, 2005


Certain
      items have been restated in the Financial Statements as of January 1, 2005
      - see
      reconciliation below. This restatement was necessary due to the fact that the
      Company removed the effects of the loan forgiveness ($74,311) in the Statement
      of Operations and recorded it in the Statement of Changes in Stockholders'
      Equity and the currency translation adjustment ($2,101) was shown
      incorrectly.





Balance
                Sheet
            
            As
                Reported
            
            Difference
            
            As
                Revised$
            
            $
            
            $Cash
                and cash equivalents
            
            
            564,713
            
            
            (2,101
            )
            
            562,612Common
                Stock
            
            
            48,287
            
            
            0
            
            
            48,287Additional
                paid in Capital
            
            
            299,076
            
            
            74,311
            
            
            373,387Retained
                Earnings (loss)
            
            
            (427,085
            )
            
            (74,311
            )
            
            (501,396
            )Translation
                Adjustment
            
            
            51,316
            
            
            (2,101
            )
            
            53,417Total
                Shareholder's Equity (Deficit)
            
            
            (28,406
            )
            
            2,101
            
            
            (26,305
            )




Reclassification
      December 31, 2005


Balance
      Sheet: Certain items have been reclassified in the December 31, 2005 Financial
      Statements - see reconciliation below. This reclassification was necessary
      due
      to the fact that the Company previously netted certain assets (Accounts
      receivable, due from related party $72,540) and liabilities (Billings in excess
      of cost and estimated earnings $106,977) that should have been presented
      differently. The reclassification in the changes of stockholder's equity was
      necessary due to the fact that the company recorded the effects of a loan
      forgiveness ($74,311) through the Statement of Operations by error. (Restatement
      as of January 1, 2005).





Statement
      of Operations: Research and Development costs ($98,363) were misclassified
      as
      non-operating other expenses ($24,085) and other general and administrative
      expenses, ($74,278), and the currency translation adjustment ($153) was shown
      incorrectly.





Statement
      of Cash Flows: The reclassification in the Statement of Cash Flow was necessary
      due to the fact that the company misclassified certain operating and financing
      activities (short term loan $50,482) and the effect of exchange rate changes
      on
      cash ($68,155) and also the cash and cash equivalents at year end ($153) were
      shown incorrectly.





F-12




**SES
      SOLAR INC. AND SUBSIDIARY**




**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**





**5.
      Restatement and Reclassification of Certain Items on previous years Balance
      Sheet / Statement of Operation / Comprehensive Loss and Cash Flow Statement
      and
      Statement of Changes Stockholders' Equity**  **(continued)**








December
                31, 2005Balance
                Sheet
            
            As
                Reported
            
            Difference
            
            As
                Revised$
            
            $
            
            $Cash
            
            
            35,017
            
            
            153
            
            
            35,170Receivables
            
            
            187,520
            
            
            34,437
            
            
            221,957Due
                from related party
            
            
            0
            
            
            72,540
            
            
            72,540Inventory
            
            
            219,580
            
            
            0
            
            
            219,580Other
                current assets
            
            
            11,973
            
            
            0
            
            
            11,973Total
                current Assets
            
            
            454,090
            
            
            107,130
            
            
            561,220Property
                and Equipment at cost,
            
            
            442,787
            
            
            0
            
            
            442,787Less
                accumulated depreciation and amortization
            
            
            (299,783
            )
            
            0
            
            
            (299,783
            )Building
                development
            
            
            76,570
            
            
            0
            
            
            76,570Total
                fixed assets
            
            
            219,574
            
            
            0
            
            
            219,574Total
                Assets
            
            
            673,664
            
            
            107,130
            
            
            780,794Short-term
                loan
            
            
            50,482
            
            
            0
            
            
            50,482Accounts
                payable
            
            
            390,036
            
            
            0
            
            
            390,036Billings
                in Excess of Cost and Estimated Earnings
            
            
            0
            
            
            106,977
            
            
            106,977Total
                current Liabilities
            
            
            440,518
            
            
            106,977
            
            
            547,495Loan
                payable
            
            
            735,539
            
            
            0
            
            
            735,539Total
                long-term liabilities
            
            
            735,539
            
            
            0
            
            
            735,539Common
                Stock
            
            
            48,287
            
            
            0
            
            
            48,287Additional
                paid in Capital
            
            
            299,076
            
            
            74,311
            
            
            373,387Retained
                Earnings (deficit)
            
            
            (932,496
            )
            
            (74,311
            )
            
            (1,006,807
            )Translation
                Adjustment
            
            
            82,740
            
            
            153
            
            
            82,893Total
                Shareholder's Equity (Deficit)
            
            
            (502,393
            )
            
