**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**









**FORM
      10-KSB**





**Amendment
      No. 1**





**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







**Explanatory
      Note**




We
      are
      filing this Amendment No. 1 on Form 10-KSB/A (“ Amended
      10-KSB ”)
      to our
      annual report on Form 10-KSB for the year ended December 31, 2006, initially
      filed with the Securities and Exchange Commission (“ SEC ”)
      on May
      16, 2007 (“ Original
      10-KSB ”),
      in
      response to certain comments received by the staff of the SEC issued in
      connection with the staff’s review of a resale registration statement we filed
      on Form SB-2 (333-140864) on February 23, 2007 and as amended on November 9,
      2007. We are filing this Amended 10-KSB to make revisions to certain disclosures
      in response to the staff’s comments and to conform the disclosure, where
      appropriate, to that of the amended Form SB-2.




We
      believe that the revisions made in this Amended 10-KSB are not, individually
      or
      in the aggregate, material to our business, financial condition or results
      of
      operations. Accordingly, we believe that our disclosure controls and procedures
      (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act
      of
      1934) are effective to provide reasonable assurance that information we are
      required to disclose in our reports under the Securities Exchange Act of 1934
      is
      recorded, processed, summarized and reported within the time periods specified
      in the SEC’s rules and forms and that such information is accumulated and
      communicated to our management as appropriate to allow timely decisions
      regarding required disclosure.




None
      of
      the items revised herein nor any other item in the Original 10-KSB has been
      updated to reflect events, results or developments concerning our business,
      financial condition or results of operations occurring after the Original 10-KSB
      or to modify or update those disclosures affected by subsequent events.
      Notwithstanding that this Amended 10-KSB has been revised to conform to the
      disclosure in the amended Form SB-2 registration statement where appropriate,
      readers should be advised that this Amended 10-KSB continues to describe
      conditions as of the date of the Original 10-KSB.




Pursuant
      to the rules of the SEC, Item 13 of Part IV of the Original 10-KSB has been
      amended to contain currently dated certifications from our Chief Executive
      Officer and Chief Financial Officer, as required by Rule 13a-14(a) under the
      Securities Exchange Act of 1934, which certifications are filed herewith as
      Exhibits 31.1 and 31.2, respectively.




1


TABLE
      OF
      CONTENTS





PagePART
                IItem
                1. DESCRIPTION OF BUSINESS
            
            
            3Item
                2. DESCRIPTION OF PROPERTY
            
            
            14Item
                3. LEGAL PROCEEDINGS
            
            
            14Item
                4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
            
            
            14PART
                IIItem
                5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
                MATTERS
            
            
            15Item
                6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
                OPERATION
            
            
            16Item
                7. FINANCIAL STATEMENTS
            
            
            22Item
                8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL
                DISCLOSURE
            
            
            22Item
                8A. CONTROLS AND PROCEDURES
            
            
            22Item
                8B. OTHER INFORMATION
            
            
            23PART
                IIIItem
                9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS AND
                CORPORATE GOVERNANCE, COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
                ACT
            
            
            24Item
                10. EXECUTIVE COMPENSATION
            
            
            27Item
                11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
                AND
                RELATED STOCKHOLDER MATTERS
            
            
            28Item
                12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
                INDEPENDENCE
            
            
            30Item
                13. EXHIBITS
            
            
            33Item
                14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
            
            
            34




2




PART
      I





We
      have
      made forward-looking statements which
      relate to future events or our future financial performance. In some cases,
      you
      can identify forward-looking statements by words such as "may", "should",
      "expects", "plans", "anticipates", "believes", "estimates", "predicts",
      "potential" or "continue" or the negative of these words or other comparable
      terms. Forward-looking statements involve risks and uncertainties that may
      cause
      our actual results or performance to be materially different from those
      expressed in or implied by the forward-looking statements. These uncertainties
      include, among others, our need to raise additional financing; risks related
      to
      the development and implementation of our new manufacturing processes and
      facility; risks related to completion, refinement and management of our supply
      chain and distribution channels; risks related to current and future research
      and development; risks related to customer acceptance of our products; risks
      related to competition in the solar energy field; risks related to the
      availability of public subsidies; our history of losses; the historical
      volatility of our stock prices; general market conditions; and the risks in
      the
      section entitled "Risk Factors" that may cause our historical and actual
      results, level of activity and performance to be materially different from
      future results, level of activity, or performance as expressed in or implied
      by
      these forward-looking statements.




Except
      as
      may be required by applicable law, we do not undertake or intend to update
      or
      revise our forward-looking statements, and we assume no obligation to update
      any
      forward-looking statement as a result of new information or future events or
      developments.




**ITEM
      1. DESCRIPTION OF BUSINESS**





We
      are a
      Delaware corporation that, through our wholly-owned subsidiary, SES Société
d'Energie Solaire (“SES Switzerland”), a Swiss-based company, is engaged in the
      business of designing, engineering, producing and installing solar panels or
      modules and solar tiles for generating electricity. Our shares are quoted on
      the
      OTC Bulletin Board under the symbol “SESI.OB”.




**Corporate
      History**





We
      were
      incorporated in Nevada on February 3, 1999 to operate an Internet based auction
      website over which users advertised and bought and sold goods and services
      for a
      fee. Effective March 31, 2004, we changed our state of domicile from Nevada
      to
      Delaware. During the third quarter of 2005, we abandoned our Internet auction
      business plan and focused on identifying suitable businesses with which to
      enter
      into a business opportunity or business combination.




Effective
      June 19, 2006, we changed our name from "The Electric Network.com, Inc." to
      "Solar Energy Sources Inc." On August 10, 2006, we changed our name to "SES
      Solar Inc." We effected the name change in contemplation of entering into the
      share exchange agreement dated August 31, 2006 with SES Switzerland and the
      shareholders thereof.




As
      a
      result of the share exchange agreement, we acquired SES Switzerland on September
      27, 2006 in a so-called “reverse merger” transaction. As a result of the merger,
      a change of control occurred as the former SES Switzerland stockholders acquired
      70% of the outstanding shares of our common stock, and we ceased being a “shell
      company” as such term is defined in Rule 12b-2 of the Securities Exchange Act of
      1934.




**Overview**




We
      are a
      renewable energy company that offers products and services focused on the
      design, development and commercialization of a portfolio of solar products
      and
      technologies capable of delivering alternative energy solutions. As of the
      date
      of this report, we produce and install custom photovoltaic solar products for
      commercial, industrial and residential use. Based on the specific needs of
      our
      customers, we manufacture our solar modules and solar tiles using cells,
      components and other raw materials that are supplied to us from third-parties.
      We also offer comprehensive engineering services for photovoltaic projects.
      As
      an engineering service provider, we design new methods of manufacturing
      photovoltaic modules, and we incorporate these modules into the specific
      architectural and building applications of our customers.




3




Our
      goal
      is to transform our business from a custom manufacturer of solar modules and
      tiles into a large scale producer and manufacturer of solar modules and tiles
      using a new proprietary assembly processes which we believe will allow for
      higher quality electrical contacts, better performance and reduced
      costs.




**The
      Photovoltaic Solar Industry**




Renewable energy
      sources for electric power generation include hydroelectric, biomass,
      geothermal, wind and solar. Among renewable sources of electricity, solar energy
      has the most potential to meet the world’s growing electricity needs. According
      to the U.S.
      Department of Energy ,
      the sun
      is the only source of renewable energy that has a large enough resource base
      to
      meet a significant portion
      of the world’s electricity needs.




Solar electricity
      is generated using either photovoltaic or solar thermal technology to extract
      energy from the sun. Photovoltaic electricity
      generating systems directly convert the sun’s energy into electricity, whereas
      solar thermal systems heat water or other fluids that are then used as sources
      of energy. Photovoltaic systems are either grid-connected systems or off-grid
      systems. Grid-connected systems are connected to the electricity transmission
      and distribution grid and feed solar electricity into the end-user’s electrical
      system and/or the grid. These systems are commonly mounted on the rooftops
      of
      buildings, integrated into building facades or installed on the ground using
      support structures, and they range in size from 2-3 kilowatts to multiple
      gigawatts (GW) and megawatts (MW). Off-grid photovoltaic systems are typically
      much smaller and are frequently used in remote areas where they may be the
      only
      source of electricity for the end-user.




