##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 20-F
  (Mark One)o

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF
    THE SECURITIES EXCHANGE ACT OF 1934ORþ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal
    year ended December 31,
    2009.ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934ORo

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934Date of event requiring this
    shell company reportFor the transition period
    from          to   Commission file number:
    001-33107
  CANADIAN SOLAR INC.
 (Exact name of Registrant as
    specified in its charter)
  N/A
   (Translation of
    Registrants name into English)
  Canada
   (Jurisdiction of incorporation
    or organization)
  199 Lushan Road
 Suzhou New District
 Suzhou, Jiangsu 215129
 Peoples Republic of
    China
 (Address of principal executive
    offices)
  Arthur Chien, Chief Financial
    Officer
 650 Riverbend Drive,
    Suite B
 Kitchener, Ontario, Canada N2K
    3S2
 Tel: (1-905)
    530-2334
 Fax: (1-905)
    530-2001
 (Name, Telephone,
    E-mail
    and/or Facsimile number and Address of Company Contact
    Person)
  Securities registered or to be
    registered pursuant to Section 12(b) of the Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon shares with no par value

The NASDAQ Stock Market LLC
    (The NASDAQ Global Market)   Securities registered or to be
    registered pursuant to Section 12(g) of the Act:
 None
 (Title of Class)
  Securities for which there is a
    reporting obligation pursuant to Section 15(d) of the
    Act:
 None
 (Title of Class)
      o þ
  o þ
  þ o
  Regulation S-T o o
  Rule 12b-2
 Large
    accelerated filer
    o
    Accelerated filer
    þ
    Non-accelerated filer
    o  þ  o o
  o o
  Rule 12b-2 o þ
    o o




---



##### 





TABLE OF
    CONTENTS
   
 PageIntroduction


1Part I


3Item 1.


Identity of Directors, Senior Management and
    Advisers


3Item 2.


Offer Statistics and Expected Timetable


3Item 3.


Key Information


3Item 4.


Information on the Company


26Item 4A.


Unresolved Staff Comments


44Item 5.


Operating and Financial Review and Prospects


44Item 6.


Directors, Senior Management and Employees


66Item 7.


Major Shareholders and Related Party
    Transactions


77Item 8.


Financial Information


78Item 9.


The Offer and Listing


80Item 10.


Additional Information


81Item 11.


Quantitative and Qualitative Disclosures About
    Market Risk


87Item 12.


Description of Securities Other than Equity
    Securities


88Part II


88Item 13.


Defaults, Dividend Arrearages and
    Delinquencies


88Item 14.


Material Modifications to the Rights of Security
    Holders and Use of Proceeds


88Item 15.


Controls and Procedures


89Item 16A.


Audit Committee Financial Expert


92Item 16B.


Code of Ethics


92Item 16C.


Principal Accountant Fees and Services


92Item 16D.


Exemptions from the Listing Standards for Audit
    Committees


93Item 16E.


Purchases of Equity Securities by the Issuer and
    Affiliated Purchasers


93Item 16F.


Change in Registrants Certifying
    Accountant


93Item 16G.


Corporate Governance


93Part III


93Item 17.


Financial Statements


93Item 18.


Financial Statements


93Item 19.


Exhibits


93Ex-8.1Ex-12.1Ex-12.2Ex-13.1Ex-13.2Ex-23.1




---



##### Table of Contents



INTRODUCTION  Form 20-F
  
    CSI, we, us, our
    company and our are to Canadian Solar Inc.,
    its predecessor entities and its consolidated subsidiaries;
    $, US$ and
    U.S. dollars are to the legal currency of the
    United States;
    RMB and Renminbi are to the legal
    currency of China;
    C$ are to the legal currency of Canada;
     and Euro are to the legal
    currency of the European Economic and Monetary Union; and
    China and the PRC are to the
    Peoples Republic of China, excluding, for the purposes of
    this annual report on
    Form 20-F,
    Taiwan and the special administrative regions of Hong Kong and
    Macau.  Form 20-F
  Form 20-F
  FORWARD-LOOKING
    INFORMATION
  Form 20-F
  
    our expectations regarding the worldwide demand for electricity
    and the market for solar power;
    our beliefs regarding the importance of environmentally friendly
    power generation;
    our expectations regarding governmental support for solar power;
    our beliefs regarding the future shortage or availability of
    high-purity silicon;
    our beliefs regarding our ability to resolve our disputes with
    suppliers with respect to our long-term supply agreements;
    our beliefs regarding the rate at which solar power technologies
    will be adopted and the continued growth of the solar power
    industry;
    our beliefs regarding the competitiveness of our solar module
    products;
    our expectations with respect to increased revenue growth and
    improved profitability;
    our expectations regarding the benefits to be derived from our
    supply chain management and vertical integration manufacturing
    strategy; 1




---



##### Table of Contents




    our beliefs and expectations regarding the use of upgraded
    metallurgical grade silicon materials (UMG-Si) and solar power
    products made of this material;
    our ability to continue developing our in-house solar components
    production capabilities and our expectations regarding the
    timing and production capacity of our internal manufacturing
    programs;
    our ability to secure adequate silicon and solar cells to
    support our solar module production;
    our beliefs regarding the effects of environmental regulation;
    our beliefs regarding the changing competitive arena in the
    solar power industry;
    our future business development, results of operations and
    financial condition; and
    competition from other manufacturers of solar power products and
    conventional energy suppliers.   2




---



##### Table of Contents



PART I  Item 1.
    IDENTITY
    OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS    Item 2.
    OFFER
    STATISTICS AND EXPECTED TIMETABLE    Item 3.
    KEY
    INFORMATION  A.
    Selected
    Financial Data  Selected
    Consolidated Financial and Operating Data
  Form 20-F. Form 20-F.
      Years Ended December 31,2005


2006


2007


2008


2009(In thousands of US$, except share and per share data, and
    operating data and percentages)Statement of operations data:Net revenues

$
18,324


$
68,212


$
302,798


$
705,006


$
630,961Net income (loss)

$
3,804


$
(9,430
)

$
(175
)

$
(7,534
)

$
22,646Earnings (loss) per share, basic

$
0.25


$
(0.50
)

$
(0.01
)

$
(0.24
)

$
0.61Shares used in computation, basic


15,427,995



18,986,498



27,283,305



31,566,503



37,137,004Earnings (loss) per share, diluted

$
0.25


$
(0.50
)

$
(0.01
)

$
(0.24
)

$
0.60Shares used in computation, diluted


15,427,995



18,986,498



27,283,305



31,566,503



37,727,138Other financial data:Gross margin


38.8
%


18.1
%


7.9
%


10.1
%


12.4
%Operating margin


28.5
%


1.6
%


(0.6
)%


3.4
%


1.0
%Net margin


20.8
%


(13.8
)%


(0.1
)%


(1.1
)%


3.6
%Selected operating data:Products sold (in MW) Standard solar modules


3.4



14.7



83.4



166.5



296.6 Specialty solar modules and products


0.7



0.2











Total


4.1



14.9



83.4



166.5



296.6Average selling price (in $ per watt) Standard solar modules

$
3.92


$
3.97


$
3.75


$
4.23


$
2.13   3




---



##### Table of Contents



As of December 31,2005

2006

2007

2008

2009(In thousands of US$, except share data)Balance Sheet Data:Total assets

$
27,430


$
129,634


$
277,622


$
570,654


$
1,038,703Net assets

$
6,967


$
112,904


$
134,501


$
332,254


$
466,001Long-term debt

$



$



$
17,866


$
45,357


$
29,290Convertible notes

$
3,387


$



$
59,885


$
830


$
866Capital stock

$
211


$
97,302


$
97,454


$
395,154


$
500,322Number of shares
    outstanding(1)


15,427,995



27,270,000



27,320,389
(1)


35,686,313
(1)


42,745,360
(1)     (1)
    
    Excluding 566,190, 58,250 and
    29,125 restricted shares, which were subject to restrictions on
    voting and dividend rights and transferability, as of
    December 31, 2007, 2008 and 2009, respectively.  Exchange
    Rate Information
     4




---



##### Table of Contents



Renminbi per U.S. dollar Exchange
    Rate(1)PeriodPeriod

End

Average(2)

Low

High(RMB per $1.00)2005


8.0702



8.1826



8.2765



8.07022006


7.8041



7.9579



8.0702



7.80412007


7.2946



7.6058



7.8127



7.29462008


6.8225



6.9477



7.2946



6.78002009


6.8259



6.8307



6.8470



6.81762010February


6.8258



6.8284



6.8230



6.8358March


6.8258



6.8262



6.8270



6.8254April


6.8247



6.8256



6.8275



6.8229May


6.8305



6.8275



6.8310



6.8245June


6.7815



6.8184



6.7815



6.8323July


6.7735



6.7762



6.7709



6.7807August (through August 13)


6.7957



6.7751



6.7670



6.7957     (1)
    
    For December 2009 and prior
    periods, the exchange rate refers to the noon buying rate as
    reported by the Federal Reserve Bank of New York. For January
    2010 and later periods, the exchange rate refers to the exchange
    rate as set forth in the H.10 statistical release of the Federal
    Reserve Board.(2)
    
    Annual averages are calculated from
    month-end rates. Monthly averages are calculated using the
    average of the daily rates during the relevant period.  B.
    Capitalization
    and Indebtedness    C.
    Reasons
    for the Offer and Use of Proceeds    D.
    Risk
    Factors  Risks
    Related to Our Company and Our Industry
  If the
    supply of wafers and cells increases concurrently with increases
    in the supply of polysilicon, then the corresponding oversupply
    of solar cells and panels may cause substantial downward
    pressure on the prices of our products and reduce our revenues
    and earnings.
   5




---



##### Table of Contents



The
    execution of our growth strategy depends upon the continued
    availability of third-party financing arrangements for our
    customers, which is affected by general economic conditions.
    Tight credit markets could depress demand for solar products,
    hamper our expansion and materially affect our results of
    operations.
    If
    governments revise, reduce or eliminate subsidies and economic
    incentives for solar power, the demand for our products could
    decline, which could materially adversely affect our revenues,
    profits, margins and results of operations.
   6




---



##### Table of Contents



We may
    not be able to adjust our raw materials costs because we have
    entered into long-term supply agreements with several
    polysilicon and wafer suppliers. If we fail to adjust such costs
    or fail to recover all or part of our advance payments after we
    terminate certain long-term supply agreements, our revenues and
    profitability could be materially and adversely affected. In
    addition, we may be subject to litigation with certain
    suppliers.
         7




---



##### Table of Contents



Credit
    terms offered to some of our customers expose us to the credit
    risks of such customers and may increase our costs and expenses,
    which could in turn materially adversely affect our revenues,
    liquidity and results of operations.
  and/or
    Fluctuations
    in exchange rates could adversely affect our business, including
    our financial condition and results of operations.
       8




---



##### Table of Contents



Seasonal
    variations in demand linked to construction cycles and weather
    conditions may impact our results of operations.
    Because
    the markets in which we compete are highly competitive and many
    of our competitors have greater resources than us, we may not be
    able to compete successfully and we may lose or be unable to
    gain market share.
     9




---



##### Table of Contents



25-year 25-year
    Our
    quarterly operating results may fluctuate from period to
    period.
    
