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 OF1934

For the quarterly period ended June 30, 2009

¨	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from _________ to _________

Commission file number 001-13549

SOLAR THIN FILMS, INC.

(Exact name of registrant as specified in its charter)

Delaware	95-4356228
(State or other jurisdiction of incorporation or organization)	(IRS Employee Identification No.)

25 Highland Blvd, Dix Hills, New York 11746

(Address of principal executive offices)

(516) 417-8454

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer o

Non-accelerated filer o	Smaller reporting company x

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

Yes o No x

Number of outstanding shares of the registrant's par value $0.01 common stock, as of August 14, 2009: 90,241,113.

SOLAR THIN FILMS, INC.

FORM 10-Q

INDEX

		PAGE

Cautionary Statement Concerning Forward-Looking Statements		3

PART I	FINANCIAL INFORMATION	F-1 to F-38

Item 1.	Condensed Consolidated Balance Sheets at June 30, 2009 (unaudited) and December 31, 2008	F-1

	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2009 and 2008 (unaudited)	F-2

	Condensed Consolidated Statement of Stockholders’ Deficit for the Twelve Months Ended December 31, 2008 and Six Months Ended June 30, 2009 (unaudited)	F-3

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2009 and 2008 (unaudited)	F-5

	Notes to Unaudited Condensed Consolidated Financial Statements	F-6 to F-38
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	5
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4T.	Controls and Procedures	22

PART II	OTHER INFORMATION	23

Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults on Senior Securities	24
Item 4.	Submission of Matters to a Vote of Security Holders	24
Item 5.	Other Information	24
Item 6.	Exhibits	25

Signatures		26

Cautionary Statement Concerning Forward-Looking Statements

Our representatives and we may from time to time make written or oral statements that are "forward-looking," including statements contained in this Quarterly Report on Form 10-Q and other filings with the Securities and Exchange Commission, reports to our stockholders and news releases. All statements that express expectations, estimates, forecasts or projections are forward-looking statements within the meaning of the Act. In addition, other written or oral statements which constitute forward-looking statements may be made by us or on our behalf. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "projects," "forecasts," "may," "should," variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. These risks may relate to, without limitation:

we have a significant working capital shortage; are currently in default in payment of approximately $1.75 million of indebtedness which became due in March 2009 and approximately $1.2 million of indebtedness which became due in June 2009, and may face litigation or even bankruptcy if we are unable to met our obligations;

we need to raise additional capital which may not be available on acceptable terms or at all;

we have a history of substantial losses, may incur addition losses in 2009 and beyond, and may never achieve or maintain profitability;

our revenues and operating results are likely to fluctuate significantly;

we have only generated limited revenues and may never achieve profitability;

our equipment business is small and projected revenues may not materialize;

our equipment business is dependent on a small amount of customers and any loss of these customers will have a negative impact on our operations;

evaluating our business and future prospects may be difficult due to the rapidly changing market landscape;

our future success substantially depends on our ability to significantly increase our manufacturing capacity through the development of additional manufacturing facilities;

our “turnkey” manufacturing facility may not gain market acceptance, which would prevent us from achieving increased sales and market share;

technological changes in the solar power industry could render our turnkey manufacturing facilities uncompetitive or obsolete, which could reduce our market share and cause our sales to decline;

we face risks associated with the marketing, development and sale of our turnkey facilities internationally, and if we are unable to effectively manage these risks, it could impair our ability to expand our business abroad;

we may not be able to successfully develop and commercialize our turnkey PV manufacturing facilities which would result in continued losses and may require us to curtail or cease;

our fixed-price contracts could subject us to losses in the event that we have cost overruns;

we are selling 49% of the equity of our Kraft subsidiary in order to acquire BudaSolar Technologies Co. Ltd;

we need to raise significant additional financing to complete the acquisition of Algatec Solar Ag;

substantially all of Algatec's existing and projected 2009 revenues from the manufacture and sale of metallurgical crystalline solar modules are derived from its OEM contract with Q-Cells, which contract will expire at the end of 2009;

our inability to perform under significant contracts would have a material adverse effect on our consolidated business and prospects;

prices of metallurgical crystalline cells and other components may increase causing Algatec's profit margins to decrease;

even if we finance and complete the Algatec acquisition, there is no assurance that Algatec will be able to build equip and operate its new manufacturing facilities on schedule or within the amount budgeted for such purpose;

we have a few proprietary rights, the lack of which may make it easier for our competitors to compete against us;

we depend on the services of key executives and technical and other personnel, the loss of whom could materially harm our business or reduce our operational effectiveness;

we do not maintain theft or casualty insurance and only maintain modest liability and property insurance coverage and therefore we could incur losses as a result of an uninsured loss; and

governmental regulation may have a negative impact on our business.

Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in or suggested by such forward-looking statements. We undertake no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers should carefully review the factors described herein and in other documents we file from time to time with the Securities and Exchange Commission, including our Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K, and any Current Reports on Form 8-K filed by us.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

SOLAR THIN FILMS, INC

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2009			2008
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	995,116		$	619,257
Accounts receivable, net of allowance for doubtful accounts of $696,067 and $696,067, respectively		949,461			194,341
Accounts receivable, related party, net of allowance for doubtful accounts of $881,863 and $831,863, respectively		450,000			500,000
Inventory		742,332			207,041
Advances to suppliers		369,411			931,370
Note receivable, net of allowance for doubtful accounts of $250,000		-			-
Deposits and other current assets		413,036			378,331
Total current assets		3,919,356			2,830,340

Property, plant and equipment, net of accumulated depreciation of $485,502 and $439,998, respectively		368,167			413,241

Other assets:
Deferred financing costs, net of accumulated amortization of $607,500 and $581,000, respectively		-			26,500
Investments into CG Solar, at cost		1,350,000			1,500,000
Deposits		37,016			38,072
Other assets		1,344			3,893
Total other assets		1,388,360			1,568,465

Total assets	$	5,675,883		$	4,812,046

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued liabilities	$	4,882,342		$	4,028,115
Notes payable, current portion		2,923,000			2,560,997
Advances received from customers		242,270			1,969,390
Deferred revenue		1,790,191			33,452
Note payable-other		1,500,000			1,500,000
Total current liabilities		11,337,803			10,091,954

Dividends payable		139,791			143,778
Total long term debt		139,791			143,778

Commitments and contingencies

Stockholder's Deficit
Preferred stock, par value $0.01 per share; 2,700,000 shares authorized:		-			-
Series A Preferred stock, par value $0.01 per share; 1,200,000 shares designated; -0- issued and outstanding at June 30, 2009 and December 31, 2008		-			-
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 issued and outstanding at June 30, 2009 and December 31, 2008		2,286			2,286
Series B-3 Preferred stock, par value $0.01 per share, 232,500 shares designated, 47,502 and 47,518 issued and outstanding at June 30, 2009 and December 31, 2008, respectively		475			475
Series B-4 Preferred stock, par value $0.01 per share, 100,000 shares designated, -0- issued and outstanding at June 30, 2009 and December 31, 2008		-			-
Common stock, par value $0.01 per share, 150,000,000 shares authorized, 58,136,113 and 57,810,601 issued and outstanding as of June 30, 2009 and December 31, 2008, respectively		581,361			578,106
Common shares to be issued		1,213,656			-
Additional paid in capital		22,473,767			24,838,003
Treasury stock		(80,000	)		(80,000	)
Deferred compensation		-			(26,250	)
Accumulated deficit		(30,844,969	)		(32,549,564	)
Accumulated other comprehensive income		851,713			666,670
Total Solar Thin Film's shareholders' deficit		(5,801,711	)		(6,570,274	)
Non controlling interest		-			1,146,588
Total shareholders' deficit		(5,801,711	)		(5,423,686	)

Total Liabilities and Stockholders' Deficit	$	5,675,883		$	4,812,046

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

F-1

SOLAR THIN FILMS, INC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(unaudited)

	Three months ended June 30,						Six months ended June 30,
	2009			2008			2009			2008

REVENUE:
Equipment sales	$	-		$	728,093		$	-		$	1,016,087
Factory Sales		4,562,284			-			6,221,024			-
Total revenue		4,562,284			728,093			6,221,024			1,016,087

Cost of sales		3,297,095			662,361			4,125,771			932,945
Gross profit		1,265,189			65,732			2,095,253			83,142

OPERATING EXPENSES:
General, selling and administrative expenses		1,389,308			1,170,399			2,559,095			2,112,039
Research and development		-			90,000			-			180,000
Depreciation and amortization		25,645			37,251			49,695			72,982
Total operating expenses		1,414,953			1,297,650			2,608,790			2,365,021

NET LOSS FROM OPERATIONS		(149,764	)		(1,231,918	)		(513,537	)		(2,281,879	)

Other income/(expense):
Foreign currency transaction loss		(193,005	)		(70,667	)		(105,223	)		(29,998	)
Interest expense, net		(451,026	)		(266,955	)		(719,240	)		(680,166	)
Gain on change in fair value of derivative liability		8,867			-			21,776			-
Impairment on investment		(150,000	)					(150,000	)		-
Debt acquisition costs		(12,045	)		(17,323	)		(26,500	)		(42,886	)
Other income		4,377			(92	)		5,645			2,423

Net loss before provision for income taxes		(942,596	)		(1,586,955	)		(1,487,079	)		(3,032,506	)

Income taxes		-			-			-			-

Net Loss		(942,596	)		(1,586,955	)		(1,487,079	)		(3,032,506	)

Income attributable to noncontrolling interest		(9,121	)		(4,926	)		(8,771	)		(13,013	)

