Solar power has recently emerged as one of the most rapidly growing renewable energy sources. Solar cells are fabricated from silicon wafers and convert sunlight into electricity through a process known as the photovoltaic effect. Solar modules, which are an array of interconnected solar cells encased in a weatherproof frame, are mounted in areas with direct exposure to the sun to generate electricity from sunlight.

Although solar power technology has been used for several decades, the solar power market has grown significantly in the past several years. According to Solarbuzz, the global solar power market, as measured by annual solar power system installations, increased from 345 MW in 2001 to 1,460 MW in 2005, representing a CAGR of 43.4%.

During the same period, solar power industry revenues grew from approximately $2.4 billion in 2001 to approximately $9.8 billion in 2005, representing a CAGR of 42.2%. Solarbuzz projects that solar power industry revenues and solar power system installations will reach $18.6 billion and 3,250 MW, respectively, by 2010.

Worldwide installations of solar power systems are expected to grow at a CAGR of 17.4% from 2005 to 2010, driven largely by on-grid shipments, according to Solarbuzz. Growth in the near term will be constrained by the limited availability of high-purity silicon, but, according to Solarbuzz, is expected to accelerate after 2007.

The Company’s standard solar modules are an array of interconnected solar cells encased in a weatherproof frame. The Company produces a wide variety of standard solar modules, currently ranging from 0.2 W to 300 W in power and using multi-crystalline and mono-crystalline solar cells.

The Company designs and manufactures specialty solar modules and products based on its customers’ specifications and requirements. The Company’s specialty solar modules and products consist of: customized solar modules; and complete specialty products.

- The customized solar modules are solar modules that the Company designs and manufactures for customers who incorporate its customized solar modules as a component of their own products;

- The Company designs and manufactures its complete specialty products, which combine the solar modules with various electronic components that the Company purchases from third party suppliers.

The Company also implements solar power development projects, primarily in conjunction with government organizations, to provide solar power generation in rural areas of China.

Cost of revenues increased from $3.9 million for the six months ended June 30, 2005 to $18.6 million for the six months ended June 30, 2006.

Gross profit increased significantly from $3.1 million for the six months ended June 30, 2005 to $7.4 million for the six months ended June 30, 2006.

Operating expenses increased by 177.5% from $836,690 for the six months ended June 30, 2005 to $2.3 million for the six months ended June 30, 2006.

Interest expenses was approximately $1.6 million for the six months ended June 30, 2006 compared to none for the six months ended June 30, 2005.

Net income was $1.9 million for the six months ended June 30, 2005, as compared to a $4.6 million net loss for the six months ended June 30, 2006.