    the average selling prices of our solar modules and products;
    the rate and cost at which we are able to expand our internal
    manufacturing capacity;
    the availability and price of solar cells and wafers from our
    suppliers and toll manufacturers;
    the availability and price of raw materials, particularly
    high-purity silicon;
    the impact of seasonal variations in demand linked to
    construction cycles and weather conditions;
    changes in government incentive programs and regulations,
    particularly in our key and target markets;
    the unpredictable volume and timing of customer orders;
    the loss of one or more key customers or the significant
    reduction or postponement of orders;
    availability of financing for on-grid and off-grid solar power
    applications;
    unplanned expenses as a result of manufacturing failures,
    defects or downtime;
    acquisition and investment costs;
    geopolitical turmoil within any of the countries in which we
    operate or sell products;
    foreign currency fluctuations, particularly in the Euro,
    U.S. dollar and RMB;
    our ability to establish and expand customer relationships;
    changes in our manufacturing costs;
    changes in the relative sales mix of our products; 10




---



##### Table of Contents




    our ability to develop, introduce and sell new or enhanced solar
    modules and products and the amount and timing of related
    research and development costs;
    the timing of new products or technology introduced or announced
    by our competitors;
    increases or decreases in electricity rates due to changes in
    fossil fuel prices or other factors;
    allowances for doubtful accounts and advances to suppliers;
    inventory write-downs; and
    loss on firm purchase commitments under long-term supply
    agreements.    If
    sufficient demand for solar power products does not develop or
    takes longer to develop than we anticipate, our revenues may not
    continue to increase or may decline, and we may be unable to
    sustain our profitability.
    
    the cost-effectiveness, performance and reliability of solar
    power products compared to conventional and other renewable
    energy sources and products;
    the availability of government subsidies and incentives to
    support the development of the solar power industry;
    the cost and availability of capital, including long-term debt
    and tax equity, for solar projects;
    the success of other alternative energy technologies, such as
    wind power, hydroelectric power, geothermal power and biomass
    fuel;
    fluctuations in economic and market conditions that affect the
    viability of conventional and other renewable energy sources,
    such as increases or decreases in the prices of oil and other
    fossil fuels;
    capital expenditures by end users of solar power products, which
    tend to decrease when the economy slows; and
    deregulation of the electric power industry and broader energy
    industry.    We may be
    unable to obtain adequate capital due to market conditions
    beyond our control, which may adversely impact our ability to
    grow our business.
   11




---



##### Table of Contents




    our future financial condition, results of operations and cash
    flows;
    general market conditions for financing activities by
    manufacturers of photovoltaic and related products; and
    economic, political and other conditions in the PRC and
    elsewhere.    Our
    dependence on a limited number of silicon wafer, solar cell and
    silicon suppliers, and the limited number of suppliers for
    certain other components, such as silver metallization paste,
    solar module
    back-sheet,
    and ethylene vinyl acetate (EVA) encapsulant, could prevent us
    from delivering our products to our customers in the required
    quantities and on time, which could result in order
    cancellations and decreased revenues.
    Our
    dependence on a limited number of customers and our lack of
    long-term customer contracts may cause significant fluctuations
    or declines in our revenues.
    
    reduced, delayed or cancelled orders from one or more of our
    significant customers;
    the loss of one or more of our significant customers; 12




---



##### Table of Contents




    a significant customers failure to pay for our products on
    time; and
    a significant customers financial problems or insolvency.    Cancellation
    of customer orders may make us unable to recoup any prepayments
    made to suppliers.
    We may
    not be able to manage the expansion of our operations
    effectively.
       13




---



##### Table of Contents



Technological
    changes in the solar power industry could render our products
    uncompetitive or obsolete, which could reduce our market share
    and cause our revenues and profit to decline.
    We are
    developing and commercializing higher conversion efficiency
    cells, such as selective emitter cells, in order to produce
    higher-powered modules, which may command better prices. We
    cannot assure that we will be able to mass-produce these cells
    in a cost effective way, if at all.
    We have
    limited experience in the building integrated photovoltaic, or
    BIPV, market and we may be unable to manage the growth of our
    BIPV business or successfully operate in the BIPV
    market.
    We face
    risks associated with the marketing, distribution and sale of
    our solar power products internationally, and if we are unable
    to effectively manage these risks, they could impair our ability
    to expand our business abroad.
    
    difficulties staffing and managing overseas operations;
    fluctuations in foreign currency exchange rates; 14




---



##### Table of Contents




    the increased cost of understanding local markets and trends and
    developing and maintaining an effective marketing and
    distributing presence in various countries;
    the difficulty of providing customer service and support in
    these markets;
    the difficulty of managing our sales channels effectively as we
    expand beyond distributors to include direct sales to systems
    integrators, end users and installers;
    the difficulties and costs of complying with the different
    commercial, legal and regulatory requirements in the overseas
    markets in which we offer our products;
    our failure to develop appropriate risk management and internal
    control structures tailored to overseas operations;
    our inability to obtain, maintain or enforce intellectual
    property rights;
    unanticipated changes in prevailing economic conditions and
    regulatory requirements; and
    trade barriers such as export requirements, tariffs, taxes and
    other restrictions and expenses, which could increase the prices
    of our products and make us less competitive in some countries.    Our
    future success depends partly on our ability to significantly
    expand our capacity to manufacture solar components, which
    exposes us to a number of risks and uncertainties.
    
    the need to raise significant additional funds to purchase raw
    materials and to build additional manufacturing facilities,
    which we may be unable to obtain on commercially reasonable
    terms or at all;
    delays and cost overruns as a result of a number of factors,
    many of which are beyond our control, including delays in
    equipment delivery by vendors;
    delays or denial of required approvals by relevant government
    authorities;
    diversion of significant management attention and other
    resources; and
    failure to execute our expansion plan effectively.    Our
    business depends substantially on the continuing efforts of our
    executive officers, and our business may be severely disrupted
    if we lose their services.
   15




---



##### Table of Contents



Problems
    with the quality or performance of our products could damage our
    reputation, lead to unexpected costs or cause us to lose market
    share.
      Since we
    cannot test our products for the duration of our standard
    warranty periods, we may be subject to unexpected warranty
    expense.
  10-year 25-year
 16




---



##### Table of Contents



Our
    future growth depends in part on our ability to make strategic
    acquisitions and investments and to establish and maintain
    strategic relationships, and our failure to do so could have a
    material adverse effect on our market penetration and revenue
    growth.
      We may
    not continue to be successful in developing and maintaining a
    cost-effective solar cell manufacturing capability.
      It may be
    difficult to develop our internal production capabilities for
    ingots and silicon wafers or to achieve acceptable yields and
    product performance as a result of manufacturing
    problems.
   17




---



##### Table of Contents



Failure
    to protect our intellectual property rights in connection with
    new specialty solar modules and products may undermine our
    competitive position.
    We may be
    exposed to infringement, misappropriation or other claims by
    third parties, which, if determined adversely to us, could
    require us to pay significant damage awards.
   18




---



##### Table of Contents



If we are
    unable to attract, train and retain technical personnel, our
    business may be materially and adversely affected.
    Product
    liability claims against us could result in adverse publicity
    and potentially significant monetary damages.
    Our
    founder, Dr. Shawn Qu, has substantial influence over our
    company and his interests may not be aligned with the interests
    of our other shareholders.
    Compliance
    with environmental regulations can be expensive, and
    noncompliance with these regulations may result in adverse
    publicity and potentially significant monetary damages, fines
    and the suspension or even termination of our business
    operations.
     19




---



##### Table of Contents



We may
    not be successful in establishing our brand name in important
    markets and the products we sell under our brand name may
    compete with the products we manufacture on an original
    equipment manufacturer, or OEM, basis for our
    customers.
    If we
    grant employee share options, restricted shares or other
    share-based compensation in the future, our net income could be
    adversely affected.
    We
    identified material weaknesses in our internal control over
    financial reporting as of December 31, 2009 and concluded
    that our internal control over financial reporting and our
    disclosure controls and procedures were not effective as of
    December 31, 2009. If our internal control over financial
    reporting or disclosure controls and procedures are not
    effective, there may be errors in our financial statements that
    could require a restatement or our filings may not be timely and
    investors may lose confidence in our reported financial
    information, which could lead to a decline in our stock
    price.
     20




---



##### Table of Contents



We face
    risks related to an SEC subpoena and private securities
    litigation.
      Risks
    Related to Doing Business in China
  We have
    not obtained approvals from the PRC National Development and
    Reform Commission, or the NDRC, for some of our operational
    projects in China, which may materially adversely affect our
    business, results of operations and prospects.
     21




---



##### Table of Contents



We may
    face penalties for failing to comply with certain PRC
    environmental and construction laws.
        The
    enforcement of the new labor contract law and increases in labor
    costs in the PRC may adversely affect our business and our
    profitability.
    Our
    subsidiaries will lose certain tax benefits over the next
    several years and we expect to pay additional PRC taxes as a
    result, which could have a material adverse impact on our
    financial condition and results of operations.
   22




---



##### Table of Contents



There are
    significant uncertainties in our tax liabilities regarding our
    income under the new Enterprise Income Tax Law of the
    PRC.
    Dividends
    payable by us to our non-Chinese shareholders and gains on the
    sale of our common shares may become subject to PRC enterprise
    income tax liabilities.
    Restrictions
    on currency exchange may limit our ability to receive and use
    our revenues effectively.
   23




---



##### Table of Contents



Uncertainties
    with respect to the Chinese legal system could materially
    adversely affect us.
    Risks
    Related to Our Common Shares
  The
    market price for our common shares may be volatile.
    
    announcements of technological or competitive developments;
    regulatory developments in our target markets affecting us, our
    customers or our competitors;
    actual or anticipated fluctuations in our quarterly operating
    results;
    changes in financial estimates by securities research analysts;
    changes in the economic performance or market valuations of
    other solar power companies;
    the departure of executive officers and key research personnel;
    patent litigation and other intellectual property disputes;
    litigation and other disputes with our long-term suppliers;
    fluctuations in the exchange rates between the U.S. dollar,
    the Euro and the RMB;
    SEC investigations or private securities litigation;
    the release or expiration of
    lock-up or
    other transfer restrictions on our outstanding common
    shares; and
    sales or anticipated sales of additional common shares.   24




---



##### Table of Contents



Substantial
    future sales of our common shares in the public market, or the
    perception that such sales could occur, could cause the price of
    our common shares to decline.
    Your
    right to participate in any future rights offerings may be
    limited, which may cause dilution to your holdings.
    Our
    articles of continuance contain anti-takeover provisions that
    could adversely affect the rights of holders of our common
    shares.
    
