UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2008

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

For the transition period from ___________ to _________

Commission file number 001-13549

SOLAR THIN FILMS, INC.

(Exact name of small business issuer as specified in its charter)

Delaware	95-4356228
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

25 Highland Blvd, Dix Hills, New York 11746

(Address of principal executive offices)

(516) 417-8454

Issuer’s telephone number

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 requirement for the past 90 days. Yes x No o

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

Large accelerated filer o Accelerated filer o Non-accelerated filer o (do not check if smaller reporting company) Smaller reporting company  x

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

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:

Common Stock, $0.01 par value	57,810,601
(Class)	(Outstanding at November 12, 2008)

SOLAR THIN FILMS, INC.

Form 10-Q

for the Quarter Ended September 30, 2008

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of September 30, 2008 (Unaudited) and December 31, 2007	3
	Condensed Consolidated Statements of Operations and Other Comprehensive Loss for the Three and Nine Months Ended September 30, 2008 and 2007 (Unaudited)	4
	Condensed Consolidated Statement of Stockholders’ Deficit for the Twelve Months Ended December 31, 2007 and Nine Months Ended September 30, 2008 (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2008 and 2007 (Unaudited)	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Result of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36
Item 4T.	Controls and Procedures	36
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults upon Senior Securities	37
Item 4.	Submission of Matters to a Vote of Security Holders	37
Item 5.	Other Information	37
Item 6.	Exhibits	38
Signatures		39

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PART I.FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS

SOLAR THIN FILMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
	September 30,			December 31,
ASSETS	2008			2007
Current assets:	(unaudited)
Cash and cash equivalents	$	933,412		$	4,157,476
Accounts receivable, net of allowance for doubtful accounts of $-0-		881,219			459,574
Accounts receivable, related party		1,337,233			1,456,863
Inventory		402,791			191,715
Note receivable		250,000			—
Advances and other current assets		171,672			169,888
Total current assets		3,976,327			6,435,516
Property, plant and equipment, net of accumulated depreciation and amortization of $485,679 and $341,896, respectively		501,173			595,030
Other assets:
Deferred financing costs, net of accumulated amortization of $565,443 and $506,796, respectively		42,057			100,704
Investment into CG Solar, at cost		1,500,000			—
Deposits		455,000			—
Other assets		5,207			7,682
Total other assets		2,002,264			108,386
Total assets	$	6,479,764		$	7,138,932
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued liabilities	$	3,035,176		$	3,072,799
Notes payable, current portion		2,387,317			—
Advances received from customers		756,676			—
Note payable-other		1,500,000			1,500,000
Total current liabilities		7,679,169			4,572,799
Convertible notes payable, net of unamortized discount		—			1,773,746
Dividends payable		159,724			156,522
Total long term debt		159,724			1,930,268
Commitments and contingencies
Minority interest		1,050,540			999,496
Stockholders’ Deficit
Preferred stock, par value $0.01 per share, authorized 2,700,000 shares:
Series A Preferred stock, par value $0.01 per share; 1,200,000 shares designated; -0- issued and outstanding at September 30, 2008 and December 31, 2007		—			—
Series B Preferred stock, par value $0.01 per share; 1,500,000 shares designated:
Series B-1 Preferred stock, par value $0.01 per share, 1,000,000 shares designated, 228,652 shares issued and outstanding at September 30, 2008 and December 31, 2007		2,286			2,286
Series B-3 Preferred stock, par value $0.01 per share, 232,500 shares designated, 47,518 shares issued and outstanding at September 30, 2008 and December 31, 2007		475			475
Series B-4 Preferred stock, par value $0.01 per share, 100,000 shares designated; - 0 - shares issued and outstanding at September 30, 2008 and December 31, 2007		—			—
Common stock, par value $0.01 per share, 150,000,000 shares authorized, 57,806,601 and 57,012,601 shares issued and outstanding at September 30, 2008 and December 31, 2007, respectively		578,066			570,126
Common stock to be issued		187,586			—
Additional paid in capital		24,361,698			22,857,742
Treasury stock, at cost		(80,000	)		(80,000	)
Deferred compensation		(47,125	)		(79,750	)
Accumulated deficit		(27,980,159	)		(24,075,554	)
Accumulated other comprehensive income		567,504			441,044
Total stockholders' deficit		(2,409,669	)		(363,631	)
Total Liabilities and Stockholders' Deficit	$	6,479,764		$	7,138,932

