**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**









**FORM
      10-KSB**





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




**For
      the fiscal year ended December 31, 2007**





**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, 2007 were
      $1,344,794.





The
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates of the registrant on March 25, 2008 based on the average of
      the
      bid and asked price on such date was $17,319,645.





As
      of
      March 25, 2008, the issuer had a total of 73,081,168 shares of common stock
      outstanding.





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







TABLE
      OF CONTENTS





PagePART
                  I
              
              1ITEM
                  1. DESCRIPTION OF BUSINESS
              
              1ITEM
                  2. DESCRIPTION OF PROPERTY
              
              13ITEM
                  3. LEGAL PROCEEDINGS
              
              13ITEM
                  4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
                  HOLDERS
              
              13PART
                  II
              
              14ITEM
                  5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED
                  STOCKHOLDER MATTERS.
              
              14ITEM
                  6. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
                  OPERATION
              
              15ITEM
                  7. FINANCIAL STATEMENTS
              
              23ITEM
                  8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS OR
                  ACCOUNTING AND FINANCIAL DISCLOSURE
              
              23ITEM
                  8A(T). MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL
                  OVER FINANCIAL REPORTING
              
              24ITEM
                  8B. OTHER INFORMATION
              
              24PART
                  III
              
              25ITEM
                  9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
                  PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(a)
                  OF THE
                  EXCHANGE ACT.
              
              25ITEM
                  10. EXECUTIVE COMPENSATION
              
              28ITEM
                  11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT AND RELATED STOCKHOLDER MATTERS
              
              29ITEM
                  12. CERTAIN RELATIONSHIPS AND RELATED
                  TRANSACTIONS
              
              30ITEM
                  13. EXHIBITS
              
              32ITEM
                  14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
              
              34


TABLE
        OF CONTENTS




**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. We currently
      produce and install custom photovoltaic (“PV”) 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 PV projects. As an engineering service
      provider, we design new methods of manufacturing PV modules, and we incorporate
      these modules into the specific architectural and building applications of
      our
      customers.




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 our new proprietary assembly processes which we believe will allow for
      higher quality electrical contacts, better performance and reduced
      costs.




1
 
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**The
      Photovoltaic (PV) 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 PV or solar thermal technology to extract energy
      from
      the sun. PV 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. PV 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 PV 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.




PV systems
      are currently the most widely used method of transforming sunlight into
      electricity. Annual installations by the PV industry grew from 0.4GW in 2002
      to
      1.7GW in 2006 and 2.9 GW at the end of 2007, representing a 70% increase in
      one
      year. Cumulative installed capacity reached just below 10GW at the end of 2007.




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 PV systems. Over time, we expect
      costs
      to decline as a result of new fabrication techniques, the development of PV
      cell
      technologies that use alternative lower-cost materials, reductions in the amount
      of silicon used in PV cells, partly through the development of thin film
      technologies, improvements in module performance as a result of greater PV
      cell
      energy efficiency, lower direct manufacturing costs, and economies of scale
      as
      production volumes rise.




In 2007, Germany was
      the
      world’s leader in MW volume of PV installations with 50%, followed by Spain with
      13%,
      Japan with 10%, Italy with 7% and the U.S. with
      7%,
      according to industry publication Solarbuzz
      LLC .




The
      solar
      PV market has demonstrated an aggregated global growth rate of more than 40%
      per
      annum over the last 10 years. Few industries can boast equivalent numbers,
      but
      solar PV has two big challenges ahead. Production costs need to go down in
      order
      for it to become more economically sustainable, while production capacity must
      continue to grow in order for PV to become a significant player in the global
      energy market.




According
      to a Merrill Lynch Report dated January 8, 2008, given the rate at which
      manufacturing capacity is being constructed, in order to keep a demand-supply
      balance, the solar industry needs to grow annual installations from 3GW in
      2007
      to over 15GW in 2010. This 70% compound annual growth rate (“CAGR”) may be
      difficult to achieve unless new countries support the solar market by
      implementing appropriate feed-in tariffs.




Since
      2005, demand for silicon has increased significantly in the PV industry,
      overtaking even the capacity needs of the semiconductor industry. This has
      resulted in unprecedented price increases for silicon on the spot-market as
      well
      as PV production facilities working at less than full capacity. To address
      this
      problem, the PV industry has established long-term capacity forecasts in order
      to secure the necessary raw materials. As a result, we believe that more
      solar-grade production will become available, which will be cheaper than the
      semiconductor grade silicon because purity requirements are less stringent
      for
      the PV industry. Because it will take at least two years to build additional
      raw
      silicon capacity, we believe it will be 2008 or beyond before silicon prices
      return to normal, which is between US$30-$40/kg for solar-grade silicon.




**Advantages
      and Disadvantages of Solar Energy**




Solar energy
      generated through PV 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. PV 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.




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Solar energy
      generated through PV systems also has certain disadvantages. Perhaps
      the most significant drawback of PV 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 PV 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.




**Description
      of Our Products**




Currently
      we produce and install custom PV 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 PV 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®*




We
      have
      developed a new technology for the production, distribution and sale of a next
      generation solar tile that will be branded under the SunTechTile® trademark on
      the international market and under the Swisstile® trademark in Switzerland.
      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 PV 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 PV 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 patented, 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 in Geneva, Switzerland which is
      currently under construction, 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.  Using equipment stored in our building in
      Härkingen, this new facility will enable us to produce customized solar PV
      modules that are larger than three square meters.




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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 PV
      cells and soldering to occur during only one production run, which is faster
      and
      is more automated than existing manufacturing processes for these types of
      cells.  As a result of this new assembly technology, we anticipate
      that our production line will be significantly smaller than traditional
      production lines using standard tabbing and stringing machines and about three
      times faster than current throughput.  We further believe that our new
      manufacturing process has numerous advantages in comparison with existing
      assembly techniques, including that it allows electrical connections between
      cells and strings in a module to be made in an easier, faster manner and
      requires fewer manufacturing steps thereby resulting in decreased manufacturing
      time and in greater throughput.  Our manufacturing process also
      significantly reduces manual labor requirements, a significant cost component
      in
      the PV industry resulting in greater capital productivity, lower costs, more
      reliable connections, more consistent performance, and less waste.




In
      addition to the above described assembly technique, our patent also applies
      to
      the connection of modules (of any cell type) to junction boxes in a more
      efficient manner, thereby resulting in reduced usage of glass material and
      encapsulate by 1% to 3%, depending on the modules.




We
      plan
      to use our patented manufacturing process and back connection technique at
      our
      new facility to produce standard PV modules and next generation integrated
      roof
      tiles. We also intend to license this technology to other module
      producers.




With
      its
      low heating demand and its large PV roof, we believe that our manufacturing
      facility will be a showcase for PV technology, with special solar windows on
      one
      facade and a roof generating more than enough power to satisfy the facility’s
      energy requirements. During the facility’s design phase, and on January 16,
      2008, we received verbal confirmation that the building 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. 
The final MINERGIE ® certificate
      is expected to be delivered upon completion of the building.




**Sales
      and Marketing**




Although
      the solar energy market is at a relatively early stage of development, energy
      experts and associations forecast still a high expansion in the solar PV market
      with CAGR reaching 30% to 40% between 2007 and 2010. 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, Spain 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 PV solutions 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 PV 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;




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




·
            potential
                module manufacturers licensing our
                technology.




In
      the
      fiscal year ended December 31, 2007, sales to our largest customer accounted
      for
      approximately 89% of our total net sales. In the fiscal year ended December
      31,
      2006, sales to our largest two customers accounted for approximately 47% and
      39%, respectively, of our net sales. The loss of one of our large customers
      or
      their default in payment could significantly reduce our revenues and harm our
      operating results.




**Suppliers
      and Process Equipment Providers**




We
      rely
      on several companies to supply certain components and materials used to
      manufacture and produce our PV 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 purchased in the past slates 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. Recent changes in the dimensions
      of some solar cells on the market, however, might require larger slates, which
      exist at the prototype level from our suppliers but whose availability on the
      mass market is not yet proven.




Our
      manufacturing processes use both off-the-shelf and custom-built equipment.
      Our
      process equipment providers have had difficulty finalizing our order for certain
      custom-built machinery to be installed in our new facility. Based on our
      patented technology, the manufacturing concept we will employ in our facility
      is
      new and an important machine that we expected to have in 2007 has yet to be
      delivered. We expect that this machine will be ready by June 2008.




**Competition**




We
      face
      competition from domestic and international companies actively engaged in the
      manufacturing and distribution of solar PV 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 PV cells and modules include Sharp
      Corporation, Kyocera Corporation, Sunpower, Suntech, Yingli Solar, China
      sunergy, Qcells, Solarworld, Schott Solar, BP Solar, Shell, Tenesol, Isofoton,
      Conergy and others. 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 PV 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 PV product offerings differ in this respect because they
      maximize power output using the latest generation PV 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, and Total. 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 PV 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 PV 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.




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**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, 2007 and 2006, we spent $426,814
      and
      $151,246,  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 second half 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 PV 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.




**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. On October 24, 2007, the international report on our
      PCT/IB2007/000428 was issued. The report recognizes that 12 of the 14 patent
      claims are new and that all have potential for industrial
      application.




**Government
      Regulation**




Currently the
      cost
      of solar electricity substantially exceeds the retail price of electricity
      in
      every significant market
      in the world. To push 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. Switzerland will have a much more favorable than feed-in tariff
      during 2008.




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, popular in the U.S., enable end- users to sell
      only 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.




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 PV 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 PV market
      and adversely affect our growth prospects. Other countries, such as Italy,
      Greece and France in 2007, have established incentives to increase solar PV
      energy production, creating new opportunities for PV products, although there
      is
      no guarantee this will occur or that such incentives will be available to
      us.




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**Employees**




As
      of
      December 31, 2007, we had five full-time employees, two of which are engineers.
      We periodically hire consultants as independent contractors. As of December
      31,
      2007, we had two such consultants. We intend to hire approximately ten
      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 $1.5 million
      in
      2007 ($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:




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




·
            continue
                the research and development of our technologies;




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·
            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.




**If
      we experience significant delays, cost over runs and technical difficulties
      in
      installing our new manufacturing facility, our business plans, prospects,
      results of operations and financial condition will suffer.**




Completing
      the installation of equipment at our Geneva, Switzerland manufacturing facility
      is subject to significant risks, including risks of delays, equipment problems,
      cost overruns and other start-up and operating difficulties. Our manufacturing
      processes use both off-the-shelf and custom-built equipment. If we experience
      any of these or similar difficulties, we may be unable to complete our
      manufacturing facility either in a timely manner or at all. Without our
      manufacturing facility, we would likely have no manufacturing capacity and
      you
      could lose your entire investment.