    Our board of directors has the authority, without approval by
    the shareholders, to issue an unlimited number of preferred
    shares in one or more series. Our board of directors may
    establish the number of shares to be included in each such
    series and may fix the designations, preferences, powers and
    other rights of the shares of a series of preferred shares.
    Our board of directors is entitled to fix and may change the
    number of directors within the minimum and maximum number of
    directors provided for in our articles. Our board of directors
    may appoint one or more additional directors to hold office for
    a term expiring no later than the close of the next annual
    meeting of shareholders, subject to the limitation that the
    total number of directors so appointed may not exceed one-third
    of the number of directors elected at the previous annual
    meeting of shareholders.  You may
    have difficulty enforcing judgments against us.
   25




---



##### Table of Contents



We may be
    classified as a passive foreign investment company, which could
    result in adverse U.S. federal income tax consequences to U.S.
    holders of our common shares.
  non-U.S. corporation
  Item 4.
    INFORMATION
    ON THE COMPANY  A.
    History
    and Development of the Company      
    CSI Solartronics, incorporated in November 2001, which has
    operations located in Changshu, China, where we conduct sales of
    solar modules;
    CSI Manufacturing, incorporated in January 2005, which has
    operations in Suzhou, China, where we manufacture primarily
    standard solar modules;
    CSI Solar Technologies Inc., or CSI Technologies, incorporated
    in August 2003, which has operations located in Changshu, China,
    where we conduct solar module product development;
    CSI Luoyang, incorporated in February 2006, which has operations
    located in Luoyang, China, where we manufacture solar module
    products, solar ingots and solar wafers;
    CSI Cells, incorporated in June 2006, which has operations
    located in Suzhou, China, where we manufacture solar cells;
    CSI Advanced, incorporated in August 2006, which has operations
    located in Changshu, China, where we manufacture solar modules;
    CSI Solar Power (China) Inc., incorporated in July 2009, which
    has operations in Suzhou, China, which will be our holding
    company in China;
    CSI Solar New Energy (Suzhou) Co. Ltd. (Formerly known as Toyo
    Science and Technology (Suzhou) Co., Ltd. or TOYO), which was
    incorporated in December 2005, manufactured lead-acid batteries
    recycling equipment in Suzhou, China before it was acquired by
    CSI Solar Power (China) Inc. in March 2010; TOYO will become the
    entity through which we will manufacture solar cells in Suzhou; 26




---



##### Table of Contents




    Canadian Solar Solutions Inc., incorporated in Ontario, Canada
    in June 2009, through which we conduct marketing and sales
    activities in Canada; we also have a number of non-wholly owned
    subsidiaries under Canadian Solar Solutions Inc., all of which
    are incorporated in Ontario, Canada in November 2009, through
    which we conduct project development activities in Canada;
    Canadian Solar (USA) Inc. (formerly doing business as CSI Solar
    Inc.), which was incorporated in Delaware in June 2007, through
    which we carry out marketing and sales activities in the United
    States;
    Canadian Solar Japan, K.K., or Canadian Solar Japan,
    incorporated in Japan as our wholly-owned subsidiary in June
    2009, through which we conduct marketing and sales activities in
    Japan; between December 2009 and May 2010, we sold an aggregate
    of 28% of the outstanding capital stock of Canadian Solar Japan
    to two Japanese companies;
    Canadian Solar (Deutschland) GmbH, incorporated in Germany in
    August 2009, through which we conduct marketing and sales
    activities in Europe;
    We hold 70% of the equity interest in CSI Project Consulting
    GmbH, incorporated in Germany in 2009, through which we invest
    in a German solar power project; CSI Project Consulting GmbH
    holds all of the shares in CVB Solar GmbH; in December 2009, CSI
    Project Consulting GmbH sold 100% of the shares of its
    subsidiary Solarpark Bernsdorf GmbH & Co. KG to a
    third party; and
    Canadian Solar Manufacturing (Ontario) Inc., incorporated in
    Ontario, Canada in June 2010, through which we will conduct our
    manufacturing activities in Canada.    530-2334 530-2001.
  www.canadiansolar.com
  B.
    Business
    Overview  Overview
       27




---



##### Table of Contents



Our
    Products
    Standard
    Solar Modules
   28




---



##### Table of Contents



Specialty
    Solar Modules and Products
      Solar
    Cells
     29




---



##### Table of Contents



Solar
    Power Development Projects
      feed-in-tariffs.
    Supply
    Chain Management
   30




---



##### Table of Contents



Silicon
    Raw Materials and Solar Wafers
       31




---



##### Table of Contents



Solar Cells.
  UMG-Si Cells.
  Solar
    Module Manufacturing
   32




---



##### Table of Contents



(1)
    
    Laser cutting is only necessary for smaller-sized modules.      Quality
    Control and Certifications
      Markets
    and Customers
   33




---



##### Table of Contents



Years Ended December 31,2007


2008


2009Total Net





Total Net





Total NetRegion

Revenues


%


Revenues


%


Revenues


%(In thousands of US$, except for percentages)Europe

$
286,588



94.7


$
631,147



89.5


$
523,087



82.9Asia


13,605



4.5



41,571



5.9



70,966



11.3United States


2,605



0.8



32,288



4.6



36,908



5.8Total net revenues

$
302,798



100


$
705,006



100


$
630,961



100     
    Germany.  The renewable energy laws in Germany
    require electricity transmission grid operators to connect
    various renewable energy sources to their electricity
    transmission grids and to purchase all electricity generated by
    such sources at guaranteed feed-in tariffs. Additional
    regulatory support measures include investment cost subsidies,
    low-interest loans and tax relief to end users of renewable
    energy.    
    Spain.  According to Solarbuzz, the Spanish
    market shrank by 96% to 98 MW in 2009 from 2,463 MW in
    2008. In Spain, the feed-in tariff for solar power energy is
    fully guaranteed for 25 years and guaranteed at 80%
    thereafter. The feed-in tariff for applications of less than 100
    kWh was initially 0.4404 per kWh for the first
    25 years of system operation and 0.3523 per kWh
    thereafter for systems installed until September 2008.
    Current feed-in tariffs are between 0.28 and 0.34
    per kWh, depending on system size, type and quarterly 34




---



##### Table of Contents



digressions. Currently the market is capped at 500 MW per
    year, with any outstanding cap rolled over to the subsequent
    year. Accordingly, up to 910 MW may be installed this year.  
    Czech Republic.  According to Solarbuzz, in
    2009, the market increased from 55 MW to approximately
    440 MW, a 700% increase. At current exchange rates the
    feed-in tariff is 12.79 to 12.89 CZK and is legislated to
    decline at up to 5% per year and is legislated to decline at up
    to 5% per year. However there are expectations that the
    legislation may change and the declines may be steeper.
    Currently no new applications are being accepted for solar
    projects. The existing backlog of approved solar power projects
    is believed to be very large, and in spite of a 30% reduction,
    project internal rates of return might continue to be acceptable.
    Italy.  According to Solarbuzz, the Italian
    solar market grew by 72% to reach 720 MW at the end of
    2009. Current feed-in tariff rates for systems range from
    0.346 per kWh for larger ground-mounted systems to
    0.470 per kWh for smaller BIPV systems, a relatively
    modest decline from the previous years rates. Furthermore,
    system owners may also benefit from self consumption with a
    reduced electrical bill. The Italian market saw an enormous
    boost in large installations in 2007 and 2008, according to
    Solarbuzz, a trend that continued in 2009 and is expected to
    continue in 2010. In 2011 the feed-in tariff is expected to be
    0.313 per kWh and to decline further in 2012 to
    0.264 per kWh.
    United States.  Over 10 states in the
    U.S. offer significant incentives, with California offering
    the most preferential ones. In January 2006, the California
    Public Utilities Commission enacted the California Solar
    Initiative, a $2.9 billion program that subsidizes solar
    power systems by $2.80 per watt. Due to excessive demand, this
    subsidy has been reduced to $2.50 per watt. Combined with
    federal tax credits for solar power usage, the subsidy may
    account for as much as 50% of the cost of a solar power system.
    The program will last until 2016 and is expected to dramatically
    increase the use of solar power for on-grid applications in
    California. The program is capped. Incentives in other US states
    include state renewable energy credits, capital subsidies and in
    some states, such as Vermont, feed-in tariffs. Many states and
    various federal departments are also subject to renewable energy
    portfolio standards that mandate minimum percentages of
    renewable energy production by utilities. Finally, the
    U.S. federal government passed several renewable energy
    provisions in the stimulus package, including a 30% investment
    tax credit, accelerated five-year system depreciation and an
    expansion of Department of Energy loan guarantees. These
    provisions were further expanded in 2009 to include a cash grant
    in lieu of the investment tax credit and were uncapped with
    respect to system size (the previous maximum rebate was $2,000)
    and to allow larger organizations such as utilities to take
    advantage of the tax credit or cash in-lieu grant for large
    scale projects. The constrained appetite for tax equity may
    limit the effectiveness of some of these provisions, such as
    accelerated depreciation.
    China.  Chinas Renewable Energy Law was
    passed in February 28, 2005 and went into effect on
    January 1, 2006. The Renewable Energy Law authorizes the
    relevant authorities to set favorable prices for the purchase of
    on-grid electricity generated by solar power and provides other
    financial incentives for the development of renewable energy
    projects. In January 2006, the NDRC further promulgated two
    implementation rules for the Renewable Energy Law. In addition,
    on April 1, 2008, the PRC Energy Conservation Law came into
    effect. Among other objectives, this law encourages the
    utilization and installation of solar power facilities in
    buildings for energy-efficiency purposes.     35




---



##### Table of Contents



20-year
  
    Canada.  In November of 2006, Canadas
    largest province by population, Ontario, introduced a program of
    subsidies for renewable energy projects, including solar energy
    projects. Under that program, a fixed price of C$0.42 per kWh
    was offered for solar power transferred to the electrical grid.
    That program was replaced with a program of feed-in tariffs. The
    proposed price for solar power under the feed-in tariff program
    ranges from C$0.443 to C$0.80 per kWh depending on the system
    size and type. Contracts under the new program are for
    20-year
    terms. We and our partners have applied for and received
    176 MW of contract offers. We may obtain further project
    approvals in the second half of 2010.
    Japan.  According to Solarbuzz, the Japanese
    market grew from 230 MW in 2008 to 477 MW in 2009. The
    Japanese government has announced a long-term goal of increasing
    installed solar power capacity by between 20 and 55 times, which
    would require 28 GW or more of solar power capacity by 2020.
    Japan is a signatory to the Kyoto Protocol, which requires it to
    reduce greenhouse gas emissions by 6% from the 1990 baseline
    level by 2012 and by 20% by 2020. Japan currently funds a number
    of key programs supporting domestic solar power installations
    and has announced a plan to begin installing solar power systems
    on federal buildings through 2012. As Japan will not likely
    reach its renewable energy (including solar) targets, Japan is
    increasing its incentives for solar power installations.
    Currently there is a capital subsidy of up to 70,000 Yen on
    small rooftop systems. More important, there is a net feed-in
    tariff program. Self-consumption is mandatory; any excess
    electricity is sold to utilities at 48 Yen per kWh.  Sales
    and Marketing
  Standard
    Solar Modules
      
    Sales contracts to distributors and project
    customers.  In late 2007, we began to enter into
    annual sales
    and/or
    distribution agreements with most of our customers. We deliver
    standard solar modules according to a pre-agreed schedule. We
    typically secure partial payment for the shipment through
    letters of credit or wire money transfers prior to shipping.
    Since late 2008, we often provide short-term credit sales
    ranging from 21 to 45 days. To some customers, we provide
    medium-term credit sales from 30 to 120 days. We actively
    use credit insurance coverage for credit sales. 36




---



##### Table of Contents




    OEM/tolling manufacturing arrangements.  Under
    these arrangements, we purchase silicon wafers and solar cells
    from customers, and then sell solar module products back to the
    same customers, who then sell those products under their own
    brands. In addition, we have been using our own solar cells or
    cells that we purchase to make modules for a limited number of
    strategic customers who brand the finished solar module products
    with their own labels. Since 2009, this has been the primary OEM
    arrangement.    Specialty
    Solar Modules and Products
    Solar
    Power Development Projects
  feed-in-tariff
  Customer
    Support and Service
  10-year 25-year
  Competition
   37




