Perfectenergy International Ltd (fka PFGY)

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Growth Strategies and Marketing


Growth Strategies


During the ten months ended October 31, 2007, approximately 95.1% of our revenue came from the sale of stand-alone PV cells, all into the Chinese market. The remaining 4.9% of our revenue was generated from the sale of assembled PV modules, with 97.9% of PV module revenue from sales to foreign markets, mostly in Europe. Our three-pronged growth strategy to further expand our sales is as follows:


1. To continue to enlarge our market share in Europe . Today, the European PV market represents over 65% of the world’s total installation. Europe’s global leadership has been spearheaded by Germany and followed by Spain, the two countries, where most of our export goes today, having already established a significant market presence. We experienced a significant drop in our European revenue for the ten month period ending October 31, 2007 which were attributable to costs and effects of our relocation to a new production facility and also a delay in our obtaining TUV certifications for our products. Because of the delay in obtaining our TUV certifications, we had to shift to sales of solar cells instead of our solar modules and the Company had decreased sales while it was in the process of establishing business relationships with new customers. Further, during the relocation, the installation and debugging required for the mechanical equipment used in our production lines were beyond what was expected and the delays that resulted had a serious impact on the output of our products and our international sales during the first ten months of 2007. However, we believe that because our new production facility is now fully operational and because we have now obtained our TUV certifications, we believe that our sales in Europe will be significantly enhanced going forward. We aim to continue our strong growth momentum in Europe, with the objective of significantly increasing our exports to Europe over the next two years. Although our overall market share in Europe is very small, we have recently obtained TUV certification for our products in Europe. TUV certification involves rigorous testing of the applications for which our products are designed. It includes verification that the products satisfy strict European regulations for the industry in which the product was designed for and ensures the product specifications are stated correctly. Certification requires very comprehensive product testing and periodic retesting of the product is required to maintain TUV certifications. We believe that maintaining these certifications will significantly enhanced the sales of our products in Europe. We emphasize product research and development and we are currently developing other types of mono-crystalline and poly-crystalline solar cell products, as well as our own PV or solar energy systems to improve the efficiency of our solar cells and increase the variety of our cell type. We also plan to increase our capacity and production lines next year. All of above will significantly enhance our sales in Europe.


2. To enter the U.S. market . Although the PV market in the United States currently accounts for only approximately 15% of the global share, it has been growing very rapidly in recent years. For example, total installations in the United States are expected to double in 2007, and installations in the United States are projected to increase to about 23% of the global market in 2011. Our plan is to achieve exports to $10 million in 2008.

United States. At the federal level, several recent developments are favorable to the PV industry in general. The United States Congress approved the Energy Policy Act of 2005, which provides a 30% investment tax credit for PV installations. The federal tax credits will expire this year, but the U.S. House of Representatives is currently discussing a renewal of this policy. In addition, the President of the United States announced the Advanced Energy Initiative in January 2006, which sets the goal of replacing more than 75% of oil imports from the Middle East by 2025 through using alternative energy. Furthermore, the President of the United States proposed $148 million in funds to support the solar energy research and development program in the United States government’s 2007 budget. In addition, a number of states, including California and New Jersey, have committed substantial resources to developing and implementing renewable energy programs. For example, in January 2006, the California Public Utilities Commission passed the California Solar Initiative with the goal of installing 3 GW PV systems by 2017. Under the California Solar Initiative, an investment of $3.2 billion will be made from 2006 to 2017 for the installation of 1 million PV plants with the total output of more than 3,000MW. Investors in these PV plants will get refund from the state and federal governments of approximately 75% of their total investment. In addition, the investors are to receive a guaranteed profit of 12% on average for the electricity produced by their PV plants with certificates of green power. In April 2006, the New Jersey Board of Public Utilities voted to approve new regulations which expand the State’s Renewable Portfolio Standard by extending the existing goals out to 2020 and increasing the required amount of renewable energy and solar energy. Under the newly adopted regulations, 20% of New Jersey’s electricity must come from renewable sources by 2020. The New Jersey regulations also include a 2% solar set aside, which is forecast to require 1,500 MW of electricity to be generated through solar power, the largest solar commitment relative to population and electricity consumption in the United States.



3. To aggressively increase our PV panels’ domestic market share inside China . China’s PV market is still small but we expect it will grow rapidly in the next decades, given the increasing support for solar energy initiatives from the Chinese government. It is projected that the Chinese solar energy products market will grow from only 25MW in 2005, to 500MW in 2010, and then to 30,000MW in 2020. We plan to increase our sales in China to 40% of our total panel sales in the next two years.

http://sec.gov/Archives/edgar/data/1345432/000114420408012130/v105144_s1a.htm