NET LOSS ATTRIBUTABLE TO SOLAR THIN FILMS, INC.	$	(951,717	)	$	(1,591,881	)	$	(1,495,850	)	$	(3,045,519	)

Net loss per common share attributable to SOLAR THIN FILMS, INC. (basic and fully diluted)	$	(0.02	)	$	(0.03	)	$	(0.03	)	$	(0.05	)

Weighted average shares outstanding (basic and fully diluted)		58,136,113			57,658,370			58,109,055			57,531,475

Comprehensive Loss:
Net Loss	$	(942,596	)	$	(1,586,955	)	$	(1,487,079	)	$	(3,032,506	)
Foreign currency translation gain		219,686			108,340			185,043			216,022

Comprehensive Loss		(722,910	)		(1,478,615	)		(1,302,036	)		(2,816,484	)
Comprehensive loss attributable to the non controlling interest		(9,121	)		(4,926	)		(8,771	)		(13,013	)
Comprehensive loss attributable to Solar Thin Films, Inc.	$	(732,031	)	$	(1,483,541	)	$	(1,310,807	)	$	(2,829,497	)

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

F-2

SOLAR THIN FILMS, INC

CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT

TWELVE MONTHS ENDED DECEMBER 31, 2008 AND SIX MONTHS ENDED JUNE 30, 2009

(UNAUDITED)

	SOLAR THIN FILMS, INC.
	Preferred Series B-1				Preferred Series B-3					Common shares				Shares
	Shares		Amount		Shares			Amount		Shares		Amount		To be issued
Balance, December 31, 2007		228,652	$	2,286		47,518		$	475		57,012,601	$	570,126	$	-
Issuance of 595,000 shares of common stock in exchange for convertible notes payable		-		-		-			-		595,000		5,950		-
Fair value of vested portion of employee options issued		-		-		-			-		-		-		-
Sale of then majority owned subsidiary common stock by subsidiary		-		-		-			-		-		-		-
Reduction in ownership of majority owned subsidiary		-		-		-			-		-		-		-
Issuance of 199,000 shares of common stock in exchange for convertible notes payable		-		-		-			-		199,000		1,990		-
Issuance of 4,000 shares of common stock in exchange for convertible notes payable		-		-		-			-		4,000		40		-
Amortization of deferred compensation		-		-		-			-		-		-		-
Foreign currency translation gain		-		-		-			-		-		-		-
Net loss		-		-		-			-		-		-		-
Balance, December 31, 2008		228,652		2,286		47,518			475		57,810,601		578,106		-
Cumulative effect of a change in accounting principle-adoption of EITF 07-05 effective January 1, 2009		-		-		-			-		-		-		-
Issuance of 325,000 shares of common stock in exchange for services to be rendered		-		-		-			-		325,000		3,250		-
Issuance of 512 shares of common stock in exchange for 16 Preferred Series B-3 shares		-		-		(16	)		-		512		5		-
Change in then majority owned subsidiary equity		-		-		-			-		-		-		-
Fair value of vested portion of employee options issued		-		-		-			-		-		-		-
Change in fair value of re priced vested employee options		-		-		-			-		-		-		-
Issuance of then majority owned subsidiary common stock for services		-		-		-			-		-		-		-
Fair value of warrants issued in exchange for services to be rendered		-		-		-			-		-		-		-
Amortization of deferred compensation		-		-		-			-		-		-		-
Common stock to be issued in exchange for non controlling interest in then majority owned subsidiary		-		-		-			-		-		-		1,213,656
Foreign currency translation gain		-		-		-			-		-		-		-
Net loss		-		-		-			-		-		-		-
Balance, June 30, 2009		228,652	$	2,286		47,502		$	475		58,136,113	$	581,361	$	1,213,656

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

F-3

SOLAR THIN FILMS, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT

TWELVE MONTHS ENDED DECEMBER 31, 2008 AND THREE MONTHS ENDED JUNE 30, 2009

(UNAUDITED)

	SOLAR THIN FILMS, INC.
									Other							Total
	Additional		Deferred			Treasury			Comprehensive		Accumulated			Non controlling		Stockholders'
	Paid in Capital		Compensation			Stock			Income (loss)		Deficit			Interest		Deficit
Balance, December 31, 2007	$	22,857,742	$	(79,750	)	$	(80,000	)	$	441,044	$	(24,075,554	)	$	999,496	$	635,865
Issuance of 595,000 shares of common stock in exchange for convertible notes payable		589,050		-			-			-		-					595,000
Fair value of vested portion of employee options		1,085,016		-			-			-		-					1,085,016
Sale of then majority owned subsidiary common stock by subsidiary		105,225		-			-			-		-			44,775		150,000
Reduction in ownership of then majority owned subsidiary		-		-			-			-		-			170,221		170,221
Issuance of 199,000 shares of common stock in exchange for convertible notes payable		197,010		-			-			-		-			-		199,000
Issuance of 4,000 shares of common stock in exchange for convertible notes payable		3,960		-			-			-		-			-