            153
            
            
            (502,240
            )Total
                Liabilities and Stockholders' Equity
            
            
            673,664
            
            
            107,130
            
            
            780,794




F-13


**SES
      SOLAR INC. AND SUBSIDIARY**




**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**





**5.
      Restatement and Reclassification of Certain Items on previous years Balance
      Sheet / Statement of Operation / Comprehensive Loss and Cash Flow Statement
      and
      Statement of Changes Stockholders' Equity**  **(continued)**










Year
                Ended December 31, 2005Statement
                of Operation and Comprehensive Loss
            
            As
                Reported
            
            Difference
            
            As
                Revised$
            
            $
            
            $Revenue
            
            
            1,100,474
            
            
            0
            
            
            1,100,474Cost
                of goods sold
            
            
            1,018,490
            
            
            0
            
            
            1,018,490Personnel
            
            
            121,867
            
            
            0
            
            
            121,867Rent
            
            
            113,590
            
            
            0
            
            
            113,590Research
                and Development
            
            
            0
            
            
            98,363
            
            
            98,363Other
                General and Administrative expenses
            
            
            232,937
            
            
            (74,278
            )
            
            158,659Depreciation
                and amortization
            
            
            52,614
            
            
            0
            
            
            52,614Total
                costs and expenses
            
            
            521,008
            
            
            24,085
            
            
            545,093Interest
                expense
            
            
            (42,302
            )
            
            0
            
            
            (42,302
            )Other
                expenses
            
            
            24,085
            
            
            (24,085
            )
            
            0Total
                other income (expense)
            
            
            66,387
            
            
            (24,085
            )
            
            42,302Loss
                before taxes
            
            
            (505,411
            )
            
            0
            
            
            (505,411
            )Income
                taxes
            
            
            0
            
            
            0
            
            
            0Net
                Loss
            
            
            (505,411
            )
            
            0
            
            
            (505,411
            )




F-14





**SES
      SOLAR INC. AND SUBSIDIARY**




**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**





**5.
      Restatement and Reclassification of Certain Items on previous years Balance
      Sheet / Statement of Operation / Comprehensive Loss and Cash Flow Statement
      and
      Statement of Changes Stockholders' Equity**  **(continued)**





Year
                Ended December 31,
                2005Statement
                of Cash Flow
            
            As
                Reported
            
            Difference
            
            As
                Revised$
            
            $
            
            $Net
                cash used in operating activities
            
            
            (478,508
            )
            
            (50,552
            )
            
            (529,060
            )Net
                cash used in investing activities
            
            
            (48,822
            )
            
            0
            
            
            (48,822
            )Net
                cash provided by financing activities
            
            
            0
            
            
            50,482
            
            
            50,482Increase
                (decrease) in cash and cash equivalents
            
            
            (527,330
            )
            
            (70
            )
            
            (527,400
            )Effect
                of exchange rate changes on cash
            
            
            (72,400
            )
            
            68,155
            
            
            (4,245
            )Cash
                and cash equivalents, beginning of year
            
            
            564,713
            
            
            2,102
            
            
            566,815Cash
                and cash equivalents, end of year
            
            
            35,017
            
            
            153
            
            
            35,170




Restatement
      September 30, 2006


Certain
      items have been restated in the unaudited Financial Statements presented as
      of
      September 30, 2006 - see reconciliation below. This restatement was necessary
      due to the fact that the Company did not record the effects of the loan
      forgiveness ($74,311) in the Statement of Operations and recorded it incorrectly
      in the Statement of Changes in Stockholder's Equity (see restatement as of
      January 1, 2005). The Currency translation adjustment was also shown
      incorrectly. In retained earnings (cr) and deferred expenses (dr) the amount
      of
      $480,000 (see also Note 15) was incorrectly shown as part of long-term assets
      instead of correctly to Shareholder's Equity because this amount is a consulting
      fee for services rendered over the next 24 months and not a finders fee in
      connection with the share issuance. The restatement in the cash and Additional
      Paid in Capital ($732,089) was necessary because a deposit was recorded in
      SES
      USA as an investment in subsidiary and therefore by error eliminated in the
      consolidation. Correctly this amount should have been recorded as a bank deposit
      (Trust Account) in the Shell.





Reclassification
      September 30, 2006


Balance
      Sheet: Reclassifications were necessary as follows: The Company had previously
      presented the amount of $76,498 in accounts receivable instead of properly
      disclosing the amount as due from related party ($76,498) for services provided
      to a related party.





Statement
      of Operations: A misclassification of research and development expenses
      ($46,427) as other expenses ($12,545) or Other G&A expenses ($58,613)
      occurred. The amount of $359 that was reclassified from income taxes to other
      expenses reflects capital tax which is not dependent on income, it was therefore
      reclassed into other expenses.





Statement
      of Cash Flows: The reclassification in the Statement of Cash Flow was necessary
      because the Company misclassified operating (deferred expense, see also Note
      15)
      and financing activities (reverse acquisition) and the effect of exchange rate
      changes on cash. Cash and cash equivalents at year end were also shown
      incorrectly.