---



##### Table of Contents




    price;
    the ability to deliver of products to customers on time and in
    the required volumes;
    product quality and associated service issues;
    name-plate power and other performance parameters of the module,
    such as power tolerances;
    value-added services such as system design and installation;
    value-added features such as those that make a module easier or
    cheaper to install;
    additional system components such a mounting systems, delivered
    as a package or bundle;
    brand equity and any good reputation resulting from the above
    items, including the willingness of banks to finance projects
    using a particular module supplier;
    customer relationships and distribution channels; and
    the aesthetic appearance of solar module products.    Insurance
     38




---



##### Table of Contents



Environmental
    Matters
        Government
    Regulation
    Renewable
    Energy Law and Other Government Directives
             39




---



##### Table of Contents



Environmental
    Regulations
     40




---



##### Table of Contents



Restriction
    on Foreign Businesses
      Income
    and VAT Taxes
           41




---



##### Table of Contents



Foreign
    Currency Exchange
    
    the Foreign Currency Administration Rules (1996), as
    amended; and
    the Settlement, Sale and Payment of Foreign Exchange
    Administration Rules (1996), or the Settlement Rules.    and/or
  Dividend
    Distribution
    
    Wholly Foreign Owned Enterprise Law (1986), as amended; and
    Wholly Foreign Owned Enterprise Law Implementation Rules (1990),
    as amended.   42




---



##### Table of Contents



C.
    Organizational
    Structure    
    D.
    Property,
    Plant and Equipment    
    CSI Advanced rents approximately 31,119 square meters in
    Changshu, including 13,889 square meters for manufacturing
    facilities under a lease effective from June 1, 2010 to
    May 31, 2011, and 17,230 square meters for
    manufacturing facilities under a lease effective from
    April 1, 2010 to March 31, 2013.
    CSI Luoyang holds the land use rights certificate for
    approximately 35,345 square meters of land in Luoyang
    (Phase I), on which we have constructed a manufacturing facility
    for module manufacturing and an office 43




---



##### Table of Contents



building. The floor area of all workshops and office buildings
    in Phase I is approximately 6,761 square meters. The
    housing ownership certificate was granted in June 2008. In 2008,
    CSI Luoyang obtained the land use rights for approximately
    79,685 square meters of adjacent land (Phase II), on which
    we are currently constructing wafer manufacturing facilities.
    The floor area of Phase II is 30,071 square meters. We
    expect to receive the housing ownership certificate upon passing
    the required inspection after the completion of construction.  
    CSI Cells holds the land use rights certificate for
    approximately 65,661 square meters of land in Suzhou. We
    completed the construction of our first solar cell manufacturing
    facilities on this site in the first quarter of 2007. The Phase
    I manufacturing facility has a 14,077 square meter workshop
    and office building, for which we obtained the housing ownership
    certificate. The Phase II cell manufacturing facilities,
    with 30,102 square meters of workshop space, were completed
    in 2009. We expect to receive the housing ownership certificate
    upon passing the required inspection.
    CSI Advanced holds the land use rights certificate for
    approximately 40,000 square meters of land in Changshu, on
    which we have built a module manufacturing facility of
    approximately 23,671 square meters. Production in this
    facility began in April 2008.
    CSI Advanced will also obtain a land use rights certificate from
    CSI Solar Power (Changshu) Inc. as a result of their merger in
    February 2010 for approximately 180,000 square meters of
    land in Changshu, on which we have built two module
    manufacturing facilities, three warehouses and other buildings
    with a total floor area of approximately 62,093 square
    meters (Phase I). Production in this facility began in August
    2008 and the central warehouses construction was completed in
    April 2010. Phase I occupies 78,320 square meters of land.
    The construction of Phase II and III manufacturing
    facilities on the remaining land are still in the design and
    planning stage.
    In March 2010, with the acquisition of CSI Solar New Energy
    (Suzhou) Co. Ltd., we obtained the land use rights certificate
    for approximately 10,000 square meters of land in Suzhou.
    Canadian Solar Manufacturing (Ontario) Inc. leases approximately
    14,787 square meters of manufacturing facilities in Guelph,
    Ontario, Canada for a term of 10 years commencing
    August 1, 2010.  Item 4A.
    UNRESOLVED
    STAFF COMMENTS    Item 5.
    OPERATING
    AND FINANCIAL REVIEW AND PROSPECTS  You should read the following discussion and analysis of our
    financial condition and results of operations in conjunction
    with our consolidated financial statements and the related notes
    included elsewhere in this annual report on
    Form 20-F.
    This discussion may contain forward-looking statements based
    upon current expectations that involve risks and uncertainties.
    Our actual results may differ materially from those anticipated
    in these forward-looking statements as a result of various
    factors, including those set forth under Item 3. Key
    Information  D. Risk Factors or in other parts
    of this annual report on
    Form 20-F.
  A.
    Operating
    Results    
    government subsidies and the availability of financing for solar
    projects;
    industry and seasonal demand;
    product pricing;
    the cost of solar cells and wafers and silicon raw materials
    relative to the selling prices of modules and the impact of
    certain of our long-term purchase commitments; and
    foreign exchange. 44




---



##### Table of Contents



Government
    Subsidies and the Availability of Financing for Solar
    Projects
      Industry
    and Seasonal Demand
      Product
    Pricing
     45




---



##### Table of Contents



year-to-year
  Price
    of Solar Cells and Wafers and Silicon Raw
    Materials
    ingot-to-wafer wafer-to-cell
  Foreign
    Exchange
   46




---



##### Table of Contents



Overview
    of Financial Results
    Net
    Revenues
  wafer-to-module cell-to-module and/or
  Cost of
    Revenues
    
    solar cells;
    silicon wafers;
    high purity and solar grade silicon materials;
    materials used in solar cell production, such as metallic pastes;
    other materials for the production of solar modules such as
    glass, aluminum frames, EVA (ethyl vinyl acetate, an encapsulant
    used to seal the module), junction boxes and polymer back sheets;
    production labor, including salaries and benefits for
    manufacturing personnel;
    warranty costs;
    overhead, including utilities, production equipment maintenance,
    share-based compensation expenses for options granted to
    employees in our manufacturing department and other support
    expenses associated with the manufacture of our solar power
    products;
    depreciation and amortization of manufacturing equipment and
    facilities, which are increasing as we expand our manufacturing
    capabilities;
    inventory write-downs; and
    loss on firm purchase commitments under long-term supply
    agreements.   47




---



##### Table of Contents



10-year 25-year 25-year,
    Gross
    Profit/Gross Margin
     48




---



##### Table of Contents



Operating
    Expenses
    Selling
    Expenses
    General
    and Administrative Expenses
    Research
    and Development Expenses
     49




---



##### Table of Contents



Share-based
    Compensation Expenses
        Years Ended December 31,2007


2008


2009(In thousands of US$, except for percentages)Share-based compensation expenses included in:Cost of revenues

$
274



3.0
%

$
350



3.8
%

$
412



7.6
%Selling expenses


2,287



25.1



1,060



11.7



733



13.5General and administrative expenses


6,277



69.0



7,306



80.3



3,772



69.4Research and development expenses


264



2.9



386



4.2



519



9.5Total share-based compensation expenses

$
9,102



100.0
%

$
9,102



100.0
%

$
5,436



100.0
%     Interest
    Expenses
   50




---



##### Table of Contents



Gain On
    Change In Fair Value Of Derivatives
    Debt
    Conversion Inducement Expenses
    Foreign
    Exchange Gain (Loss)
    Income
    Tax Expense
         51




---



##### Table of Contents



Critical
    Accounting Policies
      Revenue
    Recognition
         52




---



##### Table of Contents



Warranty
    Cost
  10-year 25-year
    Impairment
    of Long-lived Assets
    Allowance
    for Doubtful Accounts
    Inventories
   53




---



##### Table of Contents



take-or-pay
    work-in-process
    Fair
    value of derivative and financial instruments
     54




---



##### Table of Contents



Income
    Taxes
    Share-based
    compensation
    Recently
    Issued Accounting Pronouncements
  ASC 810-10,
 55




---



##### Table of Contents



810-10
  2009-05, 2009-05 2009-05
  2009-13, EITF 08-1,
  2009-17, 2009-17 2009-17 2009-17 2009-17
  2010-02, 2010-02 2010-02 2010-02 2010-02
  2010-06, 2010-06 2010-06
 56




---



##### Table of Contents



Results
    of Operations
    Years Ended December 31,2007


2008


2009(In thousands of US$, except percentages)Net revenues

$
302,798



100
%

$
705,006



100
%

$
630,961



100
%Cost of revenues


279,022



92.1



633,998



89.9



552,856



87.6Gross profit


23,776



7.9



71,008



10.1



78,105



12.4Operating expensesSelling expenses


7,531



2.5



10,608



1.5



22,089



3.5General and administrative expenses


17,204



5.7



34,510



4.9



46,324



7.3Research and development expenses


998



0.3



1,825



0.3



3,180



0.5Total operating expenses


25,733



8.5



46,943



6.7



71,593



11.3Income (loss) from operations


(1,957
)


(0.6
)


24,065



3.4



6,512



1.1Other income (expenses)






















Interest expenses


(2,311
)


(0.8
)


(12,201
)


(1.7
)


(9,459
)


(1.5
)Interest income


562



0.2



3,531



0.5



5,084



0.8Gain on change in fair value of derivatives










14,455



2.1



9,870



1.6Gain on debt extinguishment










2,429



0.3







Debt conversion inducement expenses










(10,170
)


(1.5
)






Investment income


















1,788



0.3Foreign exchange gain (loss)


2,688



0.9



(19,989
)


(2.8
)


7,681



1.2Other net


679



0.2















Income (loss) before taxes


(339
)


(0.2
)


2,120



0.3



21,476



3.4Income tax benefit (expense)


164



0.1



(9,654
)


(1.4
)


1,302



0.2Net income (loss)

$
(175
)


(0.1
)

$
(7,534
)


(1.1
)

$
22,778



3.6Less: Net income attributable to non-controlling interest


















132



Net income (loss) attributable to Canadian Solar Inc.