Photovoltaic systems
      are currently the most widely used method of transforming sunlight into
      electricity. Annual installations by the photovoltaic industry grew from 0.4GW
      in 2002 to 1.7GW in 2006, representing an average annual growth rate of over
      42%. Cumulative installed capacity reached just below 7GW at the end of 2006.




Growth
      in
      installed solar power systems has been stimulated by long-term government
      subsidies, tax incentives and feed-in tariffs that require utilities to buy
      back
      excess power generated by privately owned photovoltaic systems. Over time,
      we
      expect costs to decline as a result of new fabrication techniques, the
      development of photovoltaic cell technologies that use alternative lower-cost
      materials, reductions in the amount of silicon used in photovoltaic cells,
      partly through the development of thin film technologies, improvements in module
      performance as a result of greater photovoltaic cell energy efficiency, lower
      direct manufacturing costs, and economies of scale as production volumes
      rise.




In 2006, Germany was
      the
      world’s leader in MW volume of photovoltaic installations with 55%, followed by Japan with
      17%
      and the U.S. with
      8%,
      according to industry publication Solarbuzz
      LLC . Germany ’s
      and Japan ’s
      historical dominance is attributable to their respective government incentive
      programs, which are designed to stimulate market demand for photovoltaic
      systems. Other European countries have adopted, or are adopting, similar
      government incentive programs, as are countries in Asia and
      several states in the U.S. ,
      including California .
      The California
      Public Utilities Commission reports
      that the California
      Solar Initiative has
      committed $2.9 billion in incentives over 10 years with the goal of
      supporting installations of 3GW new installed capacity by 2017.




The
      market for grid connected photovoltaic power has undergone significant growth
      over the last several years, expanding 57% in 2004 alone, according to the
      U.S.
      Department of Energy. Industry reports indicate that on-grid applications
      represent the largest and fastest growing segment of the global market,
      accounting for 77% of the market. According to Solarbuzz LLC, photovoltaic
      world
      market sales were up 34% in 2005.




**Advantages
      and Disadvantages of Solar Energy**




Solar energy
      generated through photovoltaic systems has several advantages compared to
      conventional and other renewable sources of electricity including security, system reliability, low maintenance, modularity and
      flexibility of design, as well as significant environmental benefits.
      Photovoltaic systems also support 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 power generation.





4




Solar energy
      generated through photovoltaic systems also has certain disadvantages. Perhaps
      the most significant drawback of photovoltaic systems 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 semiconductor 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. According to the U.S. Department of Energy, the price of silicon on
      the
      market has doubled in each of the past 2 years and tight silicon supplies have
      also created back orders of several months.




**Description
      of Our Products**




Currently
      we produce and install custom photovoltaic solar products for commercial,
      industrial and residential use. Based on the specific needs of our customers,
      we
      manufacture our solar modules and solar tiles using cells, components and other
      raw materials that are supplied to us from third-parties. The design, production
      and installation of these customized solar products requires that we offer
      comprehensive engineering services. As an engineering service provider, we
      design new methods of manufacturing photovoltaic modules, and we incorporate
      these modules into the specific architectural and building applications of
      our
      customers. In addition, we plan to offer the following products:




*Solar
      Tiles: SunTechTile® and Swisstile®*




Our
      first
      product was a solar tile, initially called Sunslate® (since 1991). The Sunslate®
tile is being redesigned and will be sold under our trademarks
      SunTechTile *®* and
      Swisstile *®* .
      SunTechTile® and Swisstile® share the same design but will be marketed under
      different trademarks in order to distinguish their targeted markets. The
      SunTechTile® and Swisstile® solar tiles maximize power output by utilizing the
      latest generation photovoltaic cells in an innovative design that incorporates
      ultra-thin, invisible connectors, which we believe makes these cells easier
      to
      install and less expensive. Furthermore, this new connector design reduces
      power
      loss, thereby maximizing efficiency. These tiles will be manufactured on our
      fully automated production line, which will allow for a shorter manufacturing
      cycle and lower cost.




The
      SunTechTile® and Swisstile® solar tiles will be manufactured by us from slate
      procured from our primary supplier, Swiss Eternit. We plan to secure long term
      supply contracts when preliminary testing of our new tile design has been
      completed, which we expect to be in the first half of 2008. Unlike many other
      tiles on the market that are installed on roofs, the SunTechTile® and Swisstile®
solar tiles are made of slate, which we believe makes them both well-suited
      for
      architectural design and building integration.




*High
      Power Rated Modules*




Our
      second product includes high power rated modules, which are packaged
      interconnected assemblies of photovoltaic cells. Our modules incorporate
      back-contact cells that have reduced visibility and therefore increased
      architectural appeal. We manufacture the modules by assembling cells, a plastic
      backsheet and a front glass laminated in different layers using a standard
      lamination process. The cells are manufactured and supplied to us by several
      suppliers. We incorporate these cells into our modules, which are in turn
      offered for resale or for direct distribution to end users.




We
      produce our high power rated modules under original equipment manufacture
      agreements. The modules are branded and marketed under private labels. We do
      not
      anticipate marketing our own brand of modules.




**Description
      of Our New Proprietary Manufacturing Processes**




We
      have
      developed, and are in the process of patenting, a new assembly technology for
      our solar products. Our goal is to develop this new assembly line based on
      our
      proprietary technology, using a manufacturing facility to be built in Geneva,
      Switzerland, to produce solar panels or modules and solar tiles at a lower
      cost
      and in a more time efficient manner, resulting in more attractively priced
      products. We believe this facility will also position us as one of the few
      manufacturers in Europe capable of producing customized solar photovoltaic
      modules that are larger than three square meters. Currently, we are unable
      to
      produce or manufacture our products and will remain so until
      completion of the manufacturing facility. Upon completion of the facility,
      we
      intend to make an application to certify that the facility meets the
      MINERGIE ® standard, which is a sustainability brand for new and refurbished buildings
      that
      is mutually supported by the Swiss Confederation, the Swiss Cantons along with
      Trade and Industry and is registered in Switzerland and around the world. We
      believe that the manufacturing facility will be a showcase for photovoltaic
      technology, with solar panels on the walls and roof generating more than enough
      power to satisfy the facility’s energy requirements.




5




Our
      proprietary manufacturing process consists of an automated assembly technology
      that we believe guarantees a more reliable and efficient manufacturing process.
      This is because our new technology allows for back-contact photovoltaic cells
      and soldering to occur during only one production run, which is faster and
      is
      more automated than existing manufacturing processes. As a result of this new
      assembly technology, we anticipate that our production line could be five times
      smaller than a standard production line and three times faster.  We
      further believe that our new manufacturing process has numerous advantages
      in
      comparison with existing assembly techniques, including that it allows
      electrical connections to be made in an easier, faster manner and requires
      fewer
      manufacturing steps thereby resulting in increased manufacturing time and in
      greater throughput. Our manufacturing process also significantly reduces manual
      labor requirements, a significant cost component in the photovoltaic industry,
      with robots, resulting in greater capital productivity, lower costs, more
      reliable connections, more consistent performance, and less waste.




We
      expect
      that the cost to construct our new manufacturing facility will approximate
      $10 million, plus an additional $3 million to purchase new machinery and that
      construction will be completed by early 2008.




**Sales
      and Marketing**




Although
      the solar energy market is at a relatively early stage of development, energy
      experts and associations forecast a high expansion in the solar photovoltaic
      market. According to Solarbuzz LLC, world solar photovoltaic market
      installations reached a record high of 1,460 MW in 2005, representing annual
      growth of 34%, up from 1,086 MW installed during the previous year. To date,
      our
      operations have consisted of providing custom manufactured solar module and
      tiles and related engineering services to customers in Switzerland. As such,
      we
      have primarily focused our marketing and sales efforts in Switzerland.




Once
      we
      construct our manufacturing facility, our expansion plans and target markets
      will include Germany, France, Italy and the U.S. However, it should be noted
      that the solar energy market is at a relatively early stage of development.
      Its
      future growth could be totally different from expectations and the extent to
      which our products will be adopted is completely uncertain.




We
      currently promote our photovoltaic products through 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 marketing activities will be
      of
      greater importance once our new production line, based on our new assembly
      technology, comes into operation in late 2008 or early 2009.