F-15





**SES
      SOLAR INC. AND SUBSIDIARY**




**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**





**5.
      Restatement and Reclassification of Certain Items on previous years Balance
      Sheet / Statement of Operation / Comprehensive Loss and Cash Flow Statement
      and
      Statement of Changes Stockholders' Equity**  **(continued)**




September
                30, 2006
              **UNAUDITED**Balance
                Sheet
            
            As
                Reported
            
            Difference
            
            As
                Revised$
            
            $
            
            $Cash
            
            
            3,479,944
            
            
            732,089
            
            
            4,212,033Receivables
            
            
            116,933
            
            
            (76,498
            )
            
            40,435Due
                from related party
            
            
            0
            
            
            76,498
            
            
            76,498Inventory
            
            
            231,562
            
            
            0
            
            
            231,562Other
                current assets
            
            
            151,316
            
            
            0
            
            
            151,316Total
                current assets
            
            
            3,979,755
            
            
            732,089
            
            
            4,711,844Deferred
                Expenses
            
            
            0
            
            
            480,000
            
            
            480,000Property
                and Equipment at cost,
            
            
            442,787
            
            
            0
            
            
            442,787Less
                accumulated depreciation and amortization
            
            
            (325,061
            )
            
            0
            
            
            (325,061
            )Building
                development
            
            
            181,796
            
            
            0
            
            
            181,796Total
                fixed assets
            
            
            299,522
            
            
            480,000
            
            
            779,522Total
                Assets
            
            
            4,279,277
            
            
            1,212,089
            
            
            5,491,366Short-term
                loan
            
            
            59,705
            
            
            0
            
            
            59,705Accounts
                payable
            
            
            549,994
            
            
            0
            
            
            549,994Total
                current liabilities
            
            
            609,699
            
            
            0
            
            
            609,699Loan
                payable
            
            
            1,175,723
            
            
            0
            
            
            1,175,723Total
                long-term liabilities
            
            
            1,175,723
            
            
            0
            
            
            1,175,723Common
                Stock
            
            
            68,981
            
            
            0
            
            
            68,981Additional
                paid in Capital
            
            
            3,819,677
            
            
            1,232,478
            
            
            5,052,155Retained
                Earnings (deficit)
            
            
            (1,439,655
            )
            
            (74,317
            )
            
            (1,513,972
            )Translation
                Adjustment
            
            
            44,852
            
            
            53,928
            
            
            98,780Total
                Shareholder's Equity
            
            
            2,493,855
            
            
            1,212,089
            
            
            3,705,944Total
                Liabilities and Stockholders' Equity
            
            
            4,279,277
            
            
            1,212,089
            
            
            5,491,366




F-16





**SES
      SOLAR INC. AND SUBSIDIARY**




**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**





**5.
      Restatement and Reclassification of Certain Items on previous years Balance
      Sheet / Statement of Operation / Comprehensive Loss and Cash Flow Statement
      and
      Statement of Changes Stockholders' Equity**  **(continued)**




**UNAUDITED**Statement
                of Operation and Comprehensive Loss
            
            As
                Reported
            
            Difference
            
            As
                RevisedFor
                the Three Months Ended September 30, 2006
            
            $
            
            $
            
            $Revenue
            
            
            148,805
            
            
            0
            
            
            148,805Cost
                of goods sold
            
            
            122,374
            
            
            0
            
            
            122,374Personnel
            
            
            54,678
            
            
            0
            
            
            54,678Rent
            
            
            28,991
            
            
            0
            
            
            28,991Research
                and Development
            
            
            0
            
            
            46,427
            
            
            46,427Other
                General and Administrative expenses
            
            
            125,254
            
            
            (58,613
            )
            
            66,641Depreciation
                and amortization
            
            
            8,310
            
            
            0
            
            
            8,310Total
                costs and expenses
            
            
            217,233
            
            
            (12,186
            )
            
            205,047Interest
                expense
            
            
            (15,735
            )
            
            0
            
            
            (15,735
            )Other
                expenses
            
            
            12,545
            
            
            (12,545
            )
            
            0Total
                other income (expense)
            
            
            (3,190
            )
            
            (12,545
            )
            
            (15,735
            )Loss
                before taxes
            
            
            (193,992
            )
            
            (359
            )
            
            (194,351
            )Income
                taxes
            
            
            (359
            )
            
            359
            
            
            0Net
                Loss
            
            
            (194,351
            )
            
            0
            
            
            (194,351
            )




F-17





**SES
      SOLAR INC. AND SUBSIDIARY**




**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**





**5.
      Restatement and Reclassification of Certain Items on previous years Balance
      Sheet / Statement of Operation / Comprehensive Loss and Cash Flow Statement
      and
      Statement of Changes Stockholders' Equity**  **(continued)**




**UNAUDITED**Statement
                of Operation and Comprehensive Loss
            
            
            As
                Reported
            
            
            Difference
            
            
            As
                RevisedFor
                the Nine Months Ended September 30, 2006
            