**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;




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·
            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.




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 PV 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
      PV
      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, 2007, sales to our largest
      customer accounted for approximately 89% of our total net sales. 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
      one
      of our larger 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 PV
      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 PV
      technologies.




At
      the
      end of 2007, the global PV industry consisted of more than 150 manufacturers
      of
      PV cells and solar modules. Within the PV industry, we face competition from
      crystalline silicon PV cell and solar module manufacturers, including Trina
      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 PV cells, solar modules or turnkey production lines or have bought
      players in the PV industry. In addition to manufacturers of PV cells and solar
      modules, we face competition from companies developing solar tiles or equivalent
      (Solar century, Imerys, Atlantis and others). 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.




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**The
      reduction or elimination of government subsidies and economic incentives for
      on-grid solar electricity applications could reduce demand for our solar
      modules, lead to a reduction in our net sales and harm our operating results.**




The
      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 PV products. For example, Germany has been a strong supporter
      of PV products and systems since 2000, 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. Pressure on
      manufacturers to reduce production cost could also affect our business
      model.




**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 PV
      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.




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**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 still 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 PV 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 PV 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 PV
      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 PV products and
      investment in the research and development of PV technology. For example,
      without a mandated regulatory exception for PV
      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 PV systems and make them less desirable, thereby harming our business,
      prospects, results of operations and financial condition. In addition,
      electricity generated by PV 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 PV systems to achieve lower prices in order to compete
      with
      the price of electricity generated using other technologies.




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**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 PV products and investment in the research and development of
      PV
      technology. In addition, electricity generated by PV 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 PV 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.




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**ITEM
      2. DESCRIPTION OF PROPERTY**




Our
      principal office is located in Plan-les-Ouates, a
      suburb
      of  Geneva,
      Switzerland.




We
      were
      granted leasehold rights to land in Plan-les-Ouates, for which we paid a
      reservation cost of CHF9,053 ($7,552) per
      quarter, and which we paid for the last eight quarters for a total of CHF72,420 ($60,416 ).
      Rent
      for the entire 60-year term of the lease is CHF72,065 ($ 60,120 )
      per
      year, commencing on July 1, 2006. We received authorization to build our
      manufacturing facility on the property from the State of Geneva on May 27,
      2005
      and we
      commenced construction of the facility in the second half of 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 ($ 6,033 ).
      The
      lease agreement may be terminated with six months’ notice.




We
      also
      rent a 154 square meter office space 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. The lease varies annually
      on the basis of the Swiss consumer index. For 2007 the cost was CHF52,104
      ($43,467). The
      lease agreement was originally for a five-year term and is automatically renewed
      annually unless terminated with one years’ notice. The lease agreement was
      renewed in February 2008 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, 2007.




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**PART
      II**




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




Our
      common stock is 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”.




The
      approximate number of holders of record of our common stock as of
      March 25, 2008 was 39, inclusive of those brokerage firms and/or clearing houses
      holding shares of common stock for their clientele (with each such brokerage
      house and/or clearing house being considered as one holder). As of March 25,
      2008, we had 73,081,168 shares of common stock outstanding.




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
      25, 2008, the last date for which such information is available, the closing
      price of our common stock, as reported by the OTC Bulletin Board, was $0.70
      per
      share.




**High**
            
            **Low**2006First
                Quarter
            
            $
            0.65
            
            $
            0.45Second
                Quarter
            
            
            1.24
            
            
            1.22Third
                Quarter
            
            
            1.70
            
            
            1.70Fourth
                Quarter
            
            
            0.88
            
            
            0.852007First
                Quarter
            
            $
            0.71
            
            $
            0.63Second
                Quarter
            
            
            0.48
            
            
            0.48Third
                Quarter
            
            
            1.17
            
            
            1.11Fourth
                Quarter
            
            
            1.08
            
            
            0.902008First
                Quarter (through March 25, 2008)
            
            $
            0.70
            
            $
            0.70





**Dividend
      Policy**




We
      have
      never declared or paid dividends on our common stock. We do not intend to
      declare dividends in theforeseeablefuture
      since we anticipate that we will reinvest any future earnings into the
      development and growth of our business. Any decision as to the future payment
      of
      dividends will depend on our results of operations, our financial position
      and
      such other factors as our Board of Directors in its sole discretion deems
      relevant.




**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 shares of common
      stock to three off-shore investors at a price of $0.20 per share for total
      proceeds of $1,010,000 pursuant to subscription agreements dated May 30, 2006.
      We paid a finder’s fee of $3,636. We issued the shares in reliance upon
      Regulation S in an offshore transaction to non-U.S. persons (as that term is
      defined in Regulation S of the Securities Act of 1933) and/or upon Section
      4(2)
      of the Securities Act of 1933.




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On
      September 8, 2006, we issued an aggregate of 4,976,350 common shares
      to nineteen investors at a price of $0.80 per share for total proceeds of
      $3,981,080 pursuant to subscription agreements dated September 8, 2006. We
      issued 4,626,350 common shares in reliance upon Regulation S in an offshore
      transaction to non-U.S. persons and/or upon Section 4(2) of the Securities
      Act
      of 1933. We also 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 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 agreements, we granted registration rights to
      the
      investors. We agreed to file a registration statement within ninety (90) days
      after the closing of the private placement and to use reasonable commercial
      efforts to cause the registration statement to be declared effective.




In
      connection with the closing of the share exchange agreement on
      September 27, 2006, we 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 to non-U.S.
      persons and/or upon Section 4(2) of the Securities Act of 1933. We paid a
      commission of approximately $228,000 to a placement agent.




On
      November 22, 2006, we issued an aggregate of 4,100,001 common shares
      to three investors at a price of $0.90 per share for gross proceeds of
      $3,690,000 (the “Transaction”) pursuant to 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.




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.




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




**Overview**




We
      are
      engaged in the business of designing, engineering, producing and installing
      solar panels or modules and solar tiles for generating electricity. We have
      developed a new assembly technology for solar panels that we believe will allowforhigher
      quality electrical contacts, better performance and reduced costs resulting
      from
      our proprietary automation processes. We are constructing a manufacturing
      facility that will include a new assembly line based on our proprietary
      technology to complete the development and testing of our new products. To
      date,
      while we have been engaged in developing and testing our new solar panel
      technology, we have been developing the sales and distribution portions of
      our
      business by selling custom solar panels or modules and solar tiles, either
      manufactured by us using an early stage technology or manufactured for us by
      subcontractors, to electric companies, local governmental agencies and private
      home owners.




Our
      business was commenced in 2001 by SES Société d’Energie Solaire SA
      (“SES Switzerland”), a Swiss-based developer of solar panels and solar roof
      tiles. On September 27, 2006, our parent company, SES USA, completed a share
      exchange agreement with SES Switzerland in which SES Switzerland became our
      wholly-owned subsidiary. Our parent company then abandoned our previous Internet
      based auction website business and the SES Switzerland business of designing,
      engineering, producing, and installing solar panels or modules and solar tiles
      became the sole business of the combined company. Because SES USA and its
      subsidiary on a consolidated basis 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,
      the following discussion and analysis and plan of operations are based on SES
      Switzerland’s financial results for the relevant periods.




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**Overview
      and Plan of Operation**




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




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




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




To
      date,
      we have generated only limited revenue from the sale of custom manufactured
      solar panels or modules and solar tiles and the related engineering services
      required to design and install the same. Once our manufacturing facility is
      up
      and running, we will have available two product lines: our SunTechTile® and
      Swisstile®**solar
      tiles and our high power rated solar modules. Historically, we have relied
      upon
      third party vendors to supply us with component parts such as cells in order
      to
      manufacture and produce our products. As a result of our new manufacturing
      facility and our new proprietary technology for module assembly, we believe
      that
      we are positioning ourselves to manufacture and produce on a much larger scale
      solar products that are competitive in the solar energy market.




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




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




However,
      over
      the near term there are significant competitive concerns with solar energy.As
      the
      cost of producing electricityfromgrid
      connected PV installations is higher than the current cost of electricity from
      fossil or nuclear plants, the PV market relies heavily on government subsidies
      and regulation concerning independent power producers. These regulations favor
      PV electricity in some, but not all, countries. Existing regulations are subject
      to change due to local political factors affecting the energy market, especially
      in Europe, where the process has been ongoing for 10 years. The major PV market
      in Europe is Germany where the EEG law governs. We expect France will play
      a
      strong role in the future due to recently enacted laws. Other countries,
      including Italy, Spain and Greece, have similar but less favorable laws.The
      PV
      market is heavily dependent on public policies and, as a result, such policies
      present the greatest uncertainties for our products. Anticipated reductions
      of
      the feed-in tariff in Germany and Switzerland by 9% or 5%, respectively, per
      year could affect our sales. Spain has already spoken of decreasing the tariff
      during 2008 by 20%.Without
      continued and/or enhanced governmental support in the form of favorable laws
      and
      subsidies, the projected growth of the PV market will not exist. Our primary
      market for our Swisstile product during 2008 will be Switzerland, which recently
      enacted a new feed in tariff that become effective May 2008. This tariff has
      10
      different values depending on PV integration and size. Due to the properties
      of
      our Swisstile, we believe that it will get the highest value, which will be
      favorable to us and our product. The tariff will decrease for new entrants
      by 5%
      every year starting in 2009.




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




We
      are in
      ongoing discussions with strategic partners, including cell manufacturers,
      PV
      line manufacturers and special machine manufacturers to assist us with our
      new
      technology for module assembly. We are also progressing with construction of
      our
      new manufacturing facility, which is expected to be fully operational in late
      2008 or early 2009. During
      the fiscal year ending December 31, 2007, we incurred capital expenditures
      of
      $5,398,153 to construct this new manufacturing facility. We
      also
      continued sales of our custom solar panels and solar tiles to customers during
      the fiscal
      year ending December 31, 2007 ,
      generating revenue of approximately $1.34 million and a net loss of
      approximately $1.5 million.




Based
      on
      current and ongoing custom installation projects that will be completed during
      fiscal year 2008, we believe that our cash flow from operating activities during
      2008 will be greater than our cash flow from operating activities during 2007.
      In light of these projects and based on our past experience, we
      believe our that our operating expenses in fiscal 2008 will be approximately
      $2
      million, which we anticipate financing through revenue generated from sales
      and
      with available cash. Management anticipates total capital expenditures of
      approximately $12.4
      million for
      the
      new manufacturing facility and $3.1
      million for the assembly
      line and machinery . We
      anticipate financing these capital expenditures through available cash, loans
      and lines of credit, but we will also need additional financing to expand our
      operations once our manufacturing facility is fully operational. We do not
      have
      any current agreements in place to secure such financing. We expect to continue
      to experience losses from operations until we can generate revenue from
      manufacturing our new products. As a result of our continuing need to expand
      our
      operations and develop and market our new products, we expect to continue to
      need additional capital over the long term in order to continue as a going
      concern.