**Customers**




All
      of
      our revenue to date has been generated by sales of custom manufactured solar
      modules and tiles and related engineering services to customers, which have
      included:




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




·
            engineering
                firms, installers, distributors or end users (public or private)
                of our
                solar tiles;




·
            architects,
                public authorities or end users of our engineering services in
                photovoltaic turnkey installations; and




6




·
            potential
                module manufacturers licensing our
                technology.




In
      the
      fiscal year ended December 31, 2006, sales to our largest two customers
      accounted for approximately 47% and 39%, respectively, of our total net sales.
      The loss of any of our customers or their default in payment could significantly
      reduce our revenues and harm our operating results.




**Suppliers**




We
      rely
      on several companies to supply certain components and materials used to
      manufacture and produce our photovoltaic modules and tiles. For module and
      tile
      production, we depend on a limited number of suppliers for back contact cells.
      We believe that due to increased demand for back contact cells, additional
      suppliers have already entered the market. We acquire cells on a purchase order
      basis and do not have long-term supply contracts with any suppliers, although
      we
      may enter into such contracts. We purchase tiles from Swiss Eternit, with which
      we have a long-standing commercial relationship. We do not believe a risk of
      inventory shortage exists with respect to tiles, although if one did, we believe
      alternate suppliers exist.




**Competition**




We
      face
      competition from domestic and international companies actively engaged in the
      manufacturing and distribution of solar photovoltaic systems, as well as from
      emerging technology companies that may become viable in the next several years.
      The best funded and most established producers of photovoltaic cells and modules
      include Sharp Corporation, Kyocera Corporation, Sunpower, Suntech, Qcells,
      Solarworld, Schott Solar, BP Solar, Shell, Tenesol, Isofoton, Powerlight and
      GE
      Solar (formerly AstroPower). Because most, if not all, 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
      continued commercialization and development of our products. We believe,
      however, that our building-integrated solar roofing products have advantages
      over most other photovoltaic product offerings. In most cases, competitors
      produce modules that must be rack mounted externally to a building, creating
      potential damage to the structure, generating maintenance problems and
      detracting from their visual appearance. Our photovoltaic product offerings
      differ in this respect because they maximize power output using the latest
      generation photovoltaic cells in an innovative design that incorporates
      ultra-thin, invisible connectors between cells. This new connector design
      reduces power losses and increases efficiency.




Both
      the
      traditional and the alternative energy industries are highly competitive.
      Numerous entities in the U.S. and elsewhere compete with us to develop new
      and
      different alternative and/or renewable energy technologies. Competitors also
      include 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.




Barriers
      to entering the photovoltaic module and tile manufacturing industry include
      the
      technical know-how required to produce solar cells that maintain acceptable
      efficiency rates at competitive production costs. In addition, any new
      photovoltaic solar technology would require successful demonstration of
      reliability testing prior to widespread market acceptance. We believe the
      principal competitive factors in the market for solar electric power products
      are: price per watt, long-term stability and reliability, conversion efficiency
      and other inherent performance measures, ease of handling and installation,
      product quality, reputation, and environmental factors.




**Research
      and Development**




Our
      research and development expense consists primarily of salaries and personnel
      related costs and the cost of products, materials and outside services used
      in
      our research and development processes and product development activities.
      During the fiscal years ended December 31, 2006 and 2005, we spent $151,246
      and
      $98,363, respectively, on research and development. We expect our research
      and
      development expense to increase in absolute terms in the future, especially
      upon
      completion of our manufacturing facility in the first quarter of 2008 and as
      we
      increase personnel and research and development activity. We intend to devote
      a
      substantial amount of our future cash flows into research and development due
      to
      the new and evolving nature of the photovoltaic industry and science. Over
      time,
      we expect 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.




7




**Intellectual
      Property**




We
      rely
      on a combination of copyright, trade secret, trademark and contractual
      protections to establish and protect our proprietary rights. 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
      we typically enter into proprietary information agreements with employees and
      consultants. 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 the U.S. In addition, our competitors may independently develop technology
      similar to ours. Our precautions may not prevent misappropriation or
      infringement of our intellectual property.




Our
      wholly-owned subsidiary, SES Switzerland, has filed a patent application for
      our
      new technology for assembling cells and producing our modules and tiles. The
      application was filed with the World Intellectual Property Organization in
      Geneva on July 3, 2006, and the search report will be published by the European
      Patent Office. We have requested examination of the application in Switzerland
      in order to obtain the report which is to be provided by the Swiss Patent
      Office.




**Government
      Regulation**




Currently the
      cost
      of solar electricity substantially exceeds the retail price of electricity
      in
      every significant market
      in the world. To nurture the development of solar electricity, government bodies
      in many countries, most notably Germany , Italy , Spain , France , South
      Korea , Japan , Canada and
      the U.S. have
      provided some level of subsidies in the form of feed-in tariffs, net metering
      programs, renewable portfolio standards, rebates, tax incentives and low
      interest loans.




Under a
      feed-in
      tariff subsidy, the government sets prices that regulated utilities are required
      to pay for renewable electricity generated by end-users. The prices are set
      above market rates and may be differentiated based on system size or
      application. Net metering programs enable end- users to sell
      excess solar electricity to their local utility in exchange for a credit against
      their utility bills. Net metering programs are usually combined with rebates,
      and do not provide cash payments if delivered solar electricity exceeds their
      utility bills. Under a renewable portfolio standard, the government requires
      regulated utilities to supply a portion of their total electricity in the form
      of renewable electricity. Some programs further specify that a portion of the
      renewable energy quota must be from solar electricity.




Tax incentive
      programs exist in the U.S. at
      both
      the federal and state level, and can take the form of investment tax
      credits, accelerated depreciation and property tax exemptions. Several
      governments also facilitate low interest loans for photovoltaic systems, either
      through direct lending, credit enhancement or other programs.




We believe
      that the near-term growth in the solar energy industry depends significantly
      on
      the availability and size of these government subsidies and on the ability
      of
      the industry to reduce the cost of generating solar electricity. T he
      market
      for solar energy products is, and will continue to be, heavily dependent on
      public policies that support growth of solar energy and, as a result, the
      continuation of such policies and level of support present the greatest
      uncertainties for our products. For example, there are some indications that
      regulations in Germany, a major European market for our products and services,
      may change unfavorably with regard to solar or photovoltaic electricity as
      discussions are ongoing about
      modifying the German
      Renewable Energy Law ,
      or the
      EEG. If Germany reduces
      or eliminates the subsidies under the EEG or implements other unfavorable regulations, this would have a major impact on the solar
      photovoltaic market and adversely affect our growth prospects. Other countries,
      such as Italy and Greece, have established incentives to increase solar
      photovoltaic energy production, creating new opportunities for photovoltaic
      products, although there is no guarantee this will occur or that such incentives
      will be available to us.




8




**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.




**Risk
      Factors**




*An
      investment in our common stock involves a high degree of risk.  You
      should carefully consider the following material risks, together with the other
      information contained in this Form 10-KSB, before you decide to buy our common
      stock.  If any of the following risks actually occur, our business,
      results of operations and financial condition would likely suffer.  In
      these circumstances, the market price of our common stock could decline, and
      you
      may lose all or part of your investment.*




**Risks
      Related to Our Business**




**We
      are an early-stage company with a limited operating history, which makes us
      a
      speculative investment.**




We
      are an
      early-stage company that seeks to take advantage of a proprietary automation
      process to produce solar panels or modules and solar tiles at a lower cost.
      We
      have experienced losses from our early stage operations, which have involved
      developing and testing our new solar panel technology and commencement of the
      sales and distribution portions of our business by custom manufacturing and
      selling solar panels or modules and solar tiles. We anticipate incurring losses
      over the next few years as we complete the development and testing of prototypes
      and the licensing of our new products and commence production. There is little
      meaningful historical financial or other information available upon which you
      can base your evaluation of our business and prospects. We have not begun
      commercial production of solar panels or modules and solar tiles made using
      our
      proprietary automation process, and at this early stage of our business plan,
      we
      have less insight into how market and technology trends may affect our business
      than we expect to have in the future. The revenue and income potential of our
      business is unproven. As a result, you should consider our business and
      prospects in light of our lack of operating history and the challenges that
      we
      will face as an early-stage company seeking to develop a new manufacturing
      process. If we are not able to develop our business, we will not be able to
      achieve our goals and could suffer economic loss, in which case you may lose
      your entire investment.