$
(175
)


(0.1
)

$
(7,534
)


(1.1
)

$
22,646



3.6   Year
    Ended December 31, 2009 Compared to Year Ended
    December 31, 2008
  Net Revenues.
 57




---



##### Table of Contents



Cost of Revenues.
  Gross Profit.
  Operating Expenses.
  Selling Expenses.
  General and Administrative Expenses.
  Research and Development Expenses.
  Interest Expenses.
  Gain On Change In Fair Value Of
    Derivatives.
  Foreign Exchange Gain (Loss).
  Income Tax Benefit (Expense).
 58




---



##### Table of Contents



Net Income Attributable To Non-Controlling
    Interest.
  Net Income (Loss) Attributable To Canadian Solar
    Inc.
  Year
    Ended December 31, 2008 Compared to Year Ended
    December 31, 2007
  Net Revenues.
    Cost of Revenues.
  Gross Profit.
  Operating Expenses.
  Selling Expenses.
  General and Administrative Expenses.
  Research and Development Expenses.
 59




---



##### Table of Contents



Interest Expenses.
  Gain On Change In Fair Value Of
    Derivatives.
  Debt Conversion Inducement Expenses.
  Foreign Exchange Gain (Loss).
  Income Tax Benefit (Expense).
  Net Income (Loss) Attributable To Canadian Solar
    Inc.
  B.
    Liquidity
    and Capital Resources  Cash
    Flows and Working Capital
         60




---



##### Table of Contents



Years Ended December 312007

2008

2009(In thousands of US$)Net cash provided by (used in) operating activities

$
(80,224
)

$
3,193


$
50,915Net cash used in investing activities


(42,483
)


(125,762
)


(234,717
)Net cash provided by (used in) financing activities


124,828



201,356



228,322Net increase (decrease) in cash and cash equivalents


(3,244
)


77,994



44,450Cash and cash equivalents at the beginning of the year


40,911



37,667



115,661Cash and cash equivalents at the end of the year

$
37,667


$
115,661


$
160,111   Operating
    Activities
   61




---



##### Table of Contents



Investing
    Activities
    Financing
    Activities
      Capital
    Expenditures
    Restricted
    Net Assets
   62




---



##### Table of Contents



C.  Research
    and Development
  state-of-the-art
    
    developing new methods and equipment for analysis and quality
    control of incoming materials (such as polysilicon/solar grade
    UMG-Si silicon, wafers and cells);
    developing new technologies in ingot growth and
    characterization, wafering, cell processing and module
    manufacturing that make use of low-cost alternative silicon
    materials such as solar grade silicon;
    improving the conversion efficiency of solar cells and
    developing new cell structures and technologies for high
    conversion efficiency;
    improving manufacturing yield and reliability of solar modules
    and reducing manufacturing costs;
    testing, data tracing and analysis for module performance and
    reliability; and
    designing and developing more efficient specialty solar modules
    and products to meet customer requirements.      
    High efficiency cells. High efficiency crystalline Si solar
    cells, including our enhanced selective emitter and metal
    wrap-through cells, which we have begun commercializing, as well
    as future research and development on N-type, emitter
    wrap-through and other high efficiency cell designs. Such cell
    structures are believed to lower the overall cost of
    manufacturing solar modules and making the resulting modules
    cheaper to install. Higher powered modules might also command a
    modest brand premium.
    Solar grade silicon materials technologies and high efficiency
    cell technologies. We began the mass production of solar grade
    silicon crystalline modules, namely
    e-Modules,
    in April 2008, and have been working on improving new
    technologies in ingot, wafer, cell and module manufacturing
    using solar grade silicon. We made significant progress in this
    area recently, and the average efficiency of solar grade
    crystalline Si solar cells has increased to over 15.0% by the
    end of 2009 from 13.3% as of mid-2008. With our continuous
    efforts to optimize solar grade silicon material preparation,
    ingot growth, wafering and cell processing, we anticipate
    additional increases in our solar grade silicon cell efficiency,
    and expect that with our new solar grade silicon cell design,
    our solar grade silicon cell could reach a conversion efficiency
    close to that of conventional multi-crystalline cells.
    Solar module manufacturing technologies. With the opening of our
    Center for Photovoltaic Testing and Reliability Analysis, we
    intend to focus on developing
    state-of-the-art
    testing and diagnostic techniques that improve solar module
    production yield, efficiency, performance and durability. 63




---



##### Table of Contents




    Product development of specialty solar modules and products. We
    are expanding our product development capabilities for specialty
    solar modules and products to position ourselves for the
    expected growth in this area of the solar power market. For
    example, we are collaborating with a research institute in China
    to develop a concentrator module technology and a glass curtain
    wall company based in China to develop BIPV technology. In 2008,
    we completed a BIPV project in our Luoyang plant. We also
    supplied BIPV modules and other BIPV related design elements for
    a project for the Beijing Olympic Games.
    AC modules. We are certifying an AC module and large format
    modules and are actively developing and manufacturing tracking
    systems. We expect these products will improve system yield and
    reduce certain costs.
    Power system integration and solar application products. We
    recently began to explore power system integration products and
    expanded our research and development efforts in solar
    application products. We plan to hire additional engineering
    staff and increase investment in these areas.  D.
    Trend
    Information  Form 20-F,
  E.
    Off-balance
    Sheet Arrangements    F.
    Tabular
    Disclosure of Contractual Obligations  Contractual
    Obligations and Commercial Commitments
    Payment Due by PeriodLess than








More thanTotal


1 Year


1-3 Years


3-5 Years


5 Years(In thousands of US$)Short-term debt obligations

$
251,702


$
251,702


$



$



$
Interest related to short-term debt
    obligations(1)


6,155



6,155











Operating lease obligations


2,078



1,504



405



98



71Purchase
    obligations(2)


3,219,712



441,367



988,426



1,017,919



772,000Convertible
    notes(3)


1,000















1,000Other long-term
    borrowing(4)


29,290







24,896



4,394



Interest related to long-term
    debt(5)


3,383



1,512



1,871







Total

$
3,513,320


$
702,240


$
1,015,598


$
1,022,411


$
773,071     (1)
    
    Interest rates range from 0.74% to
    6.50% per annum for short-term debt.(2)
    
    Includes commitments to purchase
    production equipment in the amount of $11.6 million and
    commitments to purchase solar cells, wafers and silicon raw
    materials in the amount of $3,208.1 million. 64




---



##### Table of Contents



(3)
    
    Assumes redemption of
    $1.0 million aggregate principal amount of 6.0% convertible
    senior notes due December 15, 2017. Assumes none of the
    convertible senior notes have been converted into ordinary
    shares. The holders of our convertible senior notes may require
    us to repurchase the convertible senior as early as December
    2012. This figure also includes interest payable until
    December 5, 2017.(4)
    
    The other long-term borrowings
    mainly consist of the following items: commercial loans with
    Agricultural Bank of China of $13.2 million in secured
    loans related to a two-year expansion plan.; commercial loans
    with Bank of China of $14.6 million in secured loans
    related to a three-year expansion plan; government loans of
    $1.5 million in unsecured, risk-free loans related to a
    three-year expansion plan.(5)
    
    Interest rates range from 0% to
    7.56% per annum for long-term borrowings.      G.
    Safe
    Harbor  Form 20-F
  
    our expectations regarding the worldwide demand for electricity
    and the market for solar power;
    our beliefs regarding the importance of environmentally friendly
    power generation;
    our expectations regarding governmental support for solar power;
    our beliefs regarding the future shortage or availability of
    high-purity silicon;
    our beliefs regarding our ability to resolve our disputes with
    suppliers with respect to our long-term supply agreements;
    our beliefs regarding the rate at which solar power technologies
    will be adopted and the continued growth of the solar power
    industry;
    our beliefs regarding the competitiveness of our solar module
    products;
    our expectations with respect to increased revenue growth and
    improved profitability;
    our expectations regarding the benefits to be derived from our
    supply chain management and vertical integration manufacturing
    strategy;
    our beliefs and expectations regarding the use of upgraded
    metallurgical grade silicon materials (UMG-Si) and solar power
    products made of this material;
    our ability to continue developing our in-house solar components
    production capabilities and our expectations regarding the
    timing and production capacity of our internal manufacturing
    programs;
    our ability to secure adequate silicon and solar cells to
    support our solar module production;
    our beliefs regarding the effects of environmental regulation;
    our beliefs regarding the changing competitive arena in the
    solar power industry;
    our future business development, results of operations and
    financial condition; and
    competition from other manufacturers of solar power products and
    conventional energy suppliers. 65




---



##### Table of Contents



Item 6.
    DIRECTORS,
    SENIOR MANAGEMENT AND EMPLOYEES  A.
    Directors
    and Senior Management  Form 20-F.
  Name

Age

Position/TitleShawn (Xiaohua) Qu


46


Chairman of the Board, President and
    Chief Executive OfficerArthur Chien


49


Director and Chief Financial OfficerRobert McDermott


69


Lead Independent DirectorLars-Eric Johansson


64


Independent DirectorMichael G. Potter


44


Independent DirectorTai Seng Png*


47


Vice President, Business IntegrationCharlotte Xi Klein


54


Vice President, Global OperationsYan Zhuang


46


Vice President, Sales and MarketingGregory Spanoudakis


52


President, European SalesXiaohu Wang


54


Vice President, Purchase and PlanningBencheng Li


68


Vice President, Ingot and Wafer Division     *
    
    Mr. Png resigned from the
    Company effective April 2010.  Directors
  Dr. Shawn (Xiaohua) Qu tm
  Mr. Arthur Chien
 66




---



##### Table of Contents



Mr. Robert McDermott
  Mr. Lars-Eric Johansson
  Mr. Michael G. Potter
  Executive
    Officers
  Ms. Charlotte Xi Klein
 67




---



##### Table of Contents



Mr. Yan Zhuang
  Mr. Gregory Spanoudakis
  Mr. Xiaohu Wang
  Mr. Bencheng Li Sino-American
  Duties
    of Directors
    
    convening shareholder meetings and reporting to shareholders at
    such meetings;
    declaring dividends and authorizing other distributions to
    shareholders; 68




---



##### Table of Contents




    appointing officers and determining the term of office of
    officers;
    exercising the borrowing powers of our company and mortgaging
    the property of our company; and
    approving the issuance of shares.  B.
    Compensation
    of Directors and Executive Officers  Cash
    Compensation
  
  Share-based
    Compensation
  Share
    Incentive Plan
            Types of Awards.
  
    options to purchase our common shares, and
    restricted shares, which are non-transferable common shares
    without voting or dividend rights.  Plan Administration.
  Award Agreement.
  Eligibility.
 69




---



##### Table of Contents



Acceleration of Awards upon Corporate
    Transactions. change-of-control change-of-control
  Exercise Price and Term of Awards.
    Vesting Schedule.
  Options
    Common

Common

Common

CommonShares

Shares

Shares

SharesUnderlying

Underlying

Underlying

Underlying

ExerciseOptions

Options

Options

Options

Price

Date of

Date ofName

Granted

Exercised

Forfeited

Outstanding

(US$/share)

Grant

ExpirationDirectors:Shawn (Xiaohua) Qu


20,000











20,000



3.18


March 12, 2009

March 11, 2019Arthur Chien


46,600
(1)


10,000







36,600



4.29


August 8, 2006

August 7, 201623,300
(2)










23,300



9.88


July 1, 2007

June 30, 201746,600











46,600



7.36


September 24, 2007

September 23, 201720,000











20,000



3.18


March 12, 2009

March 11, 2019Robert McDermott


46,600
(2)










46,600



15.00
(3)

August 8, 2006

August 7, 201623,300
(2)


23,300











9.88


July 1, 2007

June 30, 201723,300
(2)










23,300



41.75
(4)

June 26, 2008

June 25, 201823,300
(2)










23,300



13.75
(4)

June 29, 2009

June 28, 2019Lars-Eric Johansson


46,600
(2)


25,000







21,600



15.00
(3)

August 8, 2006

August 7, 201623,300
(2)










23,300



9.88


July 1, 2007

June 30, 201723,300
(2)










23,300



41.75
(4)

June 26, 2008

June 25, 201823,300
(2)










23,300



13.75
(4)

June 29, 2009

June 28, 2019Michael G. Potter


23,300
(2)










23,300



7.36


September 24, 2007

September 23, 201723,300
(2)










23,300



41.75
(4)

June 26, 2008

June 25, 201823,300
(2)










23,300



13.75
(4)

June 29, 2009

June 28, 2019Directors as a group


459,400



58,300







401,100Executive Officers:Yan Zhuang


23,300
(2)


23,300











7.36


September 24, 2007

September 23, 201723,300
(2)










23,300



41.75
(4)