            
            $
            
            
            $
            
            
            $Revenue
            
            
            158,860
            
            
            0
            
            
            158,860Cost
                of goods sold
            
            
            129,298
            
            
            0
            
            
            129,298Personnel
            
            
            116,057
            
            
            0
            
            
            116,057Rent
            
            
            85,071
            
            
            0
            
            
            85,071Research
                and Development
            
            
            0
            
            
            94,007
            
            
            94,007Other
                General and Administrative expenses
            
            
            232,629
            
            
            (65,466
            )
            
            167,163Depreciation
                and amortization
            
            
            32,863
            
            
            0
            
            
            32,863Total
                costs and expenses
            
            
            466,620
            
            
            28,541
            
            
            495,161Interest
                expense
            
            
            (41,566
            )
            
            0
            
            
            (41,566
            )Other
                expenses
            
            
            (27,495
            )
            
            27,495
            
            
            0.00Total
                other income (expense)
            
            
            (69,061
            )
            
            27,495
            
            
            (41,566
            )Loss
                before taxes
            
            
            (506,119
            )
            
            (1,046
            )
            
            (507,165
            )Income
                taxes
            
            
            (1,046
            )
            
            1,046
            
            
            0Net
                Loss
            
            
            (507,165
            )
            
            0
            
            
            (507,165
            )




**UNAUDITED**Statement
                of Cash Flow for the Nine Months
            
            As
                Reported
            
            Difference
            
            As
                RevisedEnded
                September 30, 2006
            
            $
            
            $
            
            $Net
                cash used in operating activities
            
            
            (418,777
            )
            
            (478,416
            )
            
            (897,193
            )Net
                cash used in investing activities
            
            
            3,542,623
            
            
            (3,478,773
            )
            
            63,850Net
                cash provided by financing activities
            
            
            449,409
            
            
            4,609,708
            
            
            5,059,117Increase
                (decrease) in cash and cash equivalents
            
            
            3,444,927
            
            
            780,847
            
            
            4,225,774Effect
                of exchange rate changes on cash
            
            
            (38,328
            )
            
            (10,583
            )
            
            (48,911
            )Cash
                and cash equivalents, beginning of year
            
            
            35,017
            
            
            153
            
            
            35,170Cash
                and cash equivalents, end of year
            
            
            3,479,944
            
            
            732,089
            
            
            4,212,033




F-18


**SES
      SOLAR INC. AND SUBSIDIARY**




**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**




**6.**
              **Cash
                  and Cash Equivalents**


$
                  (held in CHF)
              
              $
                  (held in $)
              
              $
                  (held in EUR)
              
              $
                  TOTAL 2006
              
              $
                  TOTAL 2005Cash
                  on hand
              
              
              227,112
              
              
              44,469
              
              
              565
              
              
              272,146
              
              
              35,170Short-term
                  Investments
              
              
              2,459,520
              
              
              3,285,000
              
              
              -
              
              
              5,744,520
              
              
              -Cash
                  and Cash Equivalents
              
              
              2,686,632
              
              
              3,329,469
              
              
              565
              
              
              6,016,666
              
              
              35,170





Cash
      and
      cash equivalents are available to the Company, and there is no restriction
      or
      limitation on withdrawal or use of these funds. The Company’s cash equivalents
      are placed with highly credit rated financial institutions. The carrying amount
      of these assets approximates their fair value.




**7.**
            **Accounts
                Receivable and significant
                Customers**





At
      December 31, 2006 and 2005, the Company's accounts receivable balances were
      $10,386 and $221,957, respectively. Significant customers are summarized
      below:


Receivables2006
              
              2005$
              
              $A
              
              
              10,386
              
              
              65,786B
              
              
              0
              
              
              51,576C
              
              
              0
              
              
              41,445D
              
              
              0
              
              
              29,904E
              
              
              0
              
              
              24,912Others
              
              
              0
              
              
              8,334**Total
                  Accounts Receivable**
              
              
              **10,386**
              
              
              **221,957**




Revenues
      for 2006 and 2005 were $129,275 and $1,100,474, respectively. Significant
      customers are summarized below:


Revenues2006
              
              2005$
              
              $A
              
              
              61,508
              
              
              531,940B
              
              
              50,309
              
              
              229,280C
              
              
              
              
              
              157,270Others
              
              
              17,458
              
              
              181,983**Total
                  Revenues**
              
              
              **129,275**
              
              
              **1,100,474**




F-19


**SES
      SOLAR INC. AND SUBSIDIARY**




**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**




**8.**
            **Inventory**





Inventory
      is summarized as follows:


2006
              
              2005$
              
              $Raw
                  Materials and Others
              
              
              89,665
              
              
              82,978Finished
                  Goods
              
              
              147,610
              
              
              136,602**Total
                  Inventory**
              
              
              **237,275**
              
              
              **219,580**




**9.**
            **Property
                and Equipment:**




Property
      and equipment is summarized as follows:


