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I have had several questions recently as to how the bankruptcy of Suntech Power’s largest subsidiary will affect the industry in general and Natcore in particular. The short answer is that it will be good for both the industry and our company.

The solar industry has been artificially affected not only by China, subsidizing cell manufacturers, but also by the United States and Europe, imposing tariffs based on anti-dumping regulations. The Suntech failure is just another example of how free markets are larger than companies and countries.

I have been around long enough to witness Latin American and Asian countries trying to strengthen their currencies though exchange controls in the 1960s, the Hunt Brothers trying to corner the silver market in the 1970s, and the United States trying to artificially control interest rates in the 1980s. History once again has shown that countries and companies are paled by the market, and eventually succumb to what the consumer or the market place wants.

By subsidizing the solar manufacturers, China created a false sense of security to their huge industry. They were operating with old technology and delivering a marginal product with at best questionable quality. The government, through its self-declared wisdom, was determining what the market needed and wanted and was driving prices below the true costs of production.

A business model of losing money on every sale and trying to make it up on volume can only last as long as the subsidies keep flowing. When the music stops, the game is going to lose some players.

What this means to the industry is that the capacity will be dramatically reduced and it will become obvious that technology is the only thing that will fill the void left by the lost government support.

With our technology and an array of compelling applications, Natcore is in a perfect position to help fill that void. The only thing that will make the solar industry work without subsidies and government intervention is technology.

And if you own the technology, you own the industry.

Our own government should learn something from this Chinese debacle. Governments are run predominately by attorneys and academics, and neither group can boast the practical problem-solving skills of business people and entrepreneurs.

Unlike business people, government bureaucrats without real-world experience have never operated under the pressure to meet a payroll or pay bills. There’s no similar urgency to be found in government, where there is no penalty for postponing budgets or projects until next year, or the next year or the year after that. In fact, there are often political benefits to impeding progress. Similarly, university researchers are rarely working toward scientific or technical discoveries under the pressure of deadlines.

In contrast, businesses cannot operate in this way without failing.

The lesson taught by Suntech, Solyndra and a growing list of similar failures is that governments do not have the experience, skill sets or motivations to pick winners and losers in industry. Instead, they should focus on basic research, and let the marketplace determine what works in the real world

Natcore has a good understanding of what the market place wants and needs and we have focused our resources and energies to meet those needs through our proprietary technology. We have directed our energies and our scientists to take the quickest route to commercialize each of our applications. We have done this by listening to what the manufacturers want and need, and not by parroting what our government says is needed, or what we may think is needed.

I feel this catharsis in the industry is a windfall for our company and our technology.

Please feel free to call if you have any comments or questions.

Sincerely,

Chuck Provini, President, CEO & Director

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