**Since
      our inception, we have incurred net losses and anticipate continued net losses
      until development, implementation and commercialization of our products
      manufactured through our new assembly processes are
      operational.**




Since
      our
      inception we have incurred net losses, including a net loss of $1.2 million
      in
      2006 and have negative cash flows from operations. We plan to enter commercial
      production in late 2008 or early 2009, and we expect to continue to incur
      significant losses over at least the next few years. We expect to continue
      to
      make significant capital expenditures and anticipate that our expenses will
      increase in the near term as we continue to develop our manufacturing
      technologies and our sales and distribution network, implement internal systems
      and infrastructure, and hire additional personnel. As we do not expect to become
      profitable until after our new solar panels or modules and solar tiles made
      using our proprietary automation process are in production, we will be unable
      to
      satisfy our current obligations solely from cash generated from operations.




**We
      will require significant additional financing, the availability of which cannot
      be assured, and if we are unable to obtain such financing, our business may
      fail.**




To
      date,
      we have had negative cash flows from operations and have depended on sales
      of
      our equity securities and debt financing to meet our cash requirements. Our
      ability to continue our operations and to develop our technologies will depend
      upon our ability to raise significant additional financing. If we are unable
      to
      obtain such financing, we will not be able to develop our business.
      Specifically, we will need to raise additional funds to:




9




·
            support
                our planned growth and carry out our business plan;




·
            continue
                the research and development of our technologies;




·
            protect
                our intellectual property;




·
            hire
                top quality personnel for all areas of our business;




·
            address
                competing technological and market developments;
                and




·
            market
                and develop our technologies.




We
      may
      not be able to obtain additional equity or debt financing as required. Even
      if
      financing is available, it may not be available on terms that are acceptable
      or
      favorable to us or in sufficient amounts to satisfy our requirements. If we
      require, but are unable to obtain, additional financing in the future, we may
      be
      unable to implement our business plan and our growth strategies, respond to
      changing business or economic conditions, withstand adverse operating results
      and compete effectively. More importantly, if we are unable to raise additional
      financing when required, we may be forced to scale down our operations and
      our
      ability to generate revenues may be reduced. We have no current arrangements
      to
      secure any such financing.




**We
      may be unable to complete our development, manufacturing and commercialization
      plans and the failure to do so will significantly harm our business plans,
      prospects, results of operations and financial condition.**




Commercializing
      our new solar panel technology products and processes depends on a number of
      factors, including:




·
            further
                product and manufacturing process
                development;





·
            development
                of certain critical tools and large scale production capabilities;





·
            completion,
                refinement and management of our supply chain;





·
            completion,
                refinement, and management of our distribution channels; and





·
            building
                and operating the initial production line and demonstrating efficiencies
                that will make our products attractively
                priced.




Further,
      we have focused primarily on research and development. We do not know whether
      the processes or products we have developed will be capable of supporting
      large-scale manufacturing of solar modules and tiles that meet the requirements
      for cost, schedule, quality, engineering, design, production standards, field
      certification, and volume requirements.




**Our
      products have never been sold on a mass market commercial basis, and we do
      not
      know whether they will be accepted by the market.**




The
      solar
      energy market is at a relatively early stage of development and the extent
      to
      which solar modules will be widely adopted is uncertain. If our products are
      not
      accepted by the market, our business plans, prospects, results of operations
      and
      financial condition will suffer. Moreover, demand for solar modules in our
      targeted markets, including Germany, France, the United States and Italy, may
      not develop or may develop to a lesser extent than we anticipate. The
      development of a successful market for our proposed products and our ability
      to
      sell our products at a lower price per watt may be affected by a number of
      factors, many of which are beyond our control, including but not limited to:




·
            Our
                failure to produce solar power products that compete favorably against
                other solar power products on the basis of cost, quality and
                performance;





·
            Competition
                from conventional energy sources and alternative distributed generation
                technologies, such as wind energy;





·
            Our
                failure to develop and maintain successful relationships with
                distributors, systems integrators and other resellers, as well as
                strategic partners; and





·
            Customer
                acceptance of our products.




10




If
      our
      proposed products fail to gain sufficient market acceptance, our business plans,
      prospects, results of operations and financial condition will
      suffer.




**We
      depend upon a limited number of third-party suppliers for key materials, and
      any
      disruption from such suppliers could prevent us from manufacturing and selling
      cost-effective products.**




We
      manufacture our products using materials and components procured from a limited
      number of third-party suppliers. We currently purchase the photovoltaic cells
      we
      need for our proprietary technology from a small number of suppliers. We do
      not
      currently have in place any supply contracts. If we fail to maintain our
      relationships with these suppliers, or fail to secure additional supply sources
      from other photovoltaic cell suppliers, we may be unable to manufacture our
      products 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, resulting in potential order cancellations
      and lost revenue.




**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 operating results.**




Currently
      we sell our custom manufacturing services to only a few customers headquartered
      in Switzerland. In the fiscal year ended December 31, 2006, sales to our largest
      two customers accounted for approximately 47% and 39%, respectively, of our
      total net sales. 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 continue to receive significant
      revenues from these customers over the long term.




**We
      likely will face intense competition from manufacturers of crystalline silicon
      solar modules, thin film solar modules and solar thermal and concentrated
      photovoltaic systems, all of which represent direct substitutes for our
      products.**




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 more established electric power
      industry. We believe that our main sources of competition are crystalline
      silicon solar module manufacturers, thin film solar module manufacturers, and
      companies developing solar thermal and concentrated photovoltaic
      technologies.




At
      the
      end of 2006, 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 that 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.
      Most, if not all, of our competitors across each of these segments are more
      established, benefit from greater market recognition and have substantially
      greater financial, development, manufacturing and marketing resources than
      us.
      If we are unable to effectively compete for customers and suppliers, our
      financial condition and results of operations will suffer.




**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.**




11




The
      reduction, elimination or expiration of government subsidies and economic
      incentives for on-grid solar electricity could result in the diminished
      competitiveness of solar energy relative to conventional and non-solar renewable
      sources of energy, which would negatively affect the growth of the solar energy
      industry overall and our net sales specifically. 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, Canada and the United
      States, have provided subsidies in the form of 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 could
      expire, phase-out over time, exhaust the allocated funding or require renewal
      by
      the applicable authority. A reduction, elimination or expiration of government
      subsidies and economic incentives for solar electricity could result in the
      diminished competitiveness of solar energy, which would in turn hurt our sales
      and financial condition.




**Technological
      changes in the solar power industry could render our products obsolete, which
      could prevent us from achieving sales and market share.**




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 increasing our sales and becoming profitable. The solar power industry
      is
      rapidly evolving and highly competitive. 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.
      If
      this occurs, our sales and profits could be diminished.




**Failure
      to protect our proprietary technology and intellectual property rights against
      infringement could seriously impact our competitiveness and any litigation
      related to** **protection
      of such intellectual property rights** **would
      be time consuming and costly.**




Our
      success and ability to compete depends to a significant degree on our
      proprietary technology, which consists of a combination of copyright, trademark,
      and pending patent applications in both Europe and the United States. 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 patent applications, contractual protections and trade secrets.
      These measures may not be adequate to prevent the unauthorized use of our
      proprietary technology and our other intellectual property rights. Further,
      the
      laws of various countries in which we expect to offer our products may provide
      inadequate protection of such intellectual property rights.




**We** **may
      be exposed to infringement or misappropriation claims by third parties, which,
      if determined adversely to** **us** **,
      could cause** **us** **to
      pay significant damage awards or prohibit** **us** **from
      the manufacture and sale of** **our
      solar modules and tiles** **or
      the use of** **our** **manufacturing
      technology.**




Our success
      depends largely on our ability
      to use and to develop our technology
      and know-how without infringing or misappropriating the intellectual property
      rights of third parties. The validity and scope of claims relating to
      photovoltaic technology patents involve complex scientific, legal and factual
      considerations and analysis and, therefore, may be uncertain. We may
      be
      subject to litigation involving claims of patent infringement or violation
      of
      intellectual property rights of third parties. The defense and prosecution
      of
      intellectual property suits can be costly and time consuming. An adverse
      determination in any litigation or proceeding could subject us to
      significant liability to third parties, require us to
      seek
      licenses from third parties which may not be available on reasonable terms,
      require us to
      redesign our
      solar
      modules and tiles ,
      or
      subject us to
      injunctions prohibiting the manufacture and sale of our
      solar
      modules and tiles or
      the
      use of our technologies.