2006
              
              2005$
              
              $Machinery
                  and equipment
              
              
              333,048
              
              
              308,210Office
                  furniture and equipment
              
              
              43,789
              
              
              27,731Building
                  development
              
              
              219,619
              
              
              76,571**Property
                  and equipment**
              
              
              **596,456**
              
              
              **412,513**Less
                  accumulated depreciation and amortization
              
              
              (254,778
              )
              
              (192,939
              )**Property
                  and equipment, net**
              
              
              **341,677**
              
              
              **219,574**




Depreciation
      and amortization expense of property and equipment for the years ended
      December 31, 2006 and 2005 was $45,090 and $52,614, respectively. The
      company has defined the following useful lives for fixed assets: Machinery
      and
      equipment: 8 years, Office furniture and equipment: 3 (IT equipment) to 5 years
      (office furniture)




**10.**  **Borrowings
      Under Revolving Credit Facility**





SES
      Switzerland has a revolving credit line of CHF100,000 ($82,980) with UBS used
      mainly to cover short-term cash needs. The credit line bore interest at the
      rate
      of 6.25% p.a. up to October 31, 2006. From November 1, 2006, this rate has
      been
      increased to 6.75%. The credit line can be cancelled by either party upon six
      months' notice. As at December 31, 2006, this line was not used by SES
      Switzerland. $50,482 of the line was used at December 31, 2005.





SES
      Switzerland also has a Construction Credit Agreement with Banque Cantonale
      de
      Genève in the amount of CHF4,800,000 ($3,935,071), which is intended for
      financing the construction of the new facility near Geneva, Switzerland. This
      credit line must be drawn down before the later of the completion of the
      construction or June 30, 2008. The construction loan bears interest at a rate
      of
      3.25% p.a. and has not yet been utilized. There are no guarantees.





On
      December 20, 2006, SES Switzerland executed a construction loan with Ms.
      Christine Erné, the Company’s principal stockholder, to enable SES Switzerland
      to commence construction of the new manufacturing facility near Geneva,
      Switzerland. The construction loan is in the amount of CHF2,700,000
      ($2,205,090). The Company will pay interest at the rate of 4.5% p.a. The funds
      will be disbursed as soon as construction has begun.




F-20


**SES
      SOLAR INC. AND SUBSIDIARY**




**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**




**11.**  **Billings
      in Excess of Cost and Estimated Earnings**





Billings
                in Excess of Cost and Estimated Earnings
            
            2006
            
            2005Prepayments
                to suppliers
            
            
            448,521
            
            
            0Work
                in progress
            
            
            159,939
            
            
            0Prepayments
                from customers
            
            
            (732,033
            )
            
            (106,977
            )(123,573
            )
            
            (106,977
            )




**12.**  **Long-Term
      Debt Service Cantonal de l'énergie**





On
      November 3, 2003, SES Switzerland received a loan from the Geneva (Switzerland)
      State Department of Energy of up to CHF1,000,000 ($820,000). SES Switzerland
      used CHF970,000 ($794,810) as at December 31, 2006, and CHF970,000 ($735,539)
      as
      at December 31, 2005. The loan is to be repaid on March 31, 2008. The loan
      bears
      interest at a rate of 4% p.a. The stockholders have pledged 10,000,000 issued
      shares of the Company as a guarantee for the loan. At the moment, the Company
      does not have any plans to repay the loan before its due date.





On
      March
      22, 2006, SES Switzerland received a second loan from the Geneva (Switzerland)
      State Department of Energy in the amount of CHF500,000 ($409,920). This loan
      was
      granted on January 21, 2004 contingent upon SES Switzerland's meeting certain
      conditions precedent, which were fulfilled by March 22, 2006. The loan has
      a
      term of 18 months and carries an interest rate of 5% p.a. with repayment, due
      on
      September 21, 2007.




**13.**  **Commitments
      and Contingencies:**




*Operating
      Leases* - lease
      expenses for the years ended December 31, 2006 and 2005 were $138,163 and
      $113,590, respectively.





The
      following table presents future minimum lease commitments (concerning the lease
      of a vehicle) under operating leases at December 31, 2006


**Operating
                  Leases**2007
              
              
              14,6962008
              
              
              14,8152009
              
              
              12,437Thereafter
              
              
              -**Total**
              
              
              **41,948**





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 $40,889 (CHF51,204) per year.
      The
      initial lease term ended on February 28, 2007. The lease has been renewed.




SES
      Switzerland also leases a 1,654 square meter industrial facility in Härkingen,
      Switzerland. The monthly fixed rent is CHF7,232 (approximately $5,775). The
      lease has no specific termination date. The lease may be cancelled every six
      months at the end of the month, except for December.




On
      May
      27, 2005, we received authorization from the State of Geneva to build a
      manufacturing facility on other 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.




