According to Solarbuzz, the global photovoltaic or PV, market, as measured by annual PV system installations, increased from 254 MW in 2000 to 927 MW in 2004, representing a CAGR of 38.2%, while PV industry revenues grew from approximately $2.0 billion in 2000 to approximately $6.5 billion in 2004, representing a compound annual growth rate, or CAGR, of 34.3%. Despite the rapid growth, solar energy constitutes only a small fraction of the world’s energy output and still has significant growth potential. Solarbuzz projects that PV industry revenues will reach $9.9 billion by 2006 and $18.6 billion by 2010.

The economic development worldwide has resulted in a continuing rise in energy demand. According to the U.S. Department of Energy’s report on international energy outlook, worldwide demand for electricity is expected to almost double from 14.3 billion megawatt hours, or MWh, in 2002 to 26.0 billion MWh in 2025. Almost all electricity is currently produced using fossil energy resources such as natural gas, coal and petroleum, the supply of which is finite. In addition, political instability, labor unrest, war and the threat of terrorism in oil-producing regions have increased oil prices, and raised concerns over dependency on imported oil in many nations. As a result, that future demand for energy will be increasingly met by renewable sources, such as solar energy.

A growing number of countries have established incentive programs for the development of solar and other renewable energy sources, such as: net metering laws that allow on-grid end users to sell electricity back to the grid at retail prices, direct subsidies to end users to offset costs of PV equipment and installation charges, low interest loans for financing PV systems and tax incentives, and government standards that mandate minimum usage levels of renewable energy sources.

PV cell is a device made from a silicon wafer that converts sunlight into electricity by a process known as the photovoltaic effect. The Company produces a variety of monocrystalline and multicrystalline silicon PV cells.

A PV module is an assembly of PV cells that have been electrically interconnected and laminated in a durable and weather-proof package. The Company produces a variety of PV modules ranging from two to 240 watts in power, with higher output modules under development.

A PV system consists of one or more PV modules that are physically mounted and electrically interconnected, with system components such as batteries and power electronics, to produce and reserve electricity. Typical residential on-grid systems contain between 10 and 60 PV modules and produce one to six kilowatt hours, or KWh, of electricity. The Company has designed and installed PV systems used in lighting for outdoor urban public facilities, in farms and villages, as well as in telecommunications and transportation systems.

PV cell manufacturing begins with ultrasonic cleaning of silicon wafers followed by chemical treatment of the wafer surface, which reduces the PV cell’s reflection of sunlight. Through a thermal process, or a diffusion process, the Company then introduces certain impurity into the silicon wafer and forms an electrical field within the PV cell.

An anti-reflection coating on a PV cell enhances its ability to absorb incoming sunlight. For monocrystalline silicon PV cells, many types of materials can serve as anti-reflection coatings. For multicrystalline silicon PV cells, only materials that contain atomic hydrogen, such as hydrogenated silicon nitride, can be used. The Company has developed technology that enables hydrogen to be absorbed within the silicon structure to improve silicon quality.

Raw materials required in the Company’s manufacturing process include silicon wafers, ethylene vinyl acetate, metallic paste, tempered glass, tedlar-polyester-tedlar material, connecting system and aluminum frame. The Company’s raw material procurement policy is to use only vendors who have demonstrated quality control and reliability, and maintain multiple supply sources for each of its key raw materials so that supply problems with any one vendor will not materially disrupt its operations.

Cost of revenues increased from $35.4 million for the nine months ended September 30, 2004 to $91.6 million for the nine months ended September 30, 2005.

Gross profit increased from $12.3 million for the nine months ended September 30, 2004 to $45.4 million for the nine months ended September 30, 2005.

Operating expenses increased from $3.3 million for the nine months ended September 30, 2004 to $12.3 million for the nine months ended September 30, 2005.

Net income increased from $8.8 million for the nine months ended September 30, 2004 to $23.0 million for the nine months ended September 30, 2005.