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

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SOLAR THIN FILMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS
(unaudited)
	Three months ended September 30,						Nine Months ended September 30,
	2008			2007			2008			2007
REVENUE	$	1,855,371		$	826,608		$	2,871,458		$	4,371,667
Cost of sales		1,345,135			733,549			2,250,864			3,680,806
Gross profit		510,236			93,059			620,594			690,861
OPERATING EXPENSES:
General, selling and administrative expenses		1,121,147			1,067,908			3,233,186			3,398,921
Research and development		(60,000	)		90,000			120,000			270,000
Depreciation and amortization		51,375			69,406			151,573			117,496
Total operating expenses		1,112,522			1,227,314			3,504,759			3,786,417
NET LOSS FROM OPERATIONS		(602,286	)		(1,134,255	)		(2,884,165	)		(3,095,556	)
Other income/(expense)
Foreign exchange gain (loss)		52,031			(114,299	)		22,033			(83,797	)
Interest expense, net		(291,410	)		(704,974	)		(971,576	)		(2,035,179	)
Debt acquisition costs		(15,761	)		(56,349	)		(58,647	)		(156,767	)
Other income (expense)		(990	)		102,642			1,433			55,295
Net loss before provision for income taxes		(858,416	)		(1,907,235	)		(3,890,922	)		(5,316,004	)
Income taxes		—			—			—			—
Net loss before minority interest		(858,416	)		(1,907,235	)		(3,890,922	)		(5,316,004	)
Minority interest		(670	)		—			(13,683	)		—
NET LOSS		(859,086	)		(1,907,235	)		(3,904,605	)		(5,316,004	)
Foreign currency translation gain (loss)		(89,562	)		48,500			126,460			109,193
Comprehensive Loss	$	(948,648	)	$	(1,858,735	)	$	(3,778,145	)	$	(5,206,811	)
Net loss per common share (basic and diluted)	$	(0.02	)	$	(0.04	)	$	(0.07	)	$	(0.14	)
Weighted average shares outstanding (basic and diluted)		57,783,601			52,587,231			57,616,130			37,942,288

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

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SOLAR THIN FILMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
TWELVE MONTHS ENDED DECEMBER 31, 2007 AND NINE MONTHS ENDED SEPTEMBER 30, 2008 (unaudited)
	Preferred Series B-1				Preferred Series B-3				Preferred Series B-4						Common shares
	Shares		Amount		Shares		Amount		Shares			Amount			Shares		Amount
Balance at December 31, 2006		228,652	$	2,286		47,518	$	475		95,500		$	955			16,269,597	$	162,696
Fractional shares issued upon 1.6 to 1 reverse split on February 9, 2007		—		—		—		—		—			—			1,504		15
Effect of adoption of EITF 00-19-2 change in accounting principle		—		—		—		—		—			—			—		—
Issuance of 33,425,000 shares of common stock for conversion of 95,500 Preferred B-4 shares		—		—		—		—		(95,500	)		(955	)		33,425,000		334,250
Issuance of 1,312,500 shares of common stock in exchange for convertible notes payable		—		—		—		—		—			—			1,312,500		13,125
Common stock issued in June 2007 for services rendered at $0.48 per share		—		—		—		—		—			—			400,000		4,000
Fair value of warrants issued in conjunction with settlement of convertible debt		—		—		—		—		—			—			—		—
Fair value of vested portion of 3,000,000 options issued to an officer		—		—		—		—		—			—			—		—
Issuance of 1,575,000 shares of common stock to acquire minority interest in subsidiary at $0.75 per share		—		—		—		—		—			—			1,575,000		15,750
Issuance of 4,029,000 shares of common stock in exchange for convertible notes payable		—		—		—		—		—			—			4,029,000		40,290
Issuance of majority owned subsidiary common stock in exchange for services to be rendered		—		—		—		—		—			—			—		—
Issuance of majority owned subsidiary common stock in exchange for services rendered		—		—		—		—		—			—			—		—
Sale of majority owned subsidiary common stock by subsidiary		—		—		—		—		—			—			—		—
Amortization of deferred compensation		—		—		—		—		—			—			—		—
Foreign currency translation gain		—		—		—		—		—			—			—		—
Net loss, December 31, 2007		—		—		—		—		—			—			—		—
Balance, December 31, 2007		228,652	$	2,286		47,518	$	475		—		$	—			57,012,601	$	570,126
Issuance of 794,000 shares of common stock in exchange for convertible notes payable		—		—		—		—		—			—			794,000		7,940
Fair value of vested portion of employee options issued		—		—		—		—		—			—			—		—
Sale of majority owned subsidiary common stock by subsidiary		—		—		—		—		—			—			—		—
Reduction in equity ownership of majority owned subsidiary		—		—		—		—		—			—			—		—
Common shares to be issued in connection with services rendered		—		—		—		—		—			—			—		—
Amortization of deferred compensation		—		—		—		—		—			—			—		—
Foreign currency translation gain		—		—		—		—		—			—			—		—
Net Loss		—		—		—		—		—			—			—		—
Balance, September 30, 2008		228,652	$	2,286		47,518	$	475		—		$	—			57,806,601	$	578,066