12





**One** **of** **our** **directors,** **Christiane
      Erné** **,
      controls a substantial interest in** **us** **and
      therefore may control certain actions requiring a stockholder
      vote.**




Christiane
      Erné ,
      a
      director since 2006, beneficially owns 66.1% percent of our outstanding common stock. Christiane
      Erné is
      married to Daniel
      Erné ,
      another
      of our directors.
      As a result, Christiane
      Erné and Daniel Erné will
      be
      able to determine the outcome of any decision upon which our stockholders
      vote.




**All
      of our assets and a majority of our directors and officers are outside the
      United States, with the result that it may be difficult for investors to enforce
      within the United States any judgments obtained against us or any of our
      directors or officers.**




Although
      we are organized under the laws of the State of Delaware, our principal business
      office is located in Geneva, Switzerland. As such, it may be difficult for
      investors to enforce judgments against us that are obtained in the United States
      in any action, including actions predicated upon civil liability provisions
      of
      the 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 us 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
      substantial doubt as to the enforceability against 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 us. Under United States bankruptcy laws, 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,
      you may have trouble administering 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 obtained by you in the
      United States may not be enforceable.




**Risks
      Related to Our Industry**




**There
      is a shortage of semi-conductor grade silicon, upon which our products depend.
      Any continued shortage could impact our cost of sales and limit our revenue
      growth.**




Silicon
      is an essential raw material in the production of photovoltaic cells. Currently
      there is an industry-wide 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, 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
      do
      not believe that the supply imbalance will be remedied in the near term, and
      we
      expect that silicon demand will continue to outstrip supply for the foreseeable
      future. We do not have any silicon supply contracts in place, and a continued
      shortage in supply could hurt our revenue growth.




**Existing** **regulations
      and policies and changes to these regulations and policies may present
      technical, regulatory and economic barriers to the purchase and use of
      photovoltaic products, which may significantly reduce demand for** **our** **solar
      products.**




The market
      for electricity generating 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 a number of
      countries, these regulations and policies have been modified in the past and
      may
      be modified again in the future. These regulations and policies could deter
      end-user purchases of photovoltaic products and
      investment in the research and development of photovoltaic technology. 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 to a flat rate, would require photovoltaic systems to achieve lower prices
      in
      order to compete with the price of electricity generated using other
      technologies.




13




**We
      may be vulnerable to the efforts of electric utility companies lobbying to
      protect their revenue streams and from competition from such electric utility
      companies.**




Electric
      utility companies could lobby for a change in the relevant legislation in their
      markets to protect their current revenue streams. Any adverse changes to the
      regulations and policies of the solar energy industry could deter end-user
      purchases of photovoltaic products and investment in the research and
      development of photovoltaic technology. 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. Any changes to government regulations or utility
      policies that favors electric utility companies could reduce our competitiveness
      and cause a significant reduction in demand for our products.




**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.


14


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.




15




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.


16


**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$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.




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.




17




**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.




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.




18




**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.




19




**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.




20




**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.




**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.




21




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.




**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 our 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. law.




As
      a
      result of the reverse acquisition consummated on September 27, 2006, the Company
      became subject to reporting under U.S. generally
      accepted accounting principles and
      applicable SEC rules and regulations. These requirements are significantly
      different from the rules applicable to privately held Swiss companies by
      which the Company complied prior to the reverse acquisition. Due to an internal
      lack of familiarity with specific U.S. generally
      accepted accounting principles and
      applicable SEC rules and regulations which resulted in accounting errors, the
      Company was required to restate its financial statements for the year ended
      December 31, 2005 and the nine months ended September 30,
      2006.




In
      order
      to comply with the applicable accounting rules and regulations and to remediate
      these material weaknesses, the Company has hired an independent consultant
      experienced in financial reporting under U.S. law and who is assisting the
      Company in the preparation of the financial statements and related
      disclosures. In addition, the Company’s finance staff has attended
      financial reporting training to improve the quality of our financial
      reporting. The
      Company is also in the process of hiring additional staff experienced with
      U.S.
      generally accepted accounting principles.




As
      a
      result of these efforts, our Chief Executive Officer and Chief Financial Officer
      have concluded that the material weaknesses have been remediated and that the
      Company now 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 and which also are effective in ensuring that
      information required to be disclosed by the Company in the reports that it
      files
      or submits under the Exchange Act is accumulated and communicated to the
      Company’s management, including the Company’s Chief Executive Officer and Chief
      Financial Officer, to allow timely decisions regarding required disclosure.




22




There
      has
      been no change in our internal control over financial reporting that occurred
      during the fourth fiscal quarter of 2006 that materially affected, or is
      reasonably likely to materially affect, our internal control over financial
      reporting.




**ITEM
      8B. OTHER INFORMATION**




None.


23


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





**Jean-Christophe
      Hadorn, Chief Executive Officer and Director**




Mr.
      Hadorn received his masters degree in Civil Engineering from the Swiss Federal
      Institute of Technology in Lausanne in 1979 and his MBA from HEC University
      of
      Lausanne in 1998. From 1979 to 1981, Mr. Hadorn worked as a researcher at the
      Institute for Energy Production (IPEN) within the Swiss Federal Institute of
      Technology in Lausanne, Switzerland on large scale storage of solar heat in
      deep
      aquifiers. From 1981 to 1985, Mr. Hadorn worked as a project engineer for SORANE
      SA, a solar energy and engineering company in Switzerland, where he advised
      architects and designed energy concepts for buildings and industry. Mr. Hadorn
      worked from 1986 to 1995 as a project leader with BSI Engineering, a consulting
      company in energy and information technology in Switzerland, on a geographical
      information system software product for the design and management of energy
      networks as principal developer of software, code named HyperBird. Since 1999,
      Mr. Hadorn has worked as an independent energy consultant, and as the CEO of
      BASE Consultants SA, Geneva, a strategy and management consulting company which
      advises public and private businesses. Since 1985, Mr. Hadorn has been appointed
      as a leader for national solar energy and heat storage research programs by
      the
      Swiss government and from 2003 to 2005 was asked by the French government to
      set
      up the National Institute of Solar Energy in France. Mr. Hadorn has participated
      in several International Energy Agency (IEA) Tasks within the Solar Heating
      and
      Cooling Program (Task 7, Task 26, and Task 32 which he will lead as an Operating
      Agent until 2007). Mr. Hadorn also serves as director of our wholly-owned
      subsidiary, SES Switzerland.




24




**Sandrine
      Crisafulli, Chief Financial Officer and Chief Operating Officer**




Ms.
      Crisafulli has been our CFO and COO since 2001.  Ms. Crisafulli received a
      certificate of commerce in commercial studies from Lemania College in Lausanne,
      Switzerland.  She has experience in financial and administrative management
      having served as administrative director and finance chief at N.E. Achille,
      a
      retail company, from 1995 until 2001.




**Daniel
      Erné, Director**




Mr.
      Erné
has more than 25 years of experience in international trade having worked as
      a
      consultant for the Conseil Général of the Haute Savoie Department, France;
      Breitling, a Swiss watch manufacturing company; BMS Automotives Ltd., a United
      Kingdom design, engineering and turnkey supplier of automotive manufacturing
      plants and a car import company; Casino Ruhl, a French casino; and several
      hotel
      groups. In addition, Mr. Erné manages several different private car, retail,
      security and hotel companies in France and acts as a consultant to companies
      engaged in international trading, including Securiguard since 2000. Mr. Erné’s
      prior consulting engagements include Daniel.L (1980-1992), a restructuring
      and
      new market developments company and Delta Automobiles (1992-1999), a car
      retailer and a solar car development company. Mr. Erné is married to Christiane
      Erné.




**Christiane
      Erné, Director**




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
      Société d'Energie Solaire. Ms. Erné received a diploma in economics from the
      University of Geneva in 1974. **** Ms.
      Erné
is married to Daniel Erné.