**Selected
      Financial Data**




**Balance
      Sheets**




December
                312007
            
            2006$Total
                current assets
            
            
            4,472,884
            
            
            6,545,993Total
                long-term assets
            
            
            9,858,585
            
            
            761,677Total
                current liabilities
            
            
            10,366,547
            
            
            862,816Total
                long-term liabilities
            
            
            7,563
            
            
            794,810Total
                liabilities and stockholders’ equity
            
            
            14,331,469
            
            
            7,307,670




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**Statement
      Of Operations**




Year
                ended December 312007
            
            2006$Total
                revenues
            
            
            1,344,794
            
            
            129,275Total
                cost of goods sold (exclusive of depreciation shown separately
                below)
            
            
            (1,104,119
            )
            
            (95,333
            )Depreciation
                and amortization
            
            
            59,104
            
            
            45,090General
                and administrative expenses
            
            
            2,069,866
            
            
            1,246,268Interest
                expense
            
            
            (116,212
            )
            
            (56,757
            )Interest
                Income and other
            
            
            177,650
            
            
            19,384Foreign
                exchange gain
            
            
            302,803
            
            
            55,281Total
                other income (expense)
            
            
            364,241
            
            
            17,908Taxes
            
            
            —
            
            
            —Net
                (loss)/profit
            
            
            (1,524,054
            )
            
            (1,239,507
            )Other
                comprehensive income/loss: translation adjustment
            
            
            (168,631
            )
            
            (309,709
            )Comprehensive
                loss
            
            
            (1,692,685
            )
            
            (1,549,216
            )





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**RESULTS
      OF OPERATIONS - COMPARISON OF FISCAL YEARS ENDED DECEMBER 31, 2007**




**AND
      2006**




**Net
      Loss**




Our
      net
      loss for the year ended December 31, 2007 was $ 1,524,054 compared
      to a net loss of $1,239,507 for the year ended December 31,
      2006. The increase in net loss during the year ended December 31, 2007
      was
      primarily due to personnel costs to develop the new activities of our subsidiary
      (from $184,710 to $366,553), additional research expenses (from $151,246 to
      $426,814) and increased general and administrative expenses (from $ 772,149
      to
      $1,141,046).




**Revenues**




Total
      revenue for the year ended December 31, 2007 was $1,344,794, which represents
      an
      increase of $1,215,519 compared with total revenue of $129,275 for the year
      ended December 31, 2006. We recognize revenue on the completed-contract method,
      and therefore when projects are completed. The increase in revenue is due to
      3
      projects completed during 2007.




**Cost
      of Goods Sold**




Cost
      of
      goods sold for the year ended December 31, 2007 was $1,104,119, which represents
      an increase of $1,008,786 as compared to cost of goods sold of $95,333 for
      the
      year ended December 31, 2006. The increase in cost of goods sold was primarily
      attributable to the 3 projects completed during 2007. Cost of goods sold for
      the
      year ended December 31, 2007 was approximately 82% of total revenues compared
      with approximately 74% of total revenues for the year ended December 31, 2006.
      The increase in our cost of goods sold as a percentage of revenues was due
      to a decreased margin on revenues to obtain the contract. Cost of goods sold
      is
      also highly dependent on quantities being purchased from suppliers.




**Operating
      Expenses**




Operating
      expenses for the twelve months ended December 31, 2007 were $ 2,128,970,
      which represents a 61% increase from $1,291,358
      for the twelve months ended December 31, 2006. Personnel, rent, research and
      development, g e neral
      and
      administrative, and depreciation and amortization expenses constitute the
      components of our operating expenses.




The
      majority of the increase was related to personnel costs to develop the new
      activities of our subsidiary (increase of $181,843), additional research and
      development expenses (increase of $275,568), and increased general and
      administrative expenses, including expenses associated with preparation and
      SEC
      compliance of various public filings (increase of $368,897).




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




**Other
      Income (Expense)**




Interest
      expense increased to $116,212 for the twelve months ended December 31, 2007
      ($56,757 for 2006), representing an increase of approximately 105%. The increase
      in interest expense was primarily attributable to the increase of the loan
      from
      the Geneva (Switzerland) State Department of Energy (“ScanE”). On March 22,
      2006, the loan from ScanE was increased from CHF969,470 ($861,248) to
      CHF1,469,470 ($1,305,430). On August 28, 2007, we repaid to ScanE $444,182
      in
      principal and $31,284 in interest.




Interest
      income for the year ended December 31, 2007 was $177,650 as compared to $19,384
      for the year ended December 31, 2006. The interest income earned in the year
      ended December 31, 2007 was due to increased time deposits originated received during
      the second half of 2007.




Foreign
      exchange gain for the year ended December 31, 2007 was $302,803 as compared
      to
      $55,281 for the year ended December 31, 2006.




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**Liquidity
      and Capital Resources**




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




As
      of
      December 31, 2007, we had negative working capital of $5,893,663 compared with
      positive working capital of $5,683,177 as of December 31, 2006, and our cash
      and
      cash equivalents decreased to $3,429,033 as of December 31, 2007 compared to
      $6,016,666 as of December 31, 2006. This decrease is the result of increased
      operating expenses and use of funds for capital expenditures as we continue
      construction of our manufacturing facility.




As
      of
      December 31, 2007, we had accounts payable of $3,711,775 compared to $329,323
      as
      of December 31, 2006. This increase is due to amounts owed to contractors in
      charge of construction at our manufacturing facility and the solar
      roof installation.  The
      increase in accounts payable is offset by an increase in assets attributable
      to
      the facility in the amount of $3,785,521 at December 31, 2007 ($0 at December
      31, 2006).




At
      December 31, 2007, we had short-term debt in the amount of $6,147,728 compared
      to $409,920 as of December 31, 2006. We believe that our negative working
      capital situation is temporary, as we expect in the near term to restructure
      our
      capital financing arrangements into longer term loans with more favorable terms.




We
      currently have two loans outstanding with the Geneva (Switzerland) State
      Department of Energy (“ScanE”). The first such loan in the amount of up to
      $888,370 was made on November 3, 2003 and carries a principal balance of
      $861,248. The loan bears interest at 4% and is due on March 31, 2008. We agreed
      to escrow 10,000,000 shares of common stock issued to Christiane Erné,
      Jean-Christophe Hadorn and Claudia Rey in connection with the reverse merger
      to
      secure repayment of this loan. The terms of the escrow agreement are disclosed
      in the Certain Relationships and Related Transactions section.




We
      entered into a second loan with ScanE on January 21, 2004 for $444,184 at a
      5%
      interest rate. We repaid this second loan on August 28, 2007. On September
      18,
      2007, we entered into a third loan with ScanE for $3,997,665, to be used
      exclusively to build the manufacturing facility. This loan is due for March
      17,
      2008, bears interest at 5% annually, and is secured by the PV modules purchased
      by us for installation on the roof of the new manufacturing facility as well
      as
      by the 10,000,000 shares currently held in escrow.




In
      addition, the Company also has a revolving credit line with UBS which was
      increased from $88,837 to $1,776,735 (CHF 2,000,000) as of September 4, 2007,
      and again from $1,719,159 to $2,631,579 (CHF 3,000,000) as of January 31, 2008,
      used mainly to cover short-term cash needs. The Company obtained the credit
      line, which is denominated in Swiss francs, because it prefers to use Swiss
      francs versus its short term deposits, which are denominated in US dollars,
      in
      light of current exchange rates. The credit line has an overdraft facility
      that
      is secured by the short term deposits with UBS, amounting to $3,155,000 at
      December 31, 2007. This overdraft facility is secured only to the extent of
      the
      outstanding balance of the credit line. As of December 31, 2007, we used
      $1,288,815 (CHF 1,450,764) of the credit line ($0 as at December 31, 2006).
      The
      credit line bears interest at the rate of 5% (4.75% starting January 31, 2008).
      As of December 31, 2007, we had CHF 549,236 ($487,950) available under the
      credit line. The credit line can be cancelled by either party at any
      time.




SES
      Switzerland also has a Construction Credit Agreement with Banque Cantonale
      de
      Genève dated December 20, 2006 in the amount of $4,264,165 (CHF 4.8 million),
      which is intended for financing the construction of our new manufacturing
      facility. The credit facility was amended on November 13, 2007 and increased
      from CHF 4.8 million to CHF 8.5 million ($7,551,126). The credit line must
      be
      reimbursed or converted into a long term mortgage loan upon the earlier of
      completion of our manufacturing facility or December 31, 2008. As of December
      31, 2007, we used $7,563 (CHF8,513) of the credit line ($0 as at December
      31,2006). The loan bears interest at a rate of 3.5% and is secured by a second
      mortgage of CHF 9,000,000 ($7,995,309) on the facility.




Our
      ability to meet our financial commitments in the near term will be primarily
      dependent upon continued revenue from the sale of custom manufactured solar
      panels or modules and solar tiles and the related engineering services required
      to design and install the same, the continued issuance of equity to new
      stockholders, and the continued extension of credit from existing or new
      lenders. We raised and received additional capital of $8,681,081 between May
      30,
      2006 and November 22, 2006 in connection with the closing of three private
      placement transactions.




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




**Operating
      Activities**




Operating
      activities used net cash of $1,320,685 for the year ended December 31, 2007,
      as
      compared to $1,781,847 of net cash used in operating activities for the year
      ended December 31, 2006. The net cash provided from operating activities
      was mainly attributable to increased billings in excess of cost and estimated
      earnings ($350,407) and deferred expenses ($240,000) and negatively influenced
      by increased other current assets of $393,932 and the increased net loss from
      $1,239,507 to $1,524,054.




**Investing
      Activities**




Net
      cash
      used in investing activities was $5,630,316 during the year ended
      December 31, 2007, as compared to ($17,443) provided in investing
      activities during the year ended December 31, 2006. The increase in
      investing activities is mostly due to investments for the construction of the
      manufacturing plant, Solar plant and advances on machinery.




We
      expect
      total capital expenditure of approximately CHF17,500,000 ($15,546,435) as we
      build our new manufacturing facility and purchase additional
      equipment.




