The solar power market has grown rapidly over the past several years. Generally, the solar market size is analyzed in MW of installed capacity. According to Solarbuzz, the global solar power market, as measured by annual solar power system installed capacities, increased from 427 MW in 2002 to 1,744 MW in 2006, representing a CAGR of 42%.

Under the lowest of three different projections, Solarbuzz expects annual solar power system installed capacities to further increase to 4,177 MW in 2011. Solar power industry revenues are expected to increase from $10.6 billion in 2006 to $18.6 billion in 2011, representing a CAGR of 12%.

The solar power market consists of the market for on-grid applications, where the solar power systems are connected to the utility grid and generate electricity to feed into the grid, and off-grid applications, where the systems operate independent of the utility grid. According to Solarbuzz, the market for on-grid applications represents the largest and fastest growing segment of the solar power market.

According to Solarbuzz, crystalline silicon technology represented 90.2% of the solar cell market in 2006. Traditional crystalline silicon solar cells are made from either monocrystalline silicon wafers or multicrystalline silicon wafers. According to Frost & Sullivan, the conversion efficiency rates of monocrystalline and multicrystalline silicon cells range between 14% to 20% and 10% to 14%, respectively.

Since its inception in August 2004, the Company has significantly expanded its manufacturing capacity. Within eight months, the Company completed construction on a green-field site and started trial production of its first manufacturing line with a production capacity of 32 MW per year in June 2005.

The Company began commercial production at its first manufacturing line in August 2005, after three months’ trial production.

The Company completed its second to sixth solar cell manufacturing lines and started generating revenues from these lines in 2006.

As of December 2006, the Company had six solar cell manufacturing lines with an aggregate production capacity of 192 MW per year, assuming the use of 156-millimeter monocrystalline silicon wafers.

Silicon wafers are the most important raw materials for producing solar cells, with monocrystalline and multicrystalline silicon wafers as the most commonly used materials. The Company can produce solar cells with either of these types of silicon wafers.

The Company’s manufacturing process also involves metallic paste, chemicals and other materials.

Cost of revenues increased by $111.1 million, from $11.8 million in 2005 to $122.9 million in 2006.

Gross profit in 2006 increased by $24.6 million to $26.6 million, from $2.0 million in 2005.

Operating expenses increased by $9.8 million, from $1.7 million in 2005 to $11.5 million in 2006.

Selling expenses increased by $1.0 million from $38,000 in 2005 to $1.0 million in 2006.

Research and development expenses increased by $0.5 million from $49,000 in 2005 to $0.5 million in 2006.

Interest expenses increased from $0.6 million in 2005 to $3.0 million in 2006.

Net loss was $0.3 million in 2005 compared to a net income $11.8 million in 2006.