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

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SOLAR THIN FILMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
TWELVE MONTHS ENDED DECEMBER 31, 2007 AND NINE MONTHS ENDED SEPTEMBER 30, 2008 (unaudited)
												Other					Total
	Common shares		Additional			Deferred			Treasury			Comprehensive		Accumulated			Stockholders'
	To be issued		Paid in Capital			Compensation			Stock			Income (loss)		Deficit			Deficiency
Balance at December 31, 2006	$	—	$	3,627,872			—		$	(80,000	)	$	269,662	$	(4,790,109	)	$	(806,163	)
Fractional shares issued upon 1.6 to 1 reverse split on February 9, 2007		—		(15	)		—			—			—		—			—
Effect of adoption of EITF 00-19-2 change in accounting principle		—		10,821,900			—			—			—		(9,356,400	)		1,465,500
Issuance of 33,425,000 shares of common stock for conversion of 95,500 Preferred B-4 shares		—		(333,295	)		—			—			—		—			—
Issuance of 1,312,500 shares of common stock in exchange for convertible notes payable		—		511,875			—			—			—		—			525,000
Common stock issued in June 2007 for services rendered at $0.48 per share		—		188,000			—			—			—		—			192,000
Fair value of warrants issued in conjunction with settlement of convertible debt		—		61,767			—			—			—		—			61,767
Fair value of vested portion of 3,000,000 options issued to an officer		—		356,618			—			—			—		—			356,618
Issuance of 1,575,000 shares of common stock to acquire minority interest in subsidiary at $0.75 per share		—		1,165,500			—			—			—		(1,181,250	)		—
Issuance of 4,029,000 shares of common stock in exchange for convertible notes payable		—		3,988,710			—			—			—		—			4,029,000
Issuance of majority owned subsidiary common stock in exchange for services to be rendered		—		87,000			(87,000	)		—			—		—			—
Issuance of majority owned subsidiary common stock in exchange for services rendered		—		50,000			—			—			—		—			50,000
Sale of majority owned subsidiary common stock by subsidiary		—		2,331,810			—			—			—		—			2,331,810
Amortization of deferred compensation		—		—			7,250			—			—		—			7,250
Foreign currency translation gain		—		—			—			—			171,382		—			171,382
Net loss, December 31, 2007		—		—			—			—			—		(8,747,795	)		(8,747,795	)
Balance, December 31, 2007	$	—	$	22,857,742		$	(79,750	)	$	(80,000	)	$	441,044	$	(24,075,554	)	$	(363,631	)
Issuance of 794,000 shares of common stock in exchange for convertible notes payable		—		786,060			—			—			—		—			794,000
Fair value of vested portion of employee options issued		—		605,255			—			—			—		—			605,255
Sale of majority owned subsidiary common stock by subsidiary		—		105,226			—			—			—		—