F-21




**SES
      SOLAR INC. AND SUBSIDIARY**




**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


**Use
                  of Land**2007
              
              
              57,2792008
              
              
              57,2792009
              
              
              57,2792010
              
              
              57,2792011
              
              
              57,279Thereafter
              
              
              3,121,706**Total**
              
              
              3,408,101


SES
      Switzerland has no non-cancellable operating leases.





*Employment
      Agreements* —As
      at
      year end, SES Switzerland employed 2 employees and 2 executive officers. The
      terms of employment are supplemented by Swiss Commercial Law which requires
      in
      case of termination of the contract, a minimum of one month's paid notice the
      first year, 2 months paid notice the second year and 3 month's paid notice
      of
      termination thereafter. Mrs. Crisafulli and Mr. Erné have written employment
      agreements.





Flannel
      Management sarl has a consulting agreement with SES Switzerland effective
      October 1, 2006. Flannel Management sarl receives a monthly consulting fee
      of
      CHF20,000 ($15,971) (using exchange rate set forth in Note 3 to the Consolidated
      Financial Statements hereto). The contract is for a 10-year term and if earlier
      terminated, the Company nevertheless pays the consulting fees for the remainder
      of the term. One of Flannel Management sarl's consultants is Philippe
      Crisafulli, the husband of Sandrine Crisafulli, Chief Financial Officer of
      SES
      USA and SES Switzerland.





During
      the year 2006, Jean-Christophe Hadorn, the CEO, and a stockholder of the
      Company, invoiced CHF120,000 ($95,827) to SES Switzerland as a consultant,
      of
      which CHF22,647 ($18,085) was outstanding at year-end. Daniel Erne, a Director
      of the Company and the Secretary of SES Switzerland, and Sandrine Crisafulli,
      the CFO of the Company, each received other compensation in the amount of
      $1,996.





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




*Capital
      Commitments* —At
      December 31, 2006, the Company had no outstanding purchase orders for
      equipment.




**14.**  **Business
      Segments**





All
      of
      Company's operations are conducted through its wholly owned subsidiary SES
      Switzerland, and are limited to the assembly and installation of photovoltaic
      panels in Switzerland, which is the only business segment of the
      Company.




**15.**  **Stockholders'
      Equity:**




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




In
      May
      2006, the Company issued 5,050,000 shares of common stock at a price of $0.20
      per share for cash proceeds of $1,006,364, net of issue costs.




On
      May
      15, 2006, the Company entered into a non-binding term sheet with SES
      Switzerland, to acquire all of the shares of SES Switzerland in consideration
      of
      the issuance of shares which will equate to approximately 70% of the issued
      and
      outstanding shares at the consummation of the acquisition. In accordance with
      the share exchange agreement, the Company deposited CHF 1,000,000
      ($816,700) of the proceeds from the private placement into the trust account
      of
      a Swiss lawyer. The deposited funds were to be transferred into escrow with
      another Swiss lawyer upon the signing of the share exchange agreement and held
      until the closing of the agreement. In the event that: (i) SES Switzerland
      breached the terms of the agreement; (ii) the Company elected to terminate
      the
      agreement in its sole discretion; or (iii) the agreement was not signed on
      or
      prior to June 15, 2006, the lawyer would release
      the escrowed funds to the Company. The Company entered into amended letter
      agreements dated June 15, 2006 and July 15, 2006 to extend the dates of the
      Letter of Intent. The amount of $816,700 was released from the trust account
      for
      the use of SES Switzerland as of October 13, 2006.


F-22


**SES
      SOLAR INC. AND SUBSIDIARY**




**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**




On
      September 18, 2006 the Company issued 4,976,350 shares at $0.80 for net proceeds
      of $3,563,067. This issuance was contingent upon the signed share purchase
      agreement with SES Switzerland.




As
      of
      September 27, 2006 SES Switzerland acquired all shares (10,668,000) of the
      public shell in a reverse acquisition. The public shell had net assets of
      $39,069 of which $164,234 was cash.




On
      November 22, 2006 the Company issued 4,100,000 shares at $0.90 for net proceeds
      (net of finders fee) of $3,321,000.




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.




Warrants
      - During the year ended December 31, 2006, the Company issued stock purchase
      warrants exercisable into 1,500,000 shares of common stock at $ 0.90 per share
      with an expiration date of November 22, 2010 in consideration for certain
      corporate advisory services as well as capital raising services.




During
      the year ended December 31, 2006, no stock purchase warrants were
      exercised.





Warrant
      transactions consisted of the following during the year ended December 31,
      2006:




**Exercisable****Warrants**
            
            **Strike
                 Price**Warrants
                Outstanding As of December 31, 2005
            
            
            0
            
            $
            0Warrants
                granted as consideration for agent's fee
            
            
            1,500,000
            
            $
            0.90Exercise
                of warrants
            
            
            0
            
            
            0Warrants
                Outstanding As of December 31, 2006
            
            
            1,500,000
            
            $
            0.90




Warrants
      outstanding expire as follows:




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





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





On
      August
      31, 2006, SES USA entered into an agreement with Standard Atlantic to advise
      SES
      USA and its stockholders in connection with the purchase of all of the shares
      of
      SES Switzerland.