**Michael
      D. Noonan, Director**




Mr.
      Noonan has more than 15 years of investor relations, corporate finance and
      corporate governance experience. Mr. Noonan has served since 2005 as the Vice
      President, Corporate and a director of Sky Petroleum, Inc., an oil and gas
      company quoted on the OTC Bulletin Board. Prior to joining Sky Petroleum, Mr.
      Noonan worked for Forgent Networks, an intellectual property and software
      company from 2002 to 2006, where he last served as the Senior Director of
      Investor Relations. Prior to working at Forgent Networks, Mr. Noonan was
      employed from 2000 to 2002 by Pierpont Communications, an investor and public
      relations firm, where he was a Senior Vice President. Mr. Noonan also served
      from 1999 to 2000 as director of investor relations and corporate communications
      at Integrated Electrical Services, an electrical services company, and manager
      of investor relations and public affairs for Sterling Chemicals from 1997 to
      1999, a manufacturer of commodity chemicals. Mr. Noonan received an MBA from
      Athabasca University in Alberta, Canada in 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.




**John
      Veltheer, Director**




From
      1999
      to 2000, Dr. Veltheer was President and director of SUMmedia.com Inc., an
      Internet coupon provider company quoted on the OTC Bulletin Board. From 2002
      to
      2003, Dr. Veltheer was the President and a director of Rapidtron, Inc., a
      company quoted on the OTC Bulletin Board, a leading provider of Radio Frequency
      Smart access control and ticketing/membership systems. At Rapidtron, Inc.,
      Dr.
      Veltheer was responsible for corporate finance 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, whose primary business was gourmet
      chocolate wholesaling. Since October 2005, Dr. Veltheer has served as the Chief
      Executive Officer, Secretary, Treasurer and a director of Vecten Corporation,
      a
      startup private equity fund. Dr. Veltheer has also served as the President
      and a
      director of Iridium Capital Inc. from 1999 to present, a private Canadian
      company that provides start-up consulting services; and the President and a
      director of Texada Ventures Inc. from September 2006 to present, a company
      quoted on the OTC Bulletin Board, whose primary business is mining. 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.




25




**Committees
      of the Board**




All
      proceedings of our board of directors are conducted by resolutions consented
      to
      in writing by all the directors and filed with the minutes of the proceedings
      of
      the directors. Such resolutions consented to in writing by the directors
      entitled to vote on that resolution at a meeting of the directors are, according
      to the corporate laws of the State of Delaware and the bylaws of our company,
      as
      valid and effective as if they had been passed at a meeting of the directors
      duly called and held.




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.




Our
      company does not have any defined policy or procedure requirements for
      stockholders to submit recommendations or nominations for directors. The board
      of directors believes that given the early stage of our development a specific
      nominating policy would be premature and of little assistance until our business
      operations develop to a more advanced level. Our company does not currently
      have
      any specific or minimum criteria for the election of nominees to the board
      of
      directors and we do not have any specific process or procedure for evaluating
      such nominees. The board of directors assesses all candidates, whether submitted
      by management or stockholders, and makes recommendations for election or
      appointment.




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.




**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 407(d) 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. Our board of directors does not believe that it is
      necessary to have an audit committee because we believe that the functions
      of an
      audit committees 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.




**Director
      Independence**




Our
      board
      of directors has determined that Michael D. Noonan is “independent” as such term
      is defined by NASDAQ Rule 4200(a)(15).




**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, or
      persons nominated or chosen by us to become directors or executive officers.




**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.




26




**ITEM
      10. EXECUTIVE COMPENSATION**




The
      following Summary Compensation Table sets forth certain information regarding
      the compensation of our named executive officers for services rendered in all
      capacities to us for the years ended December 31, 2006 and
      2005.




**Summary
      Compensation Table**




**Name
                and Principal**
              **Position**
            
            
            **Year**
            
            
            **Salary**
              **($)**
            
            
            **Bonus**
              **($)**
            
            
            **Stock
                Awards**
              **($)**
            
            
            **All
                Other Compensation**
              **($)**
            
            
            **Total**
              **($)**John
                Veltheer(1)
              Former
                President and Chief Executive Officer
            
            
            2006
              2005
            
            
            36,000
              3,500
            
            
            —
              —
            
            
            —
              —
            
            
            —
              —
            
            
            36,000
              3,500Jean-Christophe
                Hadorn(4)
              Chief
                Executive Officer
            
            
            2006
              2005
            
            
            —
              __
            
            
            —
              __
            
            
            —
              __
            
            
            95,827(2)
              7,141(2)
            
            
            95,827
              7,141Sandrine
                Crisafulli(3)(4)
              Chief
                Financial Officer and Chief Operating Officer
            
            
            2006
              2005
            
            
            25,953
              66,759
            
            
            —
            
            
            —
            
            
            
            
            
            25,953
              66,759







(1)
            Dr.
                Veltheer was appointed as our President, Chief Executive Officer
                and a
                director on November 7, 2005. We paid Dr. Veltheer $2,000 per month
                from
                the date of appointment through the fiscal year ended 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 and Chief Executive Officer effective September
                27,
                2006.(2)
            SES
                Switzerland entered into a one year consulting agreement with Base
                Consulting on January 1, 2006. The consulting agreement terminated
                on
                December 31, 2006, although SES Switzerland renewed the agreement
                for an
                additional year on the same terms and conditions. Base Consulting
                is paid
                an annual consulting fee of $95,827. The services provided by Base
                Consulting are performed by Mr. Hadorn. Mr. Hadorn was also paid
                $7,141 in
                consulting fees for 2005. Mr. Hadorn became our Chief Executive Officer
                on
                September 27, 2006. Other than pursuant to the consulting agreement
                entered into between the Company and Base Consulting, we do not compensate
                Mr. Hadorn in his capacity as Chief Executive Officer.(3)
            Ms.
                Crisafulli became our Chief Financial Officer and Chief Operating
                Officer
                on September 27, 2006. Pursuant to the terms of an employment agreement
                dated September 14, 2006, her annual salary is
                $108,333.(4)
            Ms.
                Crisafulli and Base Consulting are paid in Swiss Francs. The dollar
                figures were calculated using the exchange rate of 1.25225 as per
                Note 3
                to our audited consolidated financial statements for the fiscal year
                ended
                December 31, 2006.




**Stock
      Option Plan**




We
      do not
      have a stock option plan in favor of any director, officer, consultant or
      employee.




**Stock
      Options/Stock Awards**




We
      have
      not granted any options or stock awards during our prior fiscal year, either
      before or after the reverse merger.




27




**Director
      Compensation**




**Compensation
      of Directors During Fiscal Year 2006**




**Name
                and Principal**
              **Position**
            
            **Fees
                Earned**
              **or**
              **Paid
                in Cash**
              **($)**
            
            **All
                Other Compensation**
              **$**
            
            **Total**
              **($)**Jean-Christophe
                Hadorn
            
            
            8,024
            
            
            0
            
            
            8,024Daniel
                Erné
            
            
            25,953
            
            
            0
            
            
            25,953





We
      did
      not pay fees or other cash compensation for services rendered by our directors
      during the fiscal year ended December 31, 2006 other than to Messrs. Hadorn
      and
      Erné. The amount paid to Mr. Hadorn was for services rendered in his capacity as
      a director of our subsidiary, SES Switzerland. The amount paid to Mr. Erné was
      for services rendered pursuant to a consulting agreement as described below.
      We
      have no current plans to compensate our directors in their capacities as such
      in
      the future. We do reimburse our directors for reasonable out-of-pocket expenses
      incurred in connection with attending board meetings.




**Employment
      Agreements**




SES
      Switzerland entered into an employment agreement with Sandrine Crisafulli dated
      September 14, 2006. Pursuant to the terms of the agreement, Ms. Crisafulli
      receives an annual salary of $108,333. The term of the agreement is five (5)
      years. If Ms. Crisafulli’s employment is terminated without cause, we are
      obligated to pay her an amount equal to two years' salary for each completed
      three years of service.




SES
      Switzerland entered into a consulting agreement with Daniel Erné dated October
      3, 2006. Mr. Erné receives an annual salary of $108,333 in consideration for
      management consulting services. Mr. Erné is the husband of Christiane Erné, the
      Company’s principal stockholder, and a director of the Company and SES
      Switzerland.