**Financing
      Activities**




Net
      cash
      provided by financing activities was $4,554,347 for the year ended December
      31,
      2007, as compared to financing activities which provided cash of $8,011,229
      for
      the year ended December 31, 2006.




The
      cash
      received in 2007 was mainly the result of proceeds of loans used for current
      operating expenses and building of the solar plant.




The
      cash
      received in 2006 was mostly due to proceeds from the issuance of common stock
      net of finder’s fees in the amount of $7,662,431 and a new bank loan ($399,280),
      less a repayment of a loan of $50,482.




**Off-Balance
      Sheet Arrangements**




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




At
      December 31, 2007, we had an outstanding purchase order of EUR448,600 ($660,716,
      using the exchange rate of 0.67896 at December 31, 2007) for the future
      construction of a new machine to be used in the new manufacturing plant for
      solar modules production. A letter of credit in the amount of EUR224,300
      ($330,358, using the exchange rate of 0.67896 at December 31, 2007) has been
      issued by SES Switzerland’s bank as an initial partial guarantee of payment.
      There were no charges by the bank to us for the letter of credit. We made
      an advance of EUR269,160 ($396,432) for the purchase of this machine. The
      balance due will be paid upon delivery of the machine.




**QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**




**Foreign
      Exchange Risk**




Our
      Swiss
      operations accounted for 100%
      of our sales in fiscal year 2007, and 100% of our sales in fiscal year 2006.
      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.




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**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, 2007. The methods, estimates and judgments we use in
      applying our most critical accounting policies have a significant impact on
      the results we
      report in our financial statements. We evaluate our estimates and judgments
      on
      an ongoing basis. We base our estimates on historical experience and on
      assumptions that we believe to be reasonable under the circumstances. Our
      experience and assumptions form the basis for our judgments about the carrying
      value of assets and liabilities that are not readily apparent from other
      sources. Actual results may vary from what we anticipate, and different
      assumptions or estimates about the future could materially change our reported
      results. We believe the following accounting policies are the most critical
      to
      us, in that they are important to the portrayal of our financial statements
      and
      they require our most difficult, subjective or complex judgments in the
      preparation of our financial statements. The Consolidated Financial Statements
      include the accounts of SES USA and its wholly owned subsidiary, SES
      Switzerland. All significant inter-company accounts and transactions have been
      eliminated in the consolidation.




**Foreign
      Currency Translation**




The
      reporting 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 cash and all highly liquid securities 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, 2007 and 2006 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 20 y ears.
      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.




22
 
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**Warranties**




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




**Revenue
      Recognition**




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




Revenues
      and profits from general management of construction-type contracts are
      recognized on the completed-contract method and therefore only 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 2007 and 2006, 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, 2007, and December 31, 2006  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**




Not
      Applicable.




**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 the
      Company’s disclosure controls and procedures are effective to ensure that
      information required to be disclosed by the Company in the reports that we
      file
      or submit under the Exchange Act is recorded, processed, summarized and reported
      within the time periods specified in the SEC’s rules and forms and which also
      are effective in ensuring that information required to be disclosed by the
      Company in the reports that it files or submits under the Exchange Act is
      accumulated and communicated to the Company’s management, including the
      Company’s Chief Executive Officer and Chief Financial Officer, to allow timely
      decisions regarding required disclosure.




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**ITEM
      8A(T).MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER
      FINANCIAL REPORTING**




Our
      management is responsible for establishing and maintaining adequate internal
      control over financial reporting for the Company as defined in Rules 13a-15(f)
      and 15d-15(f) under the Exchange Act. Our internal control over financial
      reporting is designed to p rovide
      reasonable assurance regarding the (i) effectiveness and efficiency of
      operations, (ii) reliability of financial reporting and the
      preparation of financial statements for external purposes in accordance with
      generally accepted accounting principles, and (iii) compliance with applicable
      laws and regulations.  Our internal controls framework is based on the
      criteria set forth in the Internal Control - Integrated Framework issued by
      the
      Committee of Sponsoring Organizations of the Treadway Commission
      (COSO).




Because
      of its inherent limitations, internal control over financial reporting may
      not
      prevent or detect misstatements. Also, projections of any evaluation of
      effectiveness to future periods are subject to the risk that controls may become inadequate because
      of changes in conditions, or that the degree of compliance with the policies
      or
      procedures may deteriorate.




Management’s
      assessment of the effectiveness of the Company’s internal control over financial
      reporting is as of the fiscal year ended December
      31, 2007. We believe that our internal control over financial reporting is
      effective. We have not identified any current material weaknesses considering
      the nature and extent of our current operations and any risks or errors in
      financial reporting under current operations.




This
      annual report does not include an attestation report of the Company’s registered
      public accounting firm regarding internal control over financial reporting.
      Management’s report was not subject to attestation by the Company’s registered
      public accounting firm pursuant to temporary rules of the SEC that permit the
      Company to provide only management’s report in this annual report.




**CHANGES
      IN INTERNAL CONTROL OVER FINANCIAL REPORTING**




There
      was
      no change in our
      internal control over financial reporting that occurred during the fiscal
      quarter ended December 31, 2007 that has materially affected, or is reasonably
      likely to materially affect, our internal control over financial
      reporting.




**ITEM
      8B. OTHER INFORMATION**




None.




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**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 2008**Jean-Christophe
                Hadorn
            
            Chief
                Executive Officer
              and
              Director
            
            52
            
            September
                27, 2006
            
            2008Sandrine
                Crisafulli
            
            Chief
                Financial Officer
              and
              Chief
                Operating Officer
            
            49
            
            September
                27, 2006
            
            2008Daniel
                Erné
            
            Director
            
            52
            
            September
                27, 2006
            
            2008Christiane
                Erné
            
            Director
            
            54
            
            September
                27, 2006
            
            2008Michael
                D. Noonan
            
            Director
            
            49
            
            September
                27, 2006
            
            2008Dr.
                John Veltheer
            
            Director
            
            42
            
            November
                7, 2005
            
            2008





**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.




**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.




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**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 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.




**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.




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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.




**Stockholder
      Communications**




A
      stockholder who wishes to communicate with our board of directors may do so
      by
      directing a written request addressed to our Chief Executive
      Officer.




**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 in the present situation, 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 committee can be adequately performed by our board
      of
      directors. In addition, we believe that retaining an independent director who
      would qualify as an “audit committee financial expert” would be overly costly
      and burdensome and is not warranted in our circumstances given the early stages
      of our development.




**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.




**Code
      of Ethics**




We
      have
      adopted a code of ethics that is applicable to our officers, directors and
      employees, including our principal executive officer, principal financial
      officer, principal accounting officer or controller, or persons performing
      similar functions. The code of ethics can be found as an exhibit incorporated
      by
      reference to this Annual Report on Form 10-KSB as well as under the heading
      “Policy on Business Ethics for Directors, Officers and Employees” on our website
      at www.sessolar.com .
      We will
      supply to any person without charge, upon request and in the manner described
      under the heading “Stockholder Communications,” a copy of our code of
      ethics.




**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 fiscal
      year ended December 31, 2006. The Form 4 was subsequently filed on February
      26,
      2007.





27
 
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        CONTENTS




**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, 2007 and
      2006.




**Summary
      Compensation Table**




**Name
                and Principal**
              **Position**
            
            **Year**
            
            **Salary**
              **($)**
            
            **Bonus**
              **($)**
            
            **Stock
                Awards**
              **($)**
            
            **All
                Other Compensation**
              **($)**
            
            **Total**
              **($)**Jean-Christophe
                Hadorn(3)
              Chief
                Executive Officer
            
            
            2007
              2006
            
            
            —
              —
            
            
            —
              —
            
            
            —
              —
            
            
            103,599
              95,827
            (1)
              (1)
            
            103,599
              95,827




Sandrine
                Crisafulli(2)(3)
              Chief
                Financial Officer and Chief Operating Officer
            
            
            2007
              2006
            
            
            108,450
              25,957
            
            
            —
            
            
            —
            
            
            —
            
            
            108,450
              25,957







(1)
            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. The services provided
                by
                Base Consulting are performed by Mr. Hadorn. 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.




(2)
            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
                $108,450.




(3)
            Ms.
                Crisafulli and Base Consulting are paid in Swiss Francs. The dollar
                figures for 2007 were calculated using the average exchange rate
                in effect
                for the fiscal year 2007 (CHF 1.19870). The dollar figures for 2006
                were
                calculated using the exchange rate of CHF 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.




**Director
      Compensation**




**Compensation
      of Directors During Fiscal Year 2007**




**Name
                and Principal**
              **Position**
            
            **Fees
                Earned**
              **or**
              **Paid
                in Cash**
              **($)**
            
            **All
                Other Compensation**
              **($)**
            
            **Total**
              **($)**Jean-Christophe
                Hadorn
            
            
            8,342
            
            
            0
            
            
            8,342Daniel
                Erné
            
            
            108,450
            
            
            0
            
            
            108,450





We
      did
      not pay fees or other cash compensation for services rendered by our directors
      during the fiscal year ended December 31, 2007 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 and is included in the $103,598
      reported above. 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. The dollar figures for 2007 were
      calculated using the average exchange rate in effect for the fiscal year 2007
      (CHF 1.19870).




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**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 $108,450. 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 $108,450 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.




**Principal
      Stockholders**




The
      following table sets forth certain information regarding our common stock
      beneficially owned as of March 25, 2008 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
            
            
            52,000
            (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)
            
            
            48,338,817
            
            
            66.1
            %




*  less
      than
      1%




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(1)
            Based
                on 73,081,168 shares of common stock issued and outstanding as of
                March
                25, 2008. 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 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).




(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 long
                term
                escrow, 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.




**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 2007,
      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.




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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. See Management’s Discussion and
      Analysis. The 10,000,000 shares of common stock are to be delivered by the
      escrow agent as follows:




(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.




As
      of the
      December 31, 2007, 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 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
                CHF 12 million on or before November 30,
                2007.




On
      September 18, 2007, we entered into a loan agreement with ScanE in the principal
      amount of $3.9 million (CHF 4.5 million). On November 13, 2007, we entered
      into
      an amended agreement with Banque Cantonal de Genève whereby our Construction
      Credit Agreement dated December 20, 2006 was increased from $4.1 million (CHF
      4.8 million) to $7.6 million (CHF 8.5 million). As a result these recent
      financings, and in combination with our other available financing arrangements
      as discussed in the Liquidity section to Management’s Discussion and Analysis,
      the Company has obtained total financing in excess of the amount required to
      satisfy the Credit Line Escrow Agreement such that the 24,143,410 shares have
      been transferred from the Credit Line Escrow to the Long Term
      Escrow.