Pursuant
      to the terms of a Finder's Agreement between SES USA and Standard Financial
      (the
      "Finder's Agreement") the parties agreed to a finder's fee of $228,000 if a
      transaction were consummated. The Finder's Agreement also provided that Standard
      Atlantic would continue to provide consulting services to the Company for a
      period of 24 months regarding investor relations matters for a monthly fee
      of
      $20,000. The two-year consulting fee was due and was paid to Standard Financial
      at closing. The Company recorded the total amount as of September 30, 2006,
      as
      deferred expense and amortizes the amount over the 24 months of the consulting
      agreement




F-23




**SES
      SOLAR INC. AND SUBSIDIARY**




**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**





As
      per
      the terms of the Long Term Escrow Agreement dated September 1, 2006 (as
      amended), related to the reverse acquisition, the Company is required to obtain
      additional financing in the amount of CHF12,000,000 ($9,838,082) before November
      30, 2007 to build the manufacturing plant in Plan-les-Ouates. Otherwise, the
      24,143,410 escrowed shares will be cancelled. The shares of common stock of
      the
      Company held in escrow pursuant to the terms of the Long Term Escrow Agreement
      are to be delivered from escrow by the escrow agent on the second anniversary
      of
      the closing of the share exchange agreement. The escrowed shares are not
      included in the calculation of Earnings per Share since they are
      anti-dilutive.




**16.**  **Employee
      Benefit Plans:**




SES
      Switzerland's employees are enrolled in a mandatory group pension plan with
      Bâloise Assurances. The pension plan is a defined contribution plan, and
      payments to the plan are made in equal parts by the employee (through
      withholding) and the employer. Contributions are based on the age of the
      employee and vary between 8% and 16%. Total amounts paid by the employer for
      2006 were $8,557 ($4,923 for 2005).





**17.**  **Interest
      Income:**




The
      Income Statement for 2006 includes interest income of $19,384 (CHF24,274)
      derived from interest received on time deposits.




**18.**  **Income
      Taxes:**





The
      Company's tax basis for assets and liabilities is identical for the financial
      statements and tax reporting. Accordingly, the only deferred tax portion is
      the
      benefit with respect to the net operating loss. The Company records a valuation
      allowance to reduce the deferred tax asset to the amount that is estimated
      to be
      more likely than not to be realized.




**December
                  31, 2006**
              
              **December
                  31, 2005**$
              
              $Deferred
                  tax assets:Net
                  operating loss carry-forward
              
              
              588,759
              
              
              263,884Less:
                  valuation allowance
              
              
              (588,759
              )
              
              (263,884
              )Net
                  deferred tax assets
              
              
              -
              
              
              -




We
      have
      net losses for financial reporting purposes. Recognition of deferred tax assets
      will require generation of future taxable income. There can be no assurance
      that
      we will generate sufficient taxable income in future years. Therefore, we
      established a valuation allowance on net deferred tax assets of $588,759 as
      of
      December 31, 2006 and $263,884 as of December 31, 2005.




The
      components of loss before income tax benefit are as follows:


**For
                  the Years Ended December 31,****2006**
              
              **2005**$
              
              $United
                  StatesSwitzerland
              
              
              (1,239,507
              )
              
              (505,411
              )**(1,239,507**
              **)**
              
              **(505,411**
              **)**




As
      of
      December 31, 2006, we have net operating loss carryforwards for Swiss tax
      purposes of $2,246,314, expiring at various times from years ending 2010 to
      2012.




**2006****$**2010
              
              
              (501,396
              )2011
              
              
              (505,411
              )2012
              
              
              (1,239,507
              )**Total
                  tax-deductible loss carry forward**
              
              
              **(2,246,314**
              **)**




F-24




**SES
      SOLAR INC. AND SUBSIDIARY**




**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**




The
      deferred tax asset is realizable as we anticipate sufficient taxable income
      in
      future years to realize the tax benefit with respect to the net operating loss.




The
      tax
      provisions differ from the amount computed using the federal statutory income
      tax rate as follows:




**Years
                  Ended December 31,****2006**
              
              **2005****$**
              
              **$**Income
                  tax benefit at federal statutory rate
              
              
              (421,432
              )
              
              (171,840
              )Foreign
                  tax rate differential
              
              
              96,558
              
              
              39,372Increase
                  in valuation reserve
              
              
              324,875
              
              
              132,468**-**
              
              
              **-**


**19.**  **Fair
      Value of Financial Instruments**





The
      carrying amounts of cash and cash equivalents, trade accounts receivable,
      product inventory, trade accounts payable, accrued expenses and other current
      liabilities and the note payable to a bank, which bears interest at variable
      rates, approximate their fair value as of December 31, 2006, and December 31,
      2005.