June 26, 2008

June 25, 201880,000











80,000



9.37


May 23, 2009

May 22, 2019Gregory Spanoudakis


116,500











116,500



2.12


May 30, 2006

May 29, 201620,000











20,000



3.18


March 12, 2009

March 11, 2019 70




---



##### Table of Contents



Common

Common

Common

CommonShares

Shares

Shares

SharesUnderlying

Underlying

Underlying

Underlying

ExerciseOptions

Options

Options

Options

Price

Date of

Date ofName

Granted

Exercised

Forfeited

Outstanding

(US$/share)

Grant

ExpirationXiaohu Wang


89,705



44,853







44,852



2.12


May 30, 2006

May 29, 201612,000











12,000



3.18


March 12, 2009

March 11, 2019Bencheng Li


64,075



48,056







16,019



2.12


May 30, 2006

May 29, 201612,000











12,000



3.18


March 12, 2009

March 11, 2019Charlotte Xi Klein


11,652
(5)


11,652











7.36


September 24, 2007

September 23, 201746,600



34,950







11,650



12.10


March 1, 2007

February 28, 201712,000



3,000







9,000



3.18


March 12, 2009

March 11, 201940,000











40,000



16.10


November 8, 2009

November 7, 2019Executive Officers as a group


551,132



165,811







385,321Employees:Three employees as a group


256,300



74,970







181,330



2.12


May 30, 2006

May 29, 2016Twenty-two employees as a group


76,308



26,887







49,421



4.29


May 30, 2006

May 29, 2016Two employees as a group


51,260



1,165







50,095



4.29


June 30, 2006

June 29, 2016One employee


64,075



32,019







32,056



4.29


July 17, 2006

July 16, 2016Hanbing
    Zhang(7)


46,600











46,600



4.29


July 28, 2006

July 27, 2016One employee


58,250



14,563







43,687



12.00
(8)

August 8, 2006

August 7, 2016Two employees as a group


9,320



4,496







4,824



12.00
(8)

August 31, 2006

August 30, 2016One employee


5,000











5,000



8.21


August 17, 2007

August 16, 2017Three employees as a group


16,896
(5)


16,896











7.36


September 24, 2007

September 23, 2017Ten employees as a group


85,145



28,360







56,785



7.36


September 24, 2007

September 23, 2017Six employees as a group


36,136











36,136



19.55


February 28, 2008

February 27, 2018One employee


10,000











10,000



19.40


March 3, 2008

March 2, 2018One employee


10,000











10,000



20.67


March 31, 2008

March 30, 2018One employee


30,000











30,000



46.28


June 26, 2008

June 25, 2018Three employees as a group


20,000











20,000



27.88


August 7, 2008

August 6, 2018Sixty-seven employees as a group


277,800



12,150







265,650



3.18


March 12, 2009

March 11, 2019Hanbing
    Zhang(7)


6,000











6,000



3.18


March 12, 2009

March 11, 2019One employee


20,000











20,000



5.26


March 30, 2009

March 29, 2019Fourteen employees as a group


54,000











54,000



9.37


May 23, 2009

May 22, 2019One employee


10,000











10,000



11.58


May 31, 2009

May 30, 2019Six employees as a group


23,800











23,800



15.18


August 6, 2009

August 5, 2019Thirteen employees as a group


42,600











42,600



16.10


November 8, 2009

November 7, 2019Employees as a group


1,209,490



211,506







997,984Other individuals:Two individuals as a group


11,650
(2)










11,650



15.00
(3)

April 13, 2007

April 12, 2017Two individuals as a group


2,000







1,500



500



9.37


May 23, 2009

May 22, 2019Thirty six individuals as a group


597,007



238,839



358,168










N/A

N/A 71




---



##### Table of Contents



Common

Common

Common

CommonShares

Shares

Shares

SharesUnderlying

Underlying

Underlying

Underlying

ExerciseOptions

Options

Options

Options

Price

Date of

Date ofName

Granted

Exercised

Forfeited

Outstanding

(US$/share)

Grant

ExpirationIndividuals as a group


610,657



238,839



359,668



12,150Total Options


2,830,679



674,456



359,668



1,796,555     (1)
    
    Vest in two equal installments, the
    first upon the date of grant and the second upon the first year
    anniversary of the grant date so long as the director remains in
    service.(2)
    
    All vest immediately upon the date
    of grant.(3)
    
    The initial public offering price
    of the common shares.(4)
    
    Exercise price equal to the average
    of the trading prices of the common shares for the 20 trading
    days preceding the date of grant.(5)
    
    Vest one year after the grant date.(6)
    
    Vesting accelerated on termination.(7)
    
    The wife of Dr. Qu, our
    founder, chairman, president and chief executive officer.(8)
    
    80% of the initial public offering
    price of the common shares.    Restricted
    Shares
    Restricted

RestrictedShares

SharesName

Granted

Exercised

Date of Grant

Date of ExpirationExecutive Officers:Gregory Spanoudakis


233,000







May 30, 2006



May 29, 2016Bencheng Li


23,300



23,300



May 30, 2006



May 29, 2016Xiaohu Wang


18,640



18,640



May 30, 2006



May 29, 2016Executive Officers as a group


274,940



41,940Employees:Eight individuals as a group


44,270



40,190



May 30, 2006



May 29, 2016Hanbing
    Zhang(3)


116,500
(4)






July 28, 2006



July 27, 2016Employees as a group


160,770



40,190Other Individuals:One individual


11,650



11,650



May 30, 2006



May 29, 2016One individual


2,330
(1)


2,330



May 30, 2006



May 29, 2016One individual


116,500
(2)


116,500



June 30, 2006



June 29, 2016Other Individuals as a group


130,480



130,480Total Restricted Shares


566,190



212,610     (1)
    
    Also vest on accelerated
    termination.(2)
    
    Vest over a two-year period from
    the date of grant.(3)
    
    The wife of Dr. Qu, our
    founder, chairman and chief executive officer.(4)
    
    Vest over a four-year period from
    the date of grant. 72




---



##### Table of Contents



C.
    Board
    Practices    Terms
    of Directors and Executive Officers
    Committees
    of the Board of Directors
    Audit
    Committee
    
    selecting our independent auditors and pre-approving all
    auditing and non-auditing services permitted to be performed by
    our independent auditors;
    reviewing with our independent auditors any audit problems or
    difficulties and managements response;
    reviewing and approving all proposed related-party transactions,
    as defined in Item 404 of
    Regulation S-K
    under the Securities Act;
    discussing the annual audited financial statements with
    management and our independent auditors;
    reviewing major issues as to the adequacy of our internal
    controls and any special audit steps adopted in light of
    material control deficiencies;
    annually reviewing and reassessing the adequacy of our audit
    committee charter;
    such other matters that are specifically delegated to our audit
    committee by our board of directors from time to time;
    meeting separately and periodically with management and our
    internal and independent auditors; and
    reporting regularly to the full board of directors.    Compensation
    Committee
   73




---



##### Table of Contents




    reviewing and approving corporate goals and objectives relevant
    to the compensation of our chief executive officer, evaluating
    the performance of our chief executive officer in light of those
    goals and objectives, and setting the compensation level of our
    chief executive officer based on this evaluation;
    reviewing and approving the compensation arrangements for our
    other executive officers and our directors; and
    overseeing and periodically reviewing the operation of our
    employee benefits plans, including bonus, incentive
    compensation, stock option, pension and welfare plans.    Nominating
    and Corporate Governance Committee
    
    identifying and recommending to the board nominees for election
    or re-election to the board, or for appointment to fill any
    vacancy;
    reviewing annually with the board the current composition of the
    board in light of the characteristics of independence, age,
    skills, experience and availability of service to us;
    identifying and recommending to the board the directors to serve
    as members of the boards committees;
    advising the board periodically with respect to significant
    developments in the law and practice of corporate governance as
    well as our compliance with applicable laws and regulations, and
    making recommendations to the board on all matters of corporate
    governance and on any corrective action to be taken; and
    monitoring compliance with our code of business conduct and
    ethics, including reviewing the adequacy and effectiveness of
    our procedures to ensure proper compliance.    Interested
    Transactions
    Remuneration
    and Borrowing
   74




---



##### Table of Contents



Qualification
    Employment
    Agreements
      and/or
    Director
    Agreements
   75




---



##### Table of Contents



Indemnification
    of Directors and Officers
        D.
    Employees    As of December 31, 2009Number of Employees


Percentage of TotalManufacturing


6,535



92
%General and administrative


398



5.6
%Research and development


91



1.3
%Sales and marketing


82



1.1
%Total


7,106



100
%     E.
    Share
    Ownership    
    each of our directors and executive officers; and
    each person known to us to beneficially own more than 5% of our
    common shares.     76




---



##### Table of Contents



Shares Beneficially
    Owned(1)Directors and Executive
    Officers(2)

Number

%Shawn (Xiaohua)
    Qu(3)


13,035,000



30.0
%Arthur
    Chien(4)


88,200



*Robert
    McDermott(5)


97,200



*Lars-Eric
    Johansson(6)


91,500



*Michael G.
    Potter(7)


69,900



*Yan
    Zhuang(8)


43,300



*Gregory
    Spanoudakis(9)


354,500



*Bencheng
    Li(10)


19,019



*Charlotte Xi Klein


0



*Xiaohu
    Wang(11)


47,852



*All directors and executive officers as a group


13,846,471



31.9
%Principal
    ShareholdersN/A


N/A



*     *
    
    Less than 1%.(1)
    
    Beneficial ownership is determined
    in accordance with
    Rule 13d-3
    of the General Rules and Regulations under the Securities
    Exchange Act of 1934, as amended, and includes voting or
    investment power with respect to the securities.(2)
    
    The business address of our
    directors and executive officers is 199 Lushan Road, Suzhou New
    District, Suzhou, Jiangsu 215129, Peoples Republic of
    China. Unless otherwise stated below, all shares beneficially
    owned by directors and officers represent common shares issuable
    upon exercise of options held.(3)
    
    Includes 5,000 common shares
    issuable upon exercise of options held by Mr. Qu.(4)
    
    Includes 88,200 common shares
    issuable upon exercise of options held by Mr. Chien.(5)
    
    Includes 93,200 common shares
    issuable upon exercise of options held by Mr. McDermott.(6)
    
    Includes 91,500 common shares
    issuable upon exercise of options held by Mr. Johansson.(7)
    
    Includes 69,900 common shares
    issuable upon exercise of options held by Mr. Potter.(8)
    
    Includes 43,300 common shares
    issuable upon exercise of options held by Mr. Zhuang.(9)
    
    Includes 121,500 common shares
    issuable upon exercise of options held by Mr. Spanoudakis.(10)
    
    Includes 19,019 common shares
    issuable upon exercise of options held by Mr. Li.(11)
    
    Includes 47,852 common shares
    issuable upon exercise of options held by Mr. Wang.  Form 20-F.
  Item 7.
    MAJOR
    SHAREHOLDERS AND RELATED PARTY TRANSACTIONS  A.
    Major
    Shareholders    B.
    Related
    Party Transactions  Shareholder
    Loans
   77




---



##### Table of Contents



Guarantees
    and Share Pledges
    Employment
    Agreements
    Share
    Incentive Plan
    C.
    Interests
    of Experts and Counsel    Item 8.
    FINANCIAL
    INFORMATION  A.
    Consolidated
    Statements and Other Financial Information    Legal
    and Administrative Proceedings
  Class Action
    Lawsuits
  and/or Rule 10b-5
  and/or
    Shunda
     78