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*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, 38,286,817 of the shares of common stock (which amount
      includes the 24,143,410 shares previously escrowed pursuant to the Credit Line
      Escrow Agreement) 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.




*Other
      Related Transactions*




SES
      Switzerland entered into a consulting agreement with Flannel Management dated
      October 1, 2006. Flannel Management receives a monthly consulting fee of
      $16,685, calculated based on the exchange rate of CHF 1.19870 as in effect
      on
      December 31, 2007. 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, 2007, we paid
      $200,217 (CHF 60,000 or $47,913 for 2006) to Flannel Management.




On
      December 20, 2006, SES Switzerland executed a construction loan with Christiane
      Erné, one of our directors and our majority stockholder, to enable SES
      Switzerland to commence construction of our new manufacturing facility in
      Geneva, Switzerland. The loan was in the amount of $2,205,090, carried an
      interest rate of 4.5% and had a two year term. The proceeds of the loan could
      only be utilized once construction had commenced (July 2007). On November 13,
      2007, we increased our Construction Credit Agreement with Banque Cantonal de
      Genève from CHF 4.8 million to CHF 8.5 million. As a result of this increase,
      the construction loan with Ms. Erné, which had never been utilized, was no
      longer required and the parties mutually agreed to terminate the loan as of
      November 26, 2007.




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. As
      of
      the fiscal years ended 2007 and 2006, the Company has a receivable from a
      related party in the amount of $84,938 and $78,386 respectively.




**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, Société
                d’Energie Solaire and the shareholders of Société d’Energie Solaire
                (incorporated by reference from our Form 8-K filed on September 1,
                2006)3.1
            
            Articles
                of Incorporation (incorporated by reference from our Schedule 14C
                filed on
                March 11, 2004)3.2
            
            Bylaws
                (incorporated by reference from Schedule 14C filed on March 11, 2004)3.3
            
            Certificate
                of Ownership (incorporated by reference from our Form 8-K filed on
                June
                21, 2006)




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        CONTENTS




**Exhibit****Number**
            
            **Description**


3.4
            
            Certificate
                of Ownership (incorporated by reference from our Form 8-K filed on
                August
                25, 2006)10.1
            
            Canton
                Geneva Escrow Agreement dated September 15, 2006, among SES Solar
                Inc.,
                Christiane Erné, Jean-Christophe Hadorn, Claudia Rey, Service Cantonal De
                L’Energie and Clark Wilson LLP (incorporated by reference from our
                Form
                8-K filed on October 4, 2006)10.2
            
            Credit
                Line Escrow Agreement dated September 1, 2006, among SES Solar Inc.,
                Christiane Erné, Jean- Christophe Hadorn, Claudia Rey and Clark Wilson LLP
                (incorporated by reference from our Form 8-K filed on October 4,
                2006)10.3
            
            Amendment
                to Credit Line Escrow Agreement dated November 30, 2006, among SES
                Solar
                Inc., Christiane Erné, Jean- Christophe Hadorn, Claudia Rey and Clark
                Wilson LLP10.4
            
            Long-Term
                Escrow Agreement dated September 1, 2006, among SES Solar Inc., Christiane
                Erné, Jean- Christophe Hadorn, Claudia Rey and Clark Wilson LLP
                (incorporated by reference from our Form 8-K filed on October 4,
                2006)10.5
            
            Employment
                Agreement dated September 14, 2006 between Société d’Energie Solaire S.A.
                and Sandrine Crisafulli (incorporated by reference from our Form
                8-K filed
                on October 4, 2006)10.6
            
            Credit
                Line Agreement dated April 7, 2004 and April 10, 2004 between SES
                Société
                d’Energie Solaire S.A. and UBS SA (incorporated by reference from our
                Form
                8-K/A filed on November 16, 2006)10.7
            
            Consulting
                Agreement dated January 16, 2005 between Jean-Christophe Hadorn and
                SES
                Société d’Energie Solaire S.A. (incorporated by reference from our Form
                8-K/A filed on November 16, 2006)10.8
            
            Consultancy
                Agreement dated October 3, 2006, as amended February 16, 2007, between
                Daniel Erné and SES Société d’Energie Solaire S.A. (incorporated by
                reference from our registration statement Form SB-2 filed on November
                9,
                2007)10.9
            
            Convention
                (Voting Trust Agreement) dated September 12, 2005 between Christiane
                Erné
                and Claudia Rey (incorporated by reference from our Form 8-K/A filed
                on
                November 16, 2006)10.10
            
            Convention
                (Voting Trust Agreement) dated February 22, 2006 between Christiane
                Erné
                and Jean-Christophe Hadorn (incorporated by reference from our Form
                8-K/A
                filed on November 16, 2006)10.11
            
            Assignment
                of Rights Agreement dated August 31, 2006 between SES Société d’Energie
                Solaire S.A. and Jean-Christophe Hadorn (incorporated by reference
                from
                our Form 8-K/A filed on November 16, 2006)10.12
            
            Assignment
                of Rights Agreement dated August 31, 2006 between SES Société d’Energie
                Solaire S.A. and Olivier Ouzilou (incorporated by reference from
                our Form
                8-K/A filed on November 16, 2006)10.13
            
            Assignment
                of Rights Agreement dated August 31, 2006 between SES Société d’Energie
                Solaire S.A. and Sandrine Crisafulli (incorporated by reference from
                our
                Form 8-K/A filed on November 16, 2006)10.14
            
            Construction
                Loan dated November 30, 2006 between SES Société d’Energie Solaire S.A.
                Christiane Erné (incorporated by reference from our Annual Report on Form
                10-KSB filed on May 16, 2007)




33
 
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        CONTENTS




**Exhibit****Number**
            
            **Description**


10.15
            
            Assignment
                of Rights Agreement dated September 15, 2006 between SES Société d’Energie
                Solaire S.A. and Sylvere Leu (incorporated by reference from our
                Current
                Report on Form 8-K/A filed on November 16, 2006)10.16
            
            Loan
                Agreement dated September 18, 2007 between SES Société d’Energie Solaire
                S.A. and Etat de Geneve, Department of Territory (DT), Cantonal Energy
                Service (ScanE) (incorporated by reference from our Quarterly Report
                on
                Form 10-QSB filed on October 23, 2007)10.17
            
            Amended
                Credit Line Agreement dated September 2007 between SES Société d’Energie
                Solaire S.A. and UBS SA (incorporated by reference from our registration
                statement on Form SB-2 filed on December 21, 2007)10.17.1*
            
            Amended
                Credit Line Agreement dated January 31, 2008 between SES Société d’Energie
                Solaire S.A. and UBS SA10.18
            
            Construction
                Credit Agreement dated December 20, 2006, as amended November 13,
                2007,
                between SES Société d’Energie Solaire S.A. and Banque Cantonale de Genève
                (incorporated by reference from our Current Report on Form 8-K filed
                on
                November 16, 2007)10.19
            
            Form
                of Share Purchase Warrants and Warrant Agreement between SES Solar
                Inc.
                and Lansing Securities Corp. (incorporated by reference from our
                registration statement on Form SB-2 filed on December 21,
                2007)10.20
            
            Finder’s
                Fee Agreement dated August 31, 2006 between SES Solar Inc. and
                Standard Atlantic (Suisse) S.A. (incorporated by reference from our
                Current Report on Form 8-K filed on October 4, 2006)10.21*
            
            Consulting
                Agreement dated October 1, 2006 betweenSES
                Société d’Energie Solaire S.A. andFlannelManagement
                Sàrl14.1
            
            Code
                of Ethics (incorporated by reference from our Annual Report on Form
                10-KSB
                filed on March 31, 2005)21
            
            Subsidiaries
                of SES Solar Inc. (incorporated by reference from our Annual Report
                on
                Form 10-KSB filed on May 16, 2007)31.1*
            
            Rule
                13a-14(a)/15d-14(a) Certification31.2*
            
            Rule
                13a-14(a)/15d-14(a) Certification32.1*
            
            Section
                1350 Certification32.2*
            
            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 $207,939
      (CHF249,233) for the year ended December 31, 2007 and $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.




34
 
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        OF
        CONTENTS




**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 2006
      and 2007, 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 2006 and 2007, respectively.




**All
      Other Fees**




BDO
      Visura not rendered any professional services other than those covered in the
      Sections captioned “Audit Fees”, “Audit-Related Fees” and “Tax Fees” for the
      Company’s 2007 and 2006 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.




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        CONTENTS


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:
                March 26, 2008
            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
            
            March
                26, 2008Director
                (Principal Executive Officer)/s/
                Sandrine CrisafulliSandrine
                Crisafulli
            
            Chief
                Financial Officer
            
            March
                26, 2008(Principal
                Accounting Officer)/s/
                John VeltheerJohn
                Veltheer
            
            Director
            
            March
                26, 2008/s/ChristianeErnéChristianeErné
            
            Director
            
            March
                26, 2008/s/
                Daniel ErnéDaniel
                Erné
            
            Director
            
            March
                26, 2008/s/
                Michael D. NoonanMichael
                D. Noonan
            
            Director
            
            March
                26, 2008





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        CONTENTS


**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, 2007 and 2006 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, 2007. 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, 2007 and 2006, and the results of its operations and its cash flows for
      each
      of the two years in the periods ended December 31, 2007, in conformity with
      accounting principles generally accepted in the United States of
      America.




Zurich,
      March 26, 2008




BDO
      Visura




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





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        OF
        CONTENTS


**SES
      SOLAR INC. AND SUBSIDIARY**


**CONSOLIDATED
      BALANCE SHEET**


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




**December
                  31st**
                **2007**
            
            **December
                31st**
              **2006****ASSETS
                (in $)**Current
                Assets:Cash
                and cash equivalents
            
            
            6
            
            
            3,429,033
            
            
            6,016,666Receivables,
                net of allowance for doubtful accounts of $ 0 for the years ended
                2007 and
                2006.
            
            
            7
            
            
            47,356
            
            
            10,386Due
                from related party
            
            
            20
            
            
            84,938
            
            
            78,386Inventory
            
            
            8
            
            
            271,794
            
            
            237,275Other
                current assets
            
            
            
            
            
            639,763
            
            
            203,280**Total
                current assets**
            
            
            
            
            
            **4,472,884**
            
            
            **6,545,993**Long-Term
                Assets:Deferred
                Expense
            
            
            14
            
            
            180,000
            
            
            420,000Advance
                payments for machinery
            
            
            
            
            
            396,432
            
            
            0**Total
                other long-term assets**
            
            
            
            
            
            **576,432**
            
            
            **420,000**Property
                and Equipment, at cost,
            
            
            
            
            
            437,493
            
            
            376,837Solar
                plant
            
            
            
            
            
            3,785,521
            
            
            0Building
                construction
            
            
            
            
            
            5,398,153
            
            
            219,619Less
                accumulated depreciation and amortization
            
            
            
            
            
            (339,014
            )
            
            (254,779
            )**Total
                fixed assets**
            
            
            9
            
            
            **9,282,153**
            
            
            **341,677****Total
                long-term assets**
            
            
            
            
            
            **9,858,585**
            
            
            **761,677****Total
                Assets**
            
            
            
            
            
            **14,331,469**
            
            
            **7,307,670****LIABILITIES
                AND STOCKHOLDERS’ EQUITY (DEFICIT)**Current
                Liabilities:Short-term
                loan
            
            
            10
            
            
            6,147,728
            
            
            409,920Accounts
                payable
            
            
            
            
            
            3,711,775
            
            
            329,323Billings
                in excess of cost and estimated earnings
            
            
            11
            
            
            507,044
            
            
            123,573**Total
                current liabilities**
            
            
            
            
            
            **10,366,547**
            
            
            **862,816**Long-Term
                Liabilities:Loan
                payable
            
            
            10
            
            
            0
            
            
            794,810Construction
                loan
            
            
            10
            
            
            7,563
            
            
            0**Total
                long-term liabilities**
            
            
            
            
            
            **7,563**
            
            
            **794,810**Stockholders’
                Equity:
            
            
            14Common
                stock, $0.001 par value;
            
            
            
            
            
            73,081
            
            
            73,081100,000,000
                shares authorized;73,081,168
                shares issued and outstanding;Additional
                paid in Capital
            
            
            
            
            
            8,050,093
            
            
            8,050,093Accumulated
                other comprehensive income (loss)Translation
                Adjustment
            
            
            
            
            
            (395,447
            )
            
            (226,816
            )Year
                end Accumulated Deficit
            
            
            
            
            
            (3,770,368
            )
            
            (2,246,314
            )**Total
                stockholders’ equity (deficit)**
            
            
            
            
            
            **3,957,359**
            
            
            **5,650,044****Total
                Liabilities and Stockholders’ Equity**
            
            
            
            
            
            **14,331,469**
            
            
            **7,307,670**




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




F-2
 
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        OF
        CONTENTS


**SES
      SOLAR INC. AND SUBSIDIARY**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS**


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




**Year
                  Ended December 31, 2007**
            
            **Year
                Ended December 31, 2006**Revenue:Revenue
            
            
            5,
                7
            
            
            1,344,794
            
            
            129,275Cost
                of goods sold (exclusive of depreciation shown separately
                below)
            
            
            
            
            
            (1,104,119
            )
            
            (95,333
            )Costs
                and Expenses:Personnel
            
            
            
            
            
            366,553
            
            
            184,710Rent
                and Leases Expenses
            
            
            12
            
            
            135,453
            
            
            138,163Research
                and Development
            
            
            
            
            
            426,814
            
            
            151,246Other
                G+A
            
            
            
            
            
            1,141’046
            
            
            772,149Depreciation
                and amortization
            
            
            
            
            
            59,104
            
            
            45,090Total
                costs and expenses
            
            
            
            
            
            **2,128,970**
            
            
            **1,291,358**Other
                Income and Expense:Interest
                expense
            
            
            
            
            
            (116,212
            )
            
            (56,757
            )Interest
                income and other
            
            
            16
            
            
            177,650
            
            
            19,384Foreign
                Exchange Gain
            
            
            
            
            
            302,803
            
            
            55,281Total
                Other Income
            
            
            
            
            
            **364,241**
            
            
            **17,908**Loss
                before taxes
            
            
            
            
            
            (1,524,054
            )
            
            (1,239,507
            )Income
                taxes
            
            
            17
            
            
            0
            
            
            0Net
                Loss
            
            
            
            
            
            **(1,524,054**
            **)**
            ****
            **(1,239,507**
            **)**Other
                Comprehensive Loss/Income:
            
            
            
            
            
            0
            
            
            0Translation
                adjustment
            
            
            
            
            
            (168,631
            )
            
            (309,709
            )Comprehensive
                loss
            
            
            
            
            
            (1,692,685
            )
            
            (1,549,216
            )Basic
                and diluted Weighted Average Shares
            
            
            
            
            
            55,835,875
            
            
            30,294,665Basic
                and diluted Net Loss Per Share
            
            
            
            
            
            **(0.027**
            **)**
            ****
            **(0.041**
            **)**




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




F-3
 
 TABLE
        OF
        CONTENTS




**SES
      SOLAR INC. AND SUBSIDIARY**


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


**FOR
      THE YEARS ENDED DECEMBER 31, 2007 AND 2006**


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




**Common
                Stock**
            
            
            
            
            
            **Accumulated
                Other Comprehensive Income****Shares**
            
            
            
            **Amount**
            
            **Paid-in
                Capital**
            
            **Retained
                Earnings**
            
            **Translation
                Adjustment**
            
            **Total
                Shareholders’ Equity**Balance
                at January 01, 2006
            
            
            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 14)
            
            
            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
            )
            
            5,650,044Net
                Loss
            
            
            0
            
            
            
            
            
            0
            
            
            0
            
            
            (1,524,054
            )
            
            0
            
            
            (1,524,054
            )Translation
                Adjustment
            
            
            0
            
            
            
            
            
            0
            
            
            0
            
            
            0
            
            
            (168,631
            )
            
            (168,631
            )Balance
                at December 31, 2007
            
            
            73,081,168
            
            
            
            
            
            73,081
            
            
            8,050,093
            
            
            (3,770,368
            )
            
            (395,447
            )
            
            3,957,359




**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 upon consummation of the reverse acquisition.




**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-4
 
 TABLE
        OF
        CONTENTS


**SES
      SOLAR INC. AND SUBSIDIARY**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


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




**YEARS
                ENDED****December
                31st**
              **2007**
            
            **December
                31st**
              **2006**Cash
                Flows from Operating Activities:Net
                loss
            
            
            (1,524,054
            )
            
            (1,239,507
            )Adjustments
                to reconcile net loss to cash used in operating
                activities:Depreciation
                and amortization
            
            
            59,104
            
            
            45,091Changes
                in operating assets and liabilities:
            
            
            0
            
            
            0(Increase)
                decrease in:Receivables,
                including Due from Related Party
            
            
            (33,902
            )
            
            223,500Inventory
            
            
            (13,791
            )
            
            0Other
                current assets
            
            
            (393,932
            )
            
            (185,405
            )Deferred
                Expenses
            
            
            240,000
            
            
            (420,000
            )Increase
                (decrease) in:Accounts
                payable and accrued expenses
            
            
            (4,517
            )
            
            (213,294
            )Billings
                in excess of cost and estimated earnings
            
            
            350,407
            
            
            7,768**Net
                cash provided/used in operating activities**
            
            
            **(1,320,685**
            **)**
            ****
            **(1,781,847**
            **)**Cash
                Flows from Investing Activities:Property,
                plants and equipment
            
            
            (5,260,502
            )
            
            (146,791
            )Advance
                payments for machinery
            
            
            (369,814
            )
            
            0Net
                cash Acquired in a reverse Acquisition
            
            
            0
            
            
            164,234**Net
                cash provided/used in investing activities**
            
            
            **(5,630,316**
            **)**
            
            **17,443**Cash
                Flows from Financing Activities:Repayment/Proceed
                of loans
            
            
            3,344,062
            
            
            (50,482
            )Bank
                loan
            
            
            1,210,285
            
            
            399,280Proceeds
                from the issuance of common stock, net of finders fees
            
            
            0
            
            
            7,662,431**Net
                cash provided by financing activities**
            
            
            **4,554,347**
            
            
            **8,011,229**Increase
                (decrease) in cash and cash equivalents
            
            
            (2,396,654
            )
            
            6,246,825Effect
                of exchange rate changes on cash
            
            
            (190,979
            )
            
            (265,329
            )Cash
                and cash equivalents, beginning of year
            
            
            6,016,666
            
            
            35,170Cash
                and cash equivalents, end of year
            
            
            3,429,033
            
            
            6,016,666Supplemental
                Cash Flow Information (21):Cash
                paid for interest
            
            
            116,212
            
            
            56,757Supplemental
                disclosure of non-cash operating and investing activities (21):Non
                cash transaction, Property, plants and equipment in accounts
                payable
            
            
            3,167,499
            
            
            0


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




F-5
 
 TABLE
        OF
        CONTENTS


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




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




In
      connection with the reverse acquisition accomplished on September 27, 2006,
      the
      Company 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 the Company receives financing
                of at
                least $10,660,412 (CHF 12 million) on or before November 30, 2007;
                or




(b)
            to
                the Company for immediate cancellation if it do not receive financing
                of
                at least $10,660,412 (CHF 12 million) on or before November 30, 2007.




On
      September 18, 2007, we entered into a loan agreement with the Geneva
      (Switzerland) State Department of Energy (“ScanE”) in the principal amount of
      $3.9 million (CHF 4.5 million). On November 13, 2007, the Company entered into
      an amended agreement with Banque Cantonal de Genève whereby our Construction
      Credit Agreement dated December 20, 2006 was increased from $4.3 million (CHF
      4.8 million) to $7.6 million (CHF 8.5 million). As a result these recent
      financings, and in combination with its other available financing arrangements
      as discussed in the Liquidity section to Management’s Discussion and Analysis,
      the Company obtained total financing in excess of the amount required to satisfy
      the Credit Line Escrow Agreement such that the 24,143,410 shares have been
      transferred from the Credit Line Escrow to the Long Term Escrow.




SES
      USA
      engaged in a second round of financing on November 7, 2006 pursuant to which
      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.




F-6
 
 TABLE
        OF
        CONTENTS




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 operational.




**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:




Average
                Rates
            
            2007
            
            2006CHF
            
            CHF$
            
            
            1.19870
            
            
            1.25225





Balance
                Sheet year-end rates
            
            2007
            
            2006CHF
            
            CHF$
            
            
            1.12566
            
            
            1.21975





*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, 2007 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-7
 
 TABLE
        OF
        CONTENTS




*Property
      and Equipment* —Property
      and equipment is stated at cost. Depreciation is computed using straight-line
      method over estimated useful lives of 3 to 20 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 2007 and 2006, 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 2008.




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




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




*Loss
      Per Share* —Loss
      per
      share is presented in accordance with the provisions of SFAS No. 128,
“Earnings Per Share”. Basic earnings per share does not include the effects of
      potentially dilutive stock options and is computed by dividing income available
      to common stockholders by the weighted average number of shares of common stock
      outstanding for the period. Diluted earnings per share reflects, in periods
      in
      which they have a dilutive effect, commitments to issue common stock and common
      stock issuable upon exercise of stock options for periods in which the options’
exercise price is lower than the Company’s average share price for the period.
      As per an agreement dated September 1, 2006 (as amended), related to the reverse
      acquisition, the Company is required to obtain additional financing in the
      amount of CHF12,000,000 ($10,660,412) no later than November 30, 2007 to build
      a
      manufacturing plant in Plan-les-Ouates. Otherwise, 24,143,410 escrowed shares
      will be cancelled. As of September 18, 2007, the Company entered into a loan
      agreement with the Geneva (Switzerland) State Department of Energy (“ScanE”) in
      the principal amount of $3.9 million (CHF 4.5 million). On November 13, 2007,
      the Company entered into an amended agreement with Banque Cantonal de Genève
      whereby its Construction Credit Agreement dated December 20, 2006 was increased
      from $4.1 million (CHF 4.8 million) to $7.6 million (CHF 8.5 million). As a
      result these recent financings, and in combination with its other available
      financing arrangements, the Company obtained total financing in excess of the
      amount required to satisfy the Credit Line Escrow Agreement such that the
      24,143,410 shares have been transferred from the Credit Line Escrow to the
      Long
      Term Escrow (see notes 14). The escrowed shares are included in earnings per
      share once conditions were met (September 18, 2007).




F-8
 
 TABLE
        OF
        CONTENTS




Stock
      options of 43,110 were granted to a non-employee, Hogan & Hartson LLP, and
      outstanding as of June 18, 2007 and are not included in the Earnings per Share.
      The grant of options was cancelled by mutual agreement on July 18, 2007 without
      any options being exercised.




**2007**
            
            **2006**Basic
                Weighted average shares outstanding
            
            
            55,835,875
            
            
            30,294,665Diluted
                weighted average shares outstanding
            
            
            55,835,875
            
            
            30,294,665





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, 2007 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-9
 
 TABLE
        OF
        CONTENTS




**4.**  **Impact
      of Recently Issued Accounting Pronouncements**




In
      June
      2006, the Financial Accounting Standards 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. The provisions of FIN 48 were
      effective for the Company as of January 1, 2007 and required application of
      FIN
      48 to all existing tax positions upon initial adoption. The adoption of the
      standard had no effect on the Company’s financial condition or results of
      operation.




The
      Company has no unrecognized tax benefits as of January 1, 2007 and December
      31,
      2007. The federal and cantonal tax authorities in Switzerland have assessed
      that
      the Company has no income taxes based on the returns that the Company has filed
      up to and including fiscal year 2006. These assessments are final. Furthermore,
      the Company does not expect any changes to the tax returns that were filed
      for
      the fiscal year 2006 since the Company has generated net losses.




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




In
      September 2006, the FASB issued Statement of Financial Accounting Standards
      (“SFAS”) No. 157, “Fair Value Measurements” (“SFAS No. 157”). SFAS
      No. 157 defines fair value, establishes a framework for measuring fair
      value in accordance with generally accepted accounting principles, and expands
      disclosures about fair value instruments. This statement does not require any
      new fair value measurements; rather, it applies under other accounting
      pronouncements that require or permit fair value measurements. The provisions
      of
      this statement are to be applied prospectively as of the beginning of the fiscal
      year in which this statement is initially applied, with any transition
      adjustment recognized as a cumulative effect adjustment to the opening balance
      of retained earnings. The provisions of SFAS No. 157 are effective for
      fiscal years beginning after November 15, 2007. The Company has not
      determined the effect, if any, the adoption of this statement will have on
      its
      consolidated financial statements.




In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option
      for Financial Assets and Financial Liabilities,” (“SFAS No. 159”) which provides
      companies an option to report selected financial assets and liabilities at
      fair
      value. SFAS No. 159 requires companies to provide information helping financial
      statement users to understand the effect of a company’s choice to use fair value
      on its earnings, as well as to display the fair value of the assets and
      liabilities a company has chosen to use fair value for on the face of the
      balance sheet. Additionally, SFAS No. 159 establishes presentation and
      disclosure requirements designed to simplify comparisons between companies
      that
      choose different measurement attributes for similar types of assets and
      liabilities. The statement is effective as of the beginning of an entity’s first
      fiscal year beginning after November 15, 2007. The Company has not
      determined the effect, if any, the adoption of this statement will have on
      its
      consolidated financial statements.




In
      December 2007, the FASB issued SFAS No. 160, *”* Noncontrolling
      Interests in Consolidated Financial Statements” (an Amendment of ARB 51).
      SFAS 160 amends ARB 51 to establish accounting and reporting standards for
      the noncontrolling interest in a subsidiary and for the deconsolidation of
      a
      subsidiary. The statement requires consolidated net income to be reported at
      amounts that include the amounts attributable to both the parent and the
      noncontrolling interest. It also requires disclosure on the face of the
      consolidated statement of income of the amounts of consolidated net income
      attributable to the parent and to the noncontrolling interest. In addition
      this
      statement establishes a single method of accounting for changes in a parent’s
      ownership interest in a subsidiary that do not result in deconsolidation and
      requires that a parent recognize a gain or loss in net income when a subsidiary
      is deconsolidated. SFAS 160 becomes effective for fiscal periods beginning
      after December 15, 2008. The Company is currently evaluating the impact of
      SFAS 160.




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




SES
      Switzerland enters into contracts for installation of solar cell 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 2007 and 2006 are project revenues.




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




$
                (held in CHF)
            
            $
                (held in $)
            
            $
                (held in EUR)
            
            $
                TOTAL
              2007
            
            $
                TOTAL 2006Cash
                on hand
            
            
            179,046
            
            
            9,463
            
            
            85,525
            
            
            274,033
            
            
            272,146Short-term
                Investments
            
            
            -
            
            
            3,155,000
            
            
            -
            
            
            3,155,000
            
            
            5,744,520Cash
                and Cash Equivalents
            
            
            179,046
            
            
            3,164,463
            
            
            85,525
            
            
            3,429,033
            
            
            6,016,666





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




**7.**  **Accounts
      Receivable and Significant Customers**




At
      December 31, 2007 and 2006, the Company’s accounts receivable balances were
      $47,356 and $10,386, respectively. Significant customers are summarized
      below:




Receivables2007
            
            2006$
            
            $A
            
            
            11,255
            
            
            10,386F
            
            
            15,771
            
            
            0G
            
            
            20,330
            
            
            0**Total
                Accounts Receivable**
            
            
            **47,356**
            
            
            **10,386**




F-11
 
 TABLE
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Revenues
      for 2007 and 2006 were $1,344,794 and $129,275, respectively. Significant
      customers are summarized below:




Revenues2007
            
            2006$
            
            $A
            
            
            0
            
            
            61,508B
            
            
            0
            
            
            50,309D
            
            
            1,192,964
            
            
            0E
            
            
            52,023
            
            
            0F
            
            
            89,263
            
            
            0Others
            
            
            10,544
            
            
            17,458**Total
                Revenues**
            
            
            **1,344,794**
            
            
            **129,275**




**8.**  **Inventory**




Inventory
      is summarized as follows:




2007
            
            2006$
            
            $Raw
                Materials and Others
            
            
            97,159
            
            
            89,665Finished
                Goods
            
            
            174,635
            
            
            147,610**Total
                Inventory**
            
            
            **271,794**
            
            
            **237,275**




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




Property
      and equipment is summarized as follows:




2007
            
            2006$
            
            $Machinery
                and equipment
            
            
            360,887
            
            
            333,048Office
                furniture and equipment
            
            
            76,606
            
            
            43,789**Equipment**
            
            
            **437,493**
            
            
            **376,837**Solar
                plant
            
            
            3,785,521
            
            
            0Building
                construction
            
            
            5,398,153
            
            
            219,619**Property
                and equipment**
            
            
            **9,621,167**
            
            
            **596,456**Less
                accumulated depreciation and amortization
            
            
            (339,014
            )
            
            (254,779
            )**Property
                and equipment, net**
            
            
            **9,282,153**
            
            
            **341,677**





Depreciation
      and amortization expense of property and equipment for the years ended
      December 31, 2007 and 2006 was $59,104 and $45,090, 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) Solar plant : 20 years.




**10.**  **Borrowings
      Under Revolving Credit Facility, Short and Long-Term Loan**




Short-Term
                Loan
            
            2007
            
            2006State
                Department of Energy Geneva (Switzerland)
            
            
            861,248
            
            
            409,920State
                Department of Energy Geneva (Switzerland)
            
            
            3,997,665UBS
            
            
            1,288,8156,147,728
            
            
            409,920





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 TABLE
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Long-Term
                Loan
            
            2007
            
            2006Banque
                Cantonale de Genève
            
            
            7,563State
                Department of Energy Geneva (Switzerland)
            
            
            
            
            
            794,8107,563
            
            
            794,810




On
      November 3, 2003, SES Switzerland received a loan from the Geneva (Switzerland)
      State Department of Energy of up to CHF1,000,000 ($888,370). SES Switzerland
      used CHF969,470 ($861,248) as at December 31, 2007, and CHF969,470 ($794,810,
      Long-Term) as at December 31, 2006. The loan is to be repaid on March 31, 2008.
      The loan bears interest at a rate of 4% p.a. The stockholders, Christiane Erné,
      Jean-Christophe Hadorn and Claudia Rey, 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.




SES
      Switzerland was also granted a loan by the Geneva (Switzerland) State Department
      of Energy (“ScanE”) in the amount of CHF500,000 ($444,184) on January 21,
      2004 with the funds to be available 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 carried an interest rate of 5% p.a. with
      repayment due on September 21, 2007. **** On
      August
      28, 2007, CHF500,000 ($444,184) in principal and CHF37,500 ($31,284) of interest
      were reimbursed.




A
      new six
      month credit facility of CHF4,500,000 ($3,997,665) was signed on September
      18,
      2007 with ScanE. The loan bears interest at 5%. The proceeds were received
      on
      October 1, 2007 and will be reimbursed on March 17, 2008. This loan is secured
      by certain photovoltaic modules purchased by the Company for installation on
      the
      roof of the new manufacturing facility as well as by the 10,000,000 shares
      currently held in escrow.




SES
      Switzerland also has a revolving credit line with UBS which was increased from
      CHF100,000 ($88,837) to CHF2,000,000 ($1,776,735) as of September 4, 2007,
      used
      mainly to cover short-term cash needs. The credit line is secured by the short
      term deposits in US dollars with UBS, amounting to $3,155,000 as at December
      31,
      2007 and has not an expiration date. The credit line bears interest at the
      rate
      of 5%. The credit line can be cancelled by either party at any time. The credit
      facility was used for CHF1,450,764 ($1,288,815) as at December 31, 2007 (0
      as at
      December 31, 2006). As of January 31, 2008, the credit line has been increased
      to CHF3,000,000 ($2,631,579) and the interest rate has been reduced to
      4.75%.




SES
      Switzerland also has a Construction Credit Agreement with Banque Cantonale
      de
      Genève dated December 20, 2006 in the amount of $4,264,165 (CHF 4.8 million),
      which is intended for financing the construction of our new manufacturing
      facility. The loan was amended on November 13, 2007 and increased from CHF
      4.8
      million to CHF 8.5 million ($7,551,126). The amended agreement must be drawn
      down before the later of completion of the construction or December 11, 2008.
      As
      of December 31, 2007, we used $7,563 (CHF8,513) of the credit line as at
      December 31, 2007 ($0 as at December 31, 2006). The loan bears interest at
      a
      rate of 3.5% and is secured by a second lien exclusive mortgage certificate
      of
      CHF 9,000,000 ($7,995,309) on the facility.




On
      December 20, 2006, SES Switzerland signed 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 during
      2007. The construction loan is in the amount of CHF2,700,000 ($2,398,593).
      The
      Company will pay interest at the rate of 4.5% p.a. on used funds. The term
      of
      the loan is two years. The funds were to be disbursed as soon as construction
      has begun; however another credit source has been used instead and the loan
      facility has been cancelled as at November 26, 2007.




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




Billings
                in Excess of Cost and Estimated Earnings
            
            2007
            
            2006Prepayments
                to suppliers
            
            
            43,234
            
            
            448,521Work
                in progress
            
            
            367,960
            
            
            159,939Prepayments
                from customers
            
            
            (918,238
            )
            
            (732,033
            )(507,044
            )
            
            (123,573
            )





F-13
 
 TABLE
        OF
        CONTENTS




**12.**  **Commitments
      and Contingencies:**




*Operating
      Leases* - lease
      expenses for the years ended December 31, 2007 and 2006 were $135,453 and
      $138,163, respectively.




The
      following table presents future minimum lease commitments (concerning the lease
      of a vehicle) under operating leases at December 31, 2007




**Operating
                Leases**2008
            
            
            14,8912009
            
            
            12,501Thereafter
            
            
            -**Total**
            
            
            **27,392**





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 $43,467 (CHF52,104) per year.
      The
      initial lease term ended on February 28, 2008. The lease has been renewed with
      the same conditions for the next 12 months.




SES
      Switzerland also leases a 1,654 square meter industrial facility in Härkingen,
      Switzerland. The monthly fixed rent is CHF7,232 (approximately $6,033). The
      lease has no specific termination date. The lease may be cancelled with six
      months notice at the end of the month, except for December, which requires
      an
      additional month notice.




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.




The
      following are the lease commitments.




**Use
                of Land**2008
            
            
            60,1202009
            
            
            60,1202010
            
            
            60,1202011
            
            
            60,1202012
            
            
            60,120Thereafter
            
            
            3,216,400**Total**
            
            
            3,517,000




SES
      Switzerland has no non-cancellable operating leases.




*Employment
      Agreements* —As
      at
      year end, SES Switzerland employed 3 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 ($16,685) (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.




F-14
 
 TABLE
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        CONTENTS




During
      the year 2007, Jean-Christophe Hadorn, the CEO, and a stockholder of the
      Company, invoiced CHF124,182 ($103,598) to SES Switzerland as a consultant,
      of
      which CHF22,159 ($18,486) was outstanding at year-end.




*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, 2007, the Company has an outstanding purchase order of EUR448,600
      ($660,716) for the future construction of a new machine to be used in the new
      plant for solar modules production. A letter of credit in the amount of
      EUR224,300 ($330,358) has been issued by SES Switzerland’s bank as a partial
      guarantee of payment. There were no charges to the Company by the bank for
      the letter of credit. The Company has made an advance of EUR269,160
      ($396,432) for the purchase of this machine. The balance due will be paid upon
      delivery of the machine.




**13.**  **Business
      Segments**




All
      of
      the 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.




**14.**  **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.




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 gross
      proceeds of $3,690,000, less finder’s fees of $369,001 pursuant to private
      placement subscription agreements.




F-15
 
 TABLE
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        CONTENTS




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




During
      the year ended December 31, 2007, no stock purchase warrants were
      exercised.




Warrant
      transactions consisted of the following during the year ended December 31,
      2007:




**Exercisable****Warrants**
            
            **Strike
                 Price**Warrants
                Outstanding As of December 31, 2006
            
            
            0
            
            $
            0Warrants
                granted as consideration for agent’s fee
            
            
            1,500,000
            
            $
            0.90Exercise
                of warrants
            
            
            0
            
            
            0Warrants
                Outstanding As of December 31, 2007
            
            
            1,500,000
            
            $
            0.90




Warrants
      outstanding expire as follows:




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





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




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




Pursuant
      to the terms of a Finder’s Agreement between SES USA and Standard Financial (the
“Finder’s Agreement”) the parties agreed to a finder’s fee of $228,000 if a
      transaction were consummated. The Finder’s Agreement also provided that Standard
      Atlantic would continue to provide consulting services to the Company for a
      period of 24 months regarding investor relations matters for a monthly fee
      of
      $20,000. The two-year consulting fee was due and was paid to Standard Financial
      at closing. The Company recorded the total amount as of December 31, 2007,
      as
      deferred expense and amortizes the amount over the 24 months of the consulting
      agreement.




As
      per
      the terms of the Credit Line Escrow Agreement dated September 1, 2006 (as
      amended), related to the reverse acquisition, the Company was required to obtain
      additional financing in the amount of CHF12,000,000 before November 30, 2007
      to
      build the manufacturing plant in Plan-les-Ouates. Otherwise, 24,143,410 shares
      of common stock escrowed by Christiane Ernè, Jean-Christophe Hadorn and
      Claudia Rey will be cancelled. If the Company receives the necessary
      financing, the escrowed shares are to be delivered to a subsequent escrow
      pursuant to the Long Term Escrow Agreement dated September 1, 2006. 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. As
      of
      September 18, 2007, the Company did obtain the necessary financing to satisfy
      the Credit Line Escrow Agreement, thus the shares were transferred into the
      Long
      Term Escrow and are included in earnings per share.




**15.**  **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
      2007 were $8,137.




F-16
 
 TABLE
        OF
        CONTENTS




**16.**  **Interest
      Income and other:**




Interest
      income for the year ended December 31, 2007 was $177,650 as compared to $19,384
      for the year ended December 31, 2006. The interest income earned in the year
      ended December 31, 2007, was received from increase time deposits originated
      by
      additional funding received during the second semester of 2006.




**17.**  **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, 2007**
            
            **December
                31, 2006**$
            
            $Deferred
                tax assets:Net
                operating loss carry-forward
            
            
            987,836
            
            
            588,759Less:
                valuation allowance
            
            
            (987,836)
            
            
            (588,759
            )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 $987,836 as
      of
      December 31, 2007 and $588,759 as of December 31, 2006.




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




**For
                the Years Ended December 31,****2007**
            
            **2006**$
            
            $United
                States
            
            
            0
            
            
            0Switzerland
            
            
            (1,524,054
            )
            
            (1,239,507
            )**(1,524,054**
            **)**
            
            **(1,239,507**
            **)**




As
      of
      December 31, 2007, we have net operating loss carryforwards for Swiss tax
      purposes of $3,770,368, expiring at various times from years ending 2010 to
      2013.




**2007****$**2010
            
            
            (501,396
            )2011
            
            
            (505,411
            )2012
            
            
            (1,239,507
            )2013
            
            
            (1,524,054
            )**Total
                tax-deductible loss carry forward**
            
            
            **(3,770,368**
            **)**





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.




F-17
 
 TABLE
        OF
        CONTENTS




The
      adoption of FIN 48, *Accounting for Uncertainty in Income Taxes,* has had
      no impact on the reported carryforwards at December 31, 2007.




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




**Years
                Ended December 31,****2007**
            
            **2006****$**
            
            **$**Income
                tax benefit at federal statutory rate
            
            
            (518,178
            )
            
            (421,432
            )Foreign
                tax rate differential
            
            
            119,101
            
            
            96,558Increase
                in valuation reserve
            
            
            399,077
            
            
            324,875**-**
            
            
            **-**




**18.**  **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 2007 and 2006, products purchased from SES Switzerland’s top
      three suppliers accounted for 90% and 94% 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.




**19.**  **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.




**20.**  **Related
      Party Transactions**




During
      2007, Jean-Christophe Hadorn, the CEO, and a stockholder of the Company,
      invoiced CHF124,182 ($103,598) to SES Switzerland as a consultant, of which
      CHF22,159 ($18,486) was outstanding at year-end.




As
      of the
      fiscal years ended 2007 and 2006, the Company has a receivable from its major
      stockholder in the amount of $84,938 (CHF95,611) and $78,386 (CHF95,611),
      respectively. These amounts relate to a project for a building of a controlling
      stockholder.




On
      December 20, 2006, SES Switzerland signed a construction loan with Ms. Christine
      Erné, the Company’s principal stockholder, to enable SES Switzerland to commence
      construction of a new manufacturing facility near Geneva, Switzerland during
      2007. The construction loan is in the amount of CHF2,700,000 ($2,398,593).
      The
      Company will pay interest at the rate of 4.5% p.a. on used funds. The term
      of
      the loan is two years. The funds were to be disbursed as soon as construction
      has begun; however another credit source has been used instead and the credit
      loan has been cancelled as at November 26, 2007.




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 TABLE
        OF
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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 ($16,685) (using exchange rate set forth in Note 3 to the Consolidated
      Financial Statements hereto), resulting in CHF 240,000 ($200,217) for the year
      2007 (CHF 60,000 or $47,914 for 2006). 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.




SES
      Switzerland has entered into an employment agreement with Daniel Erné effective
      October 1, 2006. Mr. Erné receives an annual salary of CHF130,000 ($108,450) 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. ****




**21.**  **Supplemental
      Cash Flow Information**




Cash
      paid
      for interest during fiscal years 2007 and 2006 totaled $116,212, and $56,757,
      respectively.




In
      fixed
      assets a total amount of $3,167,499 have been capitalized but not paid as of
      December 31, 2007. This amount is included in accounts payable as of year
      end.




**22.**  **Subsequent
      Events**




No
      major
      events have occurred since the closing of the accounts.




F-19