The
      fair
      value of the long-term debt is estimated based on anticipated interest rates
      which the Company’s management believes would currently be available to the
      Company for similar issues of debt, taking into account the current credit
      risk
      of the Company and the other market factors. The fair value approximates
      carrying value of the long-term debt.




**20.**  **Supplemental
      Cash Flow Information**





Cash
      paid
      for interest during fiscal years 2006 and 2005 totaled $56,757, and $42,302,
      respectively. The net assets of the Company (SES USA) before the reverse
      acquisition summarized as follows (in $):




Cash
                and cash Equivalents
            
            
            164,234Accounts
                payable
            
            
            
            
            
            3,077Accrued
                liabilities
            
            
            
            
            
            106,988Advance
                Payments
            
            
            
            
            
            15,100Equity
            
            
            
            
            
            39,069164,234
            
            
            164,234




F-25


**SES
      SOLAR INC. AND SUBSIDIARY**




**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**




**21.**  **Concentration
      of Risk**





SES
      Switzerland is dependent on third-party equipment manufacturers, distributors
      and dealers for all of its supply of photovoltaic cells and panel components.
      For fiscal years 2006 and 2005, products purchased from SES Switzerland's top
      three suppliers accounted for 94% and 83% of total revenues, respectively.
      The
      Company is dependent on its ability to provide installations on a timely basis
      and on favorable pricing terms. Although SES Switzerland tries to diversify
      its
      sources of supplies, its technology needs certain types of solar cells and
      the
      loss of certain principal suppliers, or the loss of one or more of certain
      ongoing affinity relationships could have a strong material adverse effect
      on
      the Company.




The
      Company's future results could also be negatively impacted by the loss of
      certain customers, or the loss of one or more of certain ongoing affinity
      relationships.




**22.**  **Reverse
      Acquisition**





SES
      USA
      entered into a share exchange agreement dated August 31, 2006 with SES
      Switzerland and the stockholders of SES Switzerland. The share exchange
      agreement contemplated SES USA acquiring all of the issued and outstanding
      common shares of SES Switzerland in exchange for the issuance by SES USA of
      48,286,817 common shares. All share information has been retroactively restated
      to reflect the recapitalization in connection with the reverse takeover. See
      also Note 1.




**23.**  **Related
      Party Transactions**





During
      2006, Jean-Christophe Hadorn, the CEO, and a stockholder of the Company,
      invoiced CHF120,000 ($95,827) to SES Switzerland as a consultant, of which
      CHF22,647 ($18,085) was outstanding at year-end. Daniel Erne, a Director of
      the
      Company and the Secretary of SES Switzerland, and Sandrine Crisafulli, the
      CFO
      of the Company, each received other compensation in the amount of
      $1,996.





As
      of
      year-end, the Company has a receivable from its major stockholder in the amount
      of $78,386 and $72,540 respectively. This amount relates to a project for a
      building of the stockholder.





On
      December 20, 2006, SES Switzerland executed a construction loan with Ms.
      Christine Erné, the Company’s principal stockholder, to enable SES Switzerland
      to commence construction of a new manufacturing facility near Geneva,
      Switzerland. The construction loan is in the amount of CHF2,700,000
      (approximately $2,205,090). The Company will pay interest at the rate of 4.5%
      p.a. The funds will be disbursed as soon as construction has begun.





Flannel
      Management sarl has a consulting agreement with SES Switzerland effective
      October 1, 2006. Flannel Management sarl receives a monthly consulting fee
      of
      CHF20,000 ($15,971) (using exchange rate set forth in Note 3 to the Consolidated
      Financial Statements). The contract is for a 10-year term and if earlier
      terminated, the Company nevertheless pays the consulting fees for the full
      term.
      One of Flannel Management sarl's consultants is Philippe Crisafulli, the husband
      of Sandrine Crisafulli, Chief Financial Officer of SES USA and SES
      Switzerland.





SES
      Switzerland has entered into an employment agreement with Daniel Erné effective
      October 1, 2006. Mr. Erné receives an annual salary of CHF130,000 ($108,333) in
      consideration of management services. Mr. Erné is the husband of Christiane Erné
and a director of SES USA and SES Switzerland.




Dr.
      John
      Veltheer, past president and chief executive officer of SES Solar Inc., who
      is
      currently director of SES USA, loaned an aggregate of $30,000 to SES USA’s
      predecessor in November 2005 pursuant to an unsecured promissory note that
      was
      payable upon demand and matured in November 2006. SES USA has repaid in full
      the
      loan.




F-26




**SES
      SOLAR INC. AND SUBSIDIARY**




**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**




**24.**  **Subsequent
      Events**




No
      major
      events have occurred since the closing of the accounts. At the moment the
      Company is designing the building and machine lines for its new facility in
      Geneva.







F-27