---



##### Table of Contents



Systaic
    LDK
    Dividend
    Policy
      B.
    Significant
    Changes     79




---



##### Table of Contents



Item 9.
    THE
    OFFER AND LISTING  A.
    Offering
    and Listing Details    Trading PriceHigh

LowUS$

US$Annual Highs and Lows2006 (from November 9, 2006)


16.73



9.432007


31.44



6.502008


51.80



3.112009


30.51



3.00Quarterly Highs and LowsFirst Quarter 2008


31.10



14.74Second Quarter 2008


51.80



21.15Third Quarter 2008


39.22



16.74Fourth Quarter 2008


21.34



3.11First Quarter 2009


7.49



3.00Second Quarter 2009


16.45



5.44Third Quarter 2009


19.91



9.21Fourth Quarter 2009


30.51



13.66First Quarter 2010


33.68



18.41Second Quarter 2010


26.26



8.99Monthly Highs and Lows2010February


25.44



18.41March


25.12



19.01April


26.26



16.84May


18.08



11.12June


12.95



8.95July


14.29



9.28August (through August 17)


13.59



10.85   B.
    Plan
    of Distribution    C.
    Markets    D.
    Selling
    Shareholders    E.
    Dilution   80




---



##### Table of Contents



F.
    Expenses
    of the Issue    Item 10.
    ADDITIONAL
    INFORMATION  A.
    Share
    Capital    B.
    Memorandum
    and Articles of Association  No. 333-138144),
  C.
    Material
    Contracts  Form 20-F.
  D.
    Exchange
    Controls    E.
    Taxation  Material
    Canadian Federal Tax Considerations
  General
    Form 20-F. Form 20-F.
 81




---



##### Table of Contents



TAX MATTERS ARE VERY COMPLICATED AND THE CANADIAN FEDERAL TAX
    CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF COMMON
    SHARES WILL DEPEND ON THE SHAREHOLDERS PARTICULAR
    SITUATION. THIS SUMMARY IS NOT INTENDED TO BE A COMPLETE
    ANALYSIS OF OR DESCRIPTION OF ALL POTENTIAL CANADIAN FEDERAL TAX
    CONSEQUENCES, AND SHOULD NOT BE CONSTRUED TO BE, LEGAL, BUSINESS
    OR TAX ADVICE DIRECTED AT ANY PARTICULAR HOLDER OR PROSPECTIVE
    PURCHASER OF COMMON SHARES. ACCORDINGLY, HOLDERS OR PROSPECTIVE
    PURCHASERS OF COMMON SHARES SHOULD CONSULT THEIR OWN TAX
    ADVISORS FOR ADVICE WITH RESPECT TO THE CANADIAN FEDERAL TAX
    CONSEQUENCES OF AN INVESTMENT IN COMMON SHARES BASED ON
    THEIR PARTICULAR CIRCUMSTANCES.
  Dividends
    Disposition
    of Our Common Shares
    60-month
     82




---



##### Table of Contents



United
    States Federal Income Taxation
      
    banks;
    certain financial institutions;
    regulated investment companies;
    real estate investment trusts;
    insurance companies;
    broker dealers;
    U.S. expatriates;
    traders that elect to mark to market;
    tax-exempt entities;
    persons liable for alternative minimum tax;
    persons holding a common share as part of a straddle, hedging,
    constructive sale, conversion or integrated transaction;
    persons that actually or constructively own 10% or more of our
    voting stock;
    persons who acquired common shares pursuant to the exercise of
    any employee share option or otherwise as compensation; or
    persons holding common shares through partnerships or other
    pass-through entities for U.S. federal income tax purposes.  U.S. HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS
    ABOUT THE APPLICATION OF THE U.S. FEDERAL TAX RULES TO
    THEIR PARTICULAR CIRCUMSTANCES AS WELL AS THE STATE AND LOCAL
    AND FOREIGN TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP
    AND DISPOSITION OF COMMON SHARES.
    
    an individual who is a citizen or resident of the United States;
    a corporation (or other entity taxable as a corporation)
    organized under the laws of the United States, any State or the
    District of Columbia;
    an estate whose income is subject to U.S. federal income
    taxation regardless of its source; or 83




---



##### Table of Contents




    a trust that (1) is subject to the supervision of a court
    within the United States and the control of one or more
    U.S. persons or (2) has a valid election in effect
    under applicable U.S. Treasury regulations to be treated as
    a U.S. person.    Dividends
    and Other Distributions on the Common Shares
        Dispositions
    of Common Shares
   84




---



##### Table of Contents



Passive
    Foreign Investment Company
  non-U.S. corporation
  
    at least 75% of its gross income is passive income, or
    at least 50% of the value of its assets (based on an average of
    the quarterly values of the assets during a taxable year) is
    attributable to assets that produce or are held for the
    production of passive income (the asset test).    non-U.S. subsidiaries
  mark-to-market
  
    the excess distribution or gain will be allocated ratably over
    the U.S. Holders holding period for the common shares,
    the amount allocated to the current taxable year, and any
    taxable year prior to the first taxable year in which we became
    a PFIC, will be treated as ordinary income, and
    the amount allocated to each other year will be subject to the
    highest tax rate in effect for that year and the interest charge
    generally applicable to underpayments of tax will be imposed on
    the resulting tax attributable to each such year. 85




---



##### Table of Contents



mark-to-market mark-to-market mark-to-market mark-to-market mark-to-market mark-to-market
  mark-to-market mark-to-market
  non-U.S. corporation
      Reporting
    and Backup Withholding
    Form W-9.
   86




---



##### Table of Contents



F.
    Dividends
    and Paying Agents    G.
    Statement
    by Experts    H.
    Documents
    on Display  Form F-1, 333-138144).
  Form 20-F 1-800-SEC-0330. www.sec.gov
      I.
    Subsidiary
    Information    Item 11.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Foreign
    Exchange Risk
     87




---



##### Table of Contents



mark-to-market
    Interest
    Rate Risk
    Item 12.
    DESCRIPTION
    OF SECURITIES OTHER THAN EQUITY SECURITIES     PART II
  Item 13.
    DEFAULTS,
    DIVIDEND ARREARAGES AND DELINQUENCIES    Item 14.
    MATERIAL
    MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
    PROCEEDS    
    the registration statement on
    Form F-3
    (File number:
    333-149497)
    for our registration of convertible senior notes, initially sold
    in a private transaction on December 10, 2007, which
    registration statement was declared effective by the SEC on
    March 27, 2008; and
    the automatic shelf registration statement on
    Form F-3
    (File number:
    333-152325),
    which automatically became effective upon filing on
    July 14, 2008.     88




---



##### Table of Contents




    See Item 10. Additional Information for a
    description of the rights of securities holders, which remain
    unchanged.  Item 15.
    CONTROLS
    AND PROCEDURES  Disclosure
    Controls and Procedures
  Rule 13a-15(e)
  Managements
    Annual Report on Internal Control Over Financial
    Reporting
  Rule 13a-15(f)
   89




---



##### Table of Contents




    The control designed to ensure that all revenue recognition
    criteria were met prior to recognizing revenue did not operate
    effectively.
    An appropriate control was not designed to ensure that estimated
    sales returns were recorded.
    There is lack of control procedures to ensure that long-term
    purchase commitments are evaluated and appropriately accounted
    for in the appropriate accounting period.
    The control designed to ensure that significant subsequent
    events were properly identified, analyzed and, where
    appropriate, recorded in the Companys consolidated
    financial statements, did not operate effectively.     90




---



##### Table of Contents



Attestation
    Report of the Independent Registered Public Accounting
    Firm
      Internal Control  Integrated
    Framework
          
    The controls designed to ensure that all revenue recognition
    criteria were met prior to recognizing revenue did not operate
    effectively.
    An appropriate control was not designed to ensure that estimated
    sales returns were recorded.
    There is lack of control procedures to ensure that long-term
    purchase commitment are evaluated and appropriately accounted
    for in the appropriate accounting period.
    The control designed to ensure that significant subsequent
    events were properly identified, analyzed and, where
    appropriate, recorded in the Companys consolidated
    financial statements, did not operate effectively.   91




---



##### Table of Contents



Deloitte Touche
    Tohmatsu Ltd
     Changes
    in Internal Controls
  Managements
    Annual Report on Internal Control Over Financial Reporting
  Item 16A.
    AUDIT
    COMMITTEE FINANCIAL EXPERT  Form 20-F.
  Item 16B.
    CODE
    OF ETHICS  www.canadiansolar.com.
  Item 16C.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES    For the Years Ended December 31,2007

2008

2009Audit
    fees(1)

$
1,728,224


$
1,925,862


$
1,420,000Audit-related
    fees(2)










Tax fees










All other fees









$
47,484  92




---



##### Table of Contents



(1)
    
    Audit fees means the aggregate fees billed for
    professional services rendered by our principal auditors for the
    audit of our annual financial statements and assurance and
    related services. In 2007, these mainly consisted of the review
    of financial statements and offering documents in connection
    with our offering of 6.0% Convertible Senior Notes due
    2017. In 2008, these mainly consisted of the review of financial
    statements and offering documents in connection with our
    follow-on public offering of common shares in July 2008.(2)
    
    Audit-related fees represents aggregate fees billed
    for professional services rendered by our principal auditors for
    consultations and related services.  de minimus
  Item 16D.
    EXEMPTIONS
    FROM THE LISTING STANDARDS FOR AUDIT
    COMMITTEES    Item 16E.
    PURCHASES
    OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
    PURCHASERS    Item16F.
    CHANGE
    IN REGISTRANTS CERTIFYING
    ACCOUNTANT    Item16G.
    CORPORATE
    GOVERNANCE     PART III
  Item 17.
    FINANCIAL
    STATEMENTS    Item 18.
    FINANCIAL
    STATEMENTS    Item 19.
    EXHIBITS  Exhibit Number

Description of Document1
.1

Amended Articles of Continuance (incorporated by reference to
    Exhibit 3.2 of our registration statement on
    Form F-1
    (File
    No. 333-138144),
    as amended, initially filed with the SEC on October 23,
    2006)2
.2

Indenture, dated as of December 10, 2007, between Canadian
    Solar Inc. and The Bank of New York, as trustee, including the
    form of 6.0% Convertible Senior Notes due 2017
    (incorporated by reference to Exhibit 4.2 of our
    registration statement on
    Form F-3
    (File
    No. 333-149497),
    as amended, initially filed with the SEC on March 3, 2008)4
.1

Form of Director Indemnity Agreement (incorporated by reference
    to Exhibit 4.1 of our annual report on
    Form 20-F
    for the year ended December 31, 2008 (File
    No. 001-33107),
    as amended, initially filed with the SEC on June 8, 2009) 93




---



##### Table of Contents



Exhibit Number

Description of Document4
.2

English translation of Supplementary Agreement between CSI Cells
    Co., Ltd. and Jiangxi LDK Solar Hi-Tech Co., Ltd., dated
    February 14, 2009, supplementing the original Wafer Supply
    Agreement dated October 17, 2007 (incorporated by reference
    to Exhibit 4.2 of our annual report on
    Form 20-F
    for the year ended December 31, 2008 (File
    No. 001-33107),
    as amended, initially filed with the SEC on June 8, 2009)4
.3