**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.




28




**Principal
      Stockholders**




The
      following table sets forth certain information regarding our common stock
      beneficially owned as of May 14, 2007 for (i) each stockholder we know to be
      the
      beneficial owner of 5% or more of our outstanding common stock, (ii) each of
      our
      executive officers and directors, and (iii) all executive officers and directors
      as a group. In general, a person is deemed to be a beneficial owner of a
      security if that person has or shares the power to vote or direct the voting
      of
      such security, or the power to dispose or to direct the disposition of such
      security. A person is also deemed to be a beneficial owner of any securities
      of
      which the person has the right to acquire beneficial ownership within 60 days.


**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
              %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
              
              
              Nil
              
              
              NilMichael
                  D. Noonan
                c/o
                  129 Route de Saint-Julien, Plan-les-Ouates
                Geneva,
                  Switzerland
              
              
              Nil
              
              
              NilSandrine
                  Crisafulli
                c/o
                  129 Route de Saint-Julien, Plan-les-Ouates
                Geneva,
                  Switzerland
              
              
              Nil
              
              
              NilSG
                  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
              
              
              66.2
              %




*
            Less
                than 1%(1)
            Based
                on 73,081,168 shares of common stock issued and outstanding. 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 SEC and generally
                includes
                voting or investment power with respect to securities. Shares of
                common
                stock subject to options or warrants currently exercisable, or exercisable
                within 60 days, are deemed outstanding for purposes of computing
                the
                percentage ownership of the person holding such option or warrants,
                but
                are not deemed outstanding for purposes of computing the percentage
                ownership of any other person.(2)
            Ms.
                Erné directly holds 43,458,135 shares and indirectly holds 2,414,341
                shares transferred to Claudia Rey and 2,414,341 shares transferred
                to
                Jean-Christophe Hadorn pursuant to a voting trust agreement dated
                February
                22, 2006. Pursuant to the terms of the voting trust agreement, Ms.
                Rey and
                Mr. Hadorn each agreed to vote their shares in accordance with Ms.
                Erné’s
                instructions. Ms. Erné also has a right of preemption with respect to the
                subject shares. Of the 43,458,135 shares held directly by Ms. Erné,
                9,000,000 shares are held in escrow as security for repayment of
                a loan
                made by ScanE to SES Switzerland. The remaining 34,458,135 shares
                are held
                in escrow pursuant to the terms of a credit line escrow agreement
                and a
                long term escrow agreement, as more fully described in the Certain
                Relationships and Related Transactions section. The 2,414,341 shares
                transferred to Claudia Rey that are indirectly held by Ms. Erné are also
                held in escrow in the same manner as the shares discussed in footnote
                (3).




29




(3)
            As
                described in footnote (2), Mr. Hadorn’s 2,414,341 shares were transferred
                to him by Ms. Erné pursuant to a voting trust agreement dated February 22,
                2006. Of these shares, 500,000 shares are held in escrow as security
                for
                repayment of a loan made by ScanE to SES Switzerland. The remaining
                1,914,341 shares are held in escrow pursuant to the terms of a credit
                line
                escrow agreement and a long term escrow agreement, as more fully
                described
                in the Certain Relationships and Related Transactions section. All
                2,414,341 shares are held indirectly by Ms. Erné pursuant to the voting
                trust agreement.(4)
            Includes
                2,500 common shares held by Dr. Veltheer’s wife, Cristina
                Veltheer.





**Changes
      in Control**




We
      are
      unaware of any contract or other arrangement or provision of our Articles or
      Bylaws the operation of which may at a subsequent date result in a change of
      control of our company.




**ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**




Other
      than as set forth below, there have been no material transactions, series of
      similar transactions or currently proposed transactions during 2006, or
      subsequent thereto, to which the Company or its wholly-owned subsidiary was
      or
      is to be a party, in which the amount involved exceeded the lesser of $120,000
      or one percent of the average of the Company’s total assets at the year end for
      the last three completed fiscal years and in which any director or executive
      officer or any security holder who is known to us to own of record or
      beneficially more than 5% of our common stock, or any member of the immediate
      family or sharing the household (other than a tenant or employee) of any of
      the
      foregoing persons, had a direct or indirect material interest.




On
      August
      31, 2006, we entered into a share exchange agreement with SES Switzerland and
      the sole stockholders of SES Switzerland, namely Christiane Erné,
      Jean-Christophe Hadorn, and Claudia Rey, whereby we agreed to merge with SES
      Switzerland. The closing of the transactions contemplated by 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 terms
      of the share exchange agreement, we issued a
      total
      of 48,286,817 shares
      of common stock to the former stockholders of SES Switzerland (Christiane Erné -
      43,458,135 shares; Jean-Christophe Hadorn - 2,414,341 shares; Claudia Rey -
      2,414,341 shares) in exchange for the acquisition by us of all 39,500 issued
      and
      outstanding common shares of SES Switzerland on the basis of 1,222.451 shares
      of
      our common stock for every one common share of SES Switzerland. The terms of
      the
      share exchange agreement also stipulated that the Company and the former
      stockholders of SES Switzerland enter into the following three escrow
      agreements: (1) the Canton Geneva Escrow Agreement; (2) the Credit Line Escrow
      Agreement; and (3) the Long Term Escrow Agreement.




*Canton
      Geneva Escrow Agreement*




In
      connection with the closing of the share exchange agreement, we entered into
      the
      Canton Geneva Escrow Agreement dated September 15, 2006 with Christiane Erné,
      Jean-Christophe Hadorn, Claudia Rey, and ScanE. Pursuant to the terms of the
      Canton Geneva Escrow Agreement, the parties agreed to escrow 10,000,000 of
      the
      48,286,817 shares of common stock issued to Christiane Erné (9,000,000 shares),
      Jean-Christophe Hadorn (500,000 shares) and Claudia Rey (500,000 shares) in
      connection with the merger in order to secure partial repayment of a loan dated
      November 3, 2003 by ScanE to SES Switzerland. The 10,000,000 shares of
      common stock are to be delivered by the escrow agent as follows:




30




(a)  upon
      repayment of the loan to ScanE:




(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 ScanE.




The
      loan
      remains outstanding and the 10,000,000 shares continue to be held in escrow.




*Credit
      Line Escrow Agreement*




Also
      in
      connection with the closing of the share exchange agreement, we entered into
      the
      Credit Line Escrow Agreement dated September 1, 2006, as amended October 27,
      2006 and November 30, 2006, with Christiane Erné, Jean-Christophe Hadorn, and
      Claudia Rey. Pursuant to the terms of the Credit Line Escrow Agreement, the
      parties agreed to escrow 24,143,410 of the 48,286,817 shares of common stock
      issued in the merger to Christiane Erné (21,729,068 shares), Jean-Christophe
      Hadorn (1,207,171 shares) and Claudia Rey (1,207,171 shares). The 24,143,410
      shares of common stock are to be delivered from escrow as
      follows:




(a)  into
      a
      subsequent escrow in accordance with the terms of the Long Term Escrow Agreement
      (as described below) if our Company receives financing of at least $9,537,960
      (CHF 12 million) on or before November 30, 2007; or




(b)  to
      us for
      immediate cancellation if we do not receive financing of at least $9,537,960
      (CHF 12 million) on or before November 30, 2007.




*Long
      Term Escrow Agreement*




In
      connection with the closing of the share exchange agreement, we also entered
      into the Long Term Escrow Agreement dated September 1, 2006 with Christiane
      Erné, Jean-Christophe Hadorn, and Claudia Rey. Pursuant to the terms of the Long
      Term Escrow Agreement, we agreed to escrow all shares not otherwise escrowed
      pursuant to either the Credit Line Escrow Agreement or the Canton Geneva Escrow
      Agreement until the second anniversary of the closing of the share exchange
      agreement. As such, 14,143,407 of the 48,286,817 shares of common stock issued
      to Christiane Erné, Jean-Christophe Hadorn, and Claudia Rey in the merger are
      currently held in escrow until the second anniversary of the closing of the
      share exchange agreement.




SES
      Switzerland entered into a consulting agreement with Flannel Management dated
      October 1, 2006. Flannel Management receives a monthly consulting fee of
      $15,971. The contract is for a guaranteed 10-year term and if earlier
      terminated, we must pay the consulting fee for the full term. Flannel
      Management’s consulting services are rendered by Philippe Crisafulli, the
      husband of Sandrine Crisafulli, our Chief Operating Officer and Chief
      Financial Officer. During the fiscal year ended December 31, 2006, we paid
      $111,329 to Flannel Management.




On
      December 20, 2006, SES Switzerland executed a construction loan with Ms.
      Christine Erné to enable SES Switzerland to commence construction of our new
      manufacturing facility in Geneva, Switzerland. The construction loan is in
      the
      amount of $2,205,090. The annual interest rate is 4.5% and the loan has a two
      year term. The funds will be disbursed after construction has begun and as
      needed. As of December 31, 2006, no funds had been used.




In
      June
      2003, Christiane Erné contracted with us for the purchase and installation of
      solar tiles on her private residence. The contract amount was approximately
      $189,000 at the exchange rate of $0.76669 for 1 CHF as of June 2, 2003. The
      Company does not anticipate beginning installation before production of our
      tiles commences in our new manufacturing facility. To date, Ms. Erné has paid us
      approximately $107,000 of the $189,000 for the project. As such, we have
      recorded an outstanding receivable from a related party as of September 30,
      2007
      and December 31, 2006 in the amount of $82,185 and $78,386,
      respectively.




31




**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)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)




32




**Exhibit
                Number**
            
            **Description**


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)


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)




33




**Exhibit
                Number**
            
            **Description**


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 November
                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 Crisafulli10.31
            
            Form
                of Employment Agreement dated October 1, 2006 between SES Switzerland
                and
                Daniel Erné10.32
            
            Form
                of Consulting Agreement dated October 1, 2006 between SES Switzerland
                and
                Flannel Management Sarl10.33
            
            Construction
                Credit Contract dated December 20, 2006 between SES Switzerland and
                Banque
                Cantonale de Geneve10.34
            
            Construction
                loan dated November 30, 2006 between SES Switzerland and Christiane
                Erné11
            
            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 Subsidiaries31.1
            
            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.




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.




34




**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.


35


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:
                December 21, 2007
            By:
            /s/ Jean-Christophe
                HadornJean-Christophe
                Hadorn
              Chief
                Executive Officer





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
            
            December
                21, 2007Director(Principal
                Executive Officer)/s/
                Sandrine CrisafulliSandrine
                Crisafulli
            
            Chief
                Financial Officer
            
            December
                21, 2007(Principal
                Accounting Officer)*John
                Veltheer
            
            Director
            
            December
                21, 2007*Christine
                Erné
            
            Director
            
            December
                21, 2007*Daniel
                Erné
            
            Director
            
            December
                21, 2007*Michael
                D. Noonan
            
            Director
            
            December
                21, 2007





*  Pursuant
      to Power of Attorney




By: 
       /s/ Jean-Christophe Hadorn





Jean-Christophe
      Hadorn


Attorney-in-fact


36


**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**(As
                  Restated)**ASSETS
                  (in $)**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
              
              
              48,287100,000,000
                  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)**


**Accumulated
                  Other Comprehensive Income**
              
              **Total****Common
                  Stock**
              
              **Paid-in**
              
              **Retained**
              
              **Translation**
              
              **Shareholders'****Shares**
              
              
              
              **Amount**
              
              **Capital**
              
              **Earnings**
              
              **Adjustment**
              
              **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**(As
                  Restated)Cash
                  Flows from Operating Activities: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.




F-7


**SES
        SOLAR INC. AND SUBSIDIARY**
  **NOTES
        TO THE CONSOLIDATED FINANCIAL STATEMENTS**


**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.




*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:




2006
            
            2005Average
                  Rates
            
            CHF
            
            CHF$
            
            
            1.25225
            
            
            1.24626





2006
            
            2005Balance
                  Sheet year-end rates
            
            CHF
            
            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.




F-8


**SES
      SOLAR INC. AND SUBSIDIARY**




**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


**3.**  **Summary
      of Significant Accounting Policies:**  **(continued)**




*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.




*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.




F-9


**SES
      SOLAR INC. AND SUBSIDIARY**




**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


**3.**  **Summary
      of Significant Accounting Policies:**  **(continued)**




*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 in the computation of diluted loss per
      share because their effect was anti-dilutive.




*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.




F-10


**SES
      SOLAR INC. AND SUBSIDIARY**




**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


**3.**  **Summary
      of Significant Accounting Policies:**  **(continued)**




**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.




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.




F-11


**SES
      SOLAR INC. AND SUBSIDIARY**




**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


**3.**  **Summary
      of Significant Accounting Policies:**  **(continued)**




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.




**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 under the Completed Contract Method (CCM),
      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
      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 by error 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. Also, the currency translation adjustment ($2,101) was
      presented 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
              )


F-12


**SES
        SOLAR INC. AND SUBSIDIARY**
  **NOTES
        TO THE CONSOLIDATED FINANCIAL STATEMENTS**


Restatement
      December 31, 2005




Balance
      Sheet: Certain items have been restated in the December 31, 2005 Financial
      Statements - see reconciliation below. This restatement was necessary due to
      the
      fact that the Company previously by error 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 restatement 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 by error
      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 restatement in the Statement of Cash Flow was necessary
      due
      to the fact that the company by error misclassified certain operating and
      financing activities (short term loan $50,482) and the effect of exchange rate
      changes on cash ($68,155). Also, the cash and cash equivalents at year end
      ($153) were shown incorrectly.




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




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-13


**SES
        SOLAR INC. AND SUBSIDIARY**
  **NOTES
        TO THE CONSOLIDATED FINANCIAL STATEMENTS**


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 by error 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. The consulting fee of $480,000 was by error recorded in retained
      earnings instead of deferred expenses. The restatement was necessary 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.




Restatement
      September 30, 2006




Balance
      Sheet: The following restatement was necessary: 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.




F-14


**SES
        SOLAR INC. AND SUBSIDIARY**
  **NOTES
        TO THE CONSOLIDATED FINANCIAL STATEMENTS**


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 restated 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 restatement in the Statement of Cash Flow was necessary
      because the Company by error 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.




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




Statement
                  of Operation and Comprehensive Loss
            
            **UNAUDITED**For
                  the Three Months Ended September 30, 2006
            
            As
                Reported
            
            Difference
            
            As
                Revised$
            
            $
            
            $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-15


**SES
        SOLAR INC. AND SUBSIDIARY**
  **NOTES
        TO THE CONSOLIDATED FINANCIAL STATEMENTS**


Statement
                  of Operation and Comprehensive Loss
            
            
            **UNAUDITED**For
                the Nine Months Ended September 30, 2006
            
            
            As
                Reported
            
            
            Difference
            
            
            As
                Revised$
            
            
            $
            
            
            $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
            )




Statement
                  of Cash Flow for the Nine Months
            
            **UNAUDITED**Ended
                September 30, 2006
            
            As
                Reported
            
            Difference
            
            As
                Revised$
            
            $
            
            $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-16
 
 **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.




F-17


**SES
        SOLAR INC. AND SUBSIDIARY**
  **NOTES
        TO THE CONSOLIDATED FINANCIAL STATEMENTS**


**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**





**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**




F-18


**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.




**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
            )




F-19


**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.




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




F-20




**SES
      SOLAR INC. AND SUBSIDIARY**




**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


**13.**  **Commitments
      and Contingencies:**  **(continued)**




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 100,000,000 shares of common stock authorized, par value $0.001
      per
      share, and 73,081,168 shares issued and outstanding.




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-21


**SES
        SOLAR INC. AND SUBSIDIARY**
  **NOTES
        TO THE CONSOLIDATED FINANCIAL STATEMENTS**


**15.**  **Stockholders'
      Equity:**  **(continued)**




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.


F-22




**SES
      SOLAR INC. AND SUBSIDIARY**




**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


**15.**  **Stockholders'
      Equity:**  **(continued)**




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




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.




F-23


**SES
        SOLAR INC. AND SUBSIDIARY**
  **NOTES
        TO THE CONSOLIDATED FINANCIAL STATEMENTS**
  The
        components of loss before income tax benefit are as follows:




**18.**  **Income
      Taxes:**  **(continued)**




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**
            **)**





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.




F-24




**SES
      SOLAR INC. AND SUBSIDIARY**




**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**




**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





**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.




F-25




**SES
      SOLAR INC. AND SUBSIDIARY**




**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**




**23.**  **Related
      Party Transactions**  **(continued)**




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.




**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-26