English translation of Supplementary Agreement between Jiangsu
    Zhongneng Polysilicon Technology Development Co., Ltd., CSI
    Cells Co., Ltd., Changshu CSI Advanced Solar Inc. and CSI
    Central Solar Power Co., Ltd., dated May 22, 2009,
    supplementing the original Polysilicon Supply Contract dated
    August 20, 2008 and the original Solar Wafer Supply
    Contract dated August 20, 2008 (incorporated by reference
    to Exhibit 4.3 of our annual report on
    Form 20-F
    for the year ended December 31, 2008 (File
    No. 001-33107),
    as amended, initially filed with the SEC on June 8, 2009)4
.4

Sales Contract between Canadian Solar Inc. and Solpower GmbH,
    dated September 1, 2008, (incorporated by reference to
    Exhibit 4.4 of our annual report on
    Form 20-F
    for the year ended December 31, 2008 (File
    No. 001-33107),
    as amended, initially filed with the SEC on June 8, 2009)4
.5

Sales Contract between Canadian Solar Inc. and Iliotec Solar
    GmbH, dated October 2, 2008, (incorporated by reference to
    Exhibit 4.5 of our annual report on
    Form 20-F
    for the year ended December 31, 2008 (File
    No. 001-33107),
    as amended, initially filed with the SEC on June 8, 2009)4
.6

Sales Contract between Canadian Solar Inc. and Iliotec
    International GmbH, dated October 2, 2008, (incorporated by
    reference to Exhibit 4.6 of our annual report on
    Form 20-F
    for the year ended December 31, 2008 (File
    No. 001-33107),
    as amended, initially filed with the SEC on June 8, 2009)4
.7

English translation of Long-term
    (10-Year)
    Multi-crystalline Wafer Supply Contract between CSI Cells Co.,
    Ltd. and Jiangxi LDK Solar Hi-Tech Co., Ltd., dated
    June 27, 2008 (incorporated by reference to
    Exhibit 4.8 of Amendment No. 1 on
    Form 20-F/A
    to our annual report on
    Form 20-F
    for the year ended December 31, 2008 (File
    No. 001-33107),
    filed with the SEC on October 14, 2009)4
.8

English translation of Long-term
    (10-Year)
    Multi-crystalline Wafer Supply Contract between CSI Solar Power
    Inc. and Jiangxi LDK Solar Hi-Tech Co., Ltd., dated
    June 27, 2008 (incorporated by reference to
    Exhibit 4.9 of Amendment No. 1 on
    Form 20-F/A
    to our annual report on
    Form 20-F
    for the year ended December 31, 2008 (File
    No. 001-33107),
    filed with the SEC on October 14, 2009)4
.9

2006 Share Incentive Plan, including forms of Restricted
    Shares Award Agreement and Share Option Agreement
    (incorporated by reference to Exhibit 10.1 of our
    registration statement on
    Form F-1
    (File
    No. 333-138144),
    as amended, initially filed with the SEC on October 23,
    2006)4
.10

Employment Agreement between Canadian Solar Inc. and the
    Dr. Shawn Qu (incorporated by reference to
    Exhibit 10.2 of our registration statement on
    Form F-1
    (File
    No. 333-138144),
    as amended, initially filed with the SEC on October 23,
    2006)4
.11

Form of Employment Agreement between Canadian Solar Inc. and any
    other executive officer of the Registrant (incorporated by
    reference to Exhibit 10.3 of our registration statement on
    Form F-1
    (File
    No. 333-138144),
    as amended, initially filed with the Commission on
    October 23, 2006)8
.1*

List of Subsidiaries12
.1*

CEO Certification Pursuant to Section 302 of the
    Sarbanes-Oxley Act of 200212
.2*

CFO Certification Pursuant to Section 302 of the
    Sarbanes-Oxley Act of 200213
.1*

CEO Certification Pursuant to Section 906 of the
    Sarbanes-Oxley Act of 200213
.2*

CFO Certification Pursuant to Section 906 of the
    Sarbanes-Oxley Act of 200223
.1*

Consent of Deloitte Touche Tohmatsu CPA Ltd.     *
    
    Filed herewith
    
    Confidential treatment has been requested with respect to
    portions of these exhibits and such confidential treatment
    portions have been deleted and replaced with ****
    and filed separately with the Securities and Exchange Commission
    pursuant to
    Rule 24b-2
    under the Exchange Act. 94




---



##### Table of Contents



SIGNATURES
  Form 20-F
    By:
    /s/  Shawn
    (Xiaohua) Qu   Title:
    Chairman, President and    96




---



##### 



CANADIAN
    SOLAR INC.
  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
  
  Report of Independent Registered Public
    Accounting Firm


F-2Consolidated Balance Sheets as of
    December 31, 2008 and 2009


F-3Consolidated Statements of Operations for the
    Years Ended December 31, 2007, 2008 and 2009


F-4Consolidated Statements of Changes in Equity and
    Comprehensive Income for the Years Ended December 31, 2007,
    2008 and 2009


F-5Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2007, 2008 and 2009


F-6Notes to the Consolidated Financial Statements


F-8Schedule I


F-37   F-1




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM           ASC 470-20 No. 14-1
  Internal Control  Integrated Framework
  Deloitte
    Touche Tohmatsu CPA Ltd.
    F-2




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  CONSOLIDATED BALANCE SHEETS
  December 31,


December 31,2008


2009(In U.S. dollars, except share andper share data)ASSETSCurrent assets:Cash and cash equivalents


115,660,921



160,110,887Restricted cash


20,621,749



179,389,811Accounts receivable, net of allowance of $5,605,983 and
    $18,029,440 on December 31, 2008 and 2009, respectively


51,611,312



151,549,471Inventories


92,682,547



164,313,448Value added tax recoverable


17,492,798



39,494,689Advances to suppliers, net of allowance of $2,341,685 and
    $3,662,645 on December 31, 2008 and 2009, respectively


24,654,392



17,264,319Foreign currency derivative assets


6,974,064



Prepaid expenses and other current assets


9,316,554



41,865,170Total current assets


339,014,337



753,987,795Property, plant and equipment, net


165,541,885



217,135,540Deferred tax assets


6,965,503



10,909,778Advances to suppliers, net of allowance of nil and $7,322,550 on
    December 31, 2008 and 2009, respectively


43,087,142



35,209,654Prepaid land use right


12,782,147



12,535,450Long-term investment


3,000,000



3,000,000Investments in affiliates






4,100,628Other non-current assets


263,281



1,824,158TOTAL ASSETS


570,654,295



1,038,703,003LIABILITIES AND EQUITYCurrent liabilities:Short-term borrowings


110,664,813



251,702,149Accounts payable


29,328,038



92,271,107Short-term notes payable


629,150



105,217,737Amounts due to related parties


93,641



260,683Other payables


24,043,309



34,723,690Advances from customers


3,570,883



3,643,807Foreign currency derivative liabilities






523,462Provision for firm purchase commitments






13,822,818Other current liabilities


4,332,229



12,775,508Total current liabilities


172,662,063



514,940,961Accrued warranty costs


10,846,719



16,899,522Convertible notes


830,362



866,000Long-term borrowings


45,357,340



29,290,200Liability for uncertain tax positions


8,703,830



10,704,916TOTAL LIABILITIES


238,400,314



572,701,599Commitments and contingencies (Note 18)Equity:Common shares  no par value: unlimited authorized
    shares, 35,744,563 and 42,774,485 shares issued and
    outstanding at December 31, 2008 and 2009, respectively


395,153,795



500,322,431Additional paid-in capital


(66,705,304
)


(61,268,954
)Retained earnings (accumulated deficit)


(11,104,036
)


11,541,848Accumulated other comprehensive income


14,909,526



15,121,299Total Canadian Solar Inc. shareholders equity


332,253,981



465,716,624Non-controlling interest






284,780Total equity


332,253,981



466,001,404TOTAL LIABILITIES AND EQUITY


570,654,295



1,038,703,003    F-3




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  CONSOLIDATED STATEMENTS OF
    OPERATIONS
  Years Ended December 31,2007


2008


2009(In U.S. dollars, except share and per share data)Net revenues


302,797,671



705,006,356



630,961,165Cost of revenues


279,022,155



633,998,620



552,856,159Gross profit


23,775,516



71,007,736



78,105,006Operating expenses:Selling expenses


7,530,970



10,607,562



22,088,657General and administrative expenses


17,203,761



34,510,263



46,323,959Research and development expenses


997,832



1,824,753



3,180,372Total operating expenses


25,732,563



46,942,578



71,592,988Income (Loss) from operations


(1,957,047
)


24,065,158



6,512,018Other income (expenses):Interest expense


(2,311,270
)


(12,201,293
)


(9,458,983
)Interest income


562,006



3,530,957



5,084,227Gain on change in foreign currency derivatives






14,454,814



9,870,333Gain on debt extinguishment






2,429,524



Debt conversion inducement expense






(10,170,118
)


Foreign exchange gain (loss)


2,688,448



(19,989,123
)


7,680,503Investment income










1,788,036Other  net


679,070







Income (Loss) before income taxes


(338,793
)


2,119,919



21,476,134Income tax benefit (expense)


163,514



(9,653,780
)


1,302,065Net Income (Loss)


(175,279
)


(7,533,861
)


22,778,199Less: net income attributable to non-controlling interest










132,315Net Income (Loss) attributable to Canadian Solar Inc.


(175,279
)


(7,533,861
)


22,645,884Earnings (Loss) per share-basic

$
(0.01
)

$
(0.24
)

$
0.61Shares used in computation  basic


27,283,305



31,566,503



37,137,004Earnings (Loss) per share-diluted

$
(0.01
)

$
(0.24
)

$
0.60Shares used in computation-diluted


27,283,305



31,566,503



37,727,138    F-4




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY AND
    COMPREHENSIVE INCOME
  Retained


AccumulatedAdditional


Earnings


Other


Non-





TotalCommon


Paid-in


(Accumulated


Comprehensive


Controlling


Total


ComprehensiveShares


Capital


Deficit)


Income


Interest


Equity


IncomeNumber


$


$


$


$


$


$


$(In U.S. dollars, except share and per share data)Balance at December 31, 2006


27,270,000



97,302,391



17,333,897



(2,782,697
)


1,050,264







112,903,855Adjustment for adoption of ASC 740














(612,199
)










(612,199
)Share-based compensation










9,101,792















9,101,792Exercise of share options


50,389



151,823



















151,823Recognition of equity component of convertible notes










8,200,510















8,200,510Net loss














(175,279
)










(175,279
)


(175,279
)Foreign currency translation adjustment


















4,930,278







4,930,278



4,930,278Balance at December 31, 2007


27,320,389



97,454,214



34,636,199



(3,570,175
)


5,980,542







134,500,780



4,754,999Share-based compensation










9,102,002















9,102,002Conversion of convertible notes


3,966,841



182,550,305



(110,443,505
)














72,106,800Issuance of ordinary shares, net of issuance cost


3,500,000



110,659,864



















110,659,864Deferred tax on issuance costs of ordinary shares






2,552,082



















2,552,082Other


566,190























Exercise of share options


391,143



1,937,330



















1,937,330Net loss














(7,533,861
)










(7,533,861
)


(7,533,861
)Foreign currency translation adjustment


















8,928,984







8,928,984



8,928,984Balance at December 31, 2008


35,744,563



395,153,795



(66,705,304
)


(11,104,036
)


14,909,526







332,253,981



1,395,123Share-based compensation










5,436,350















5,436,350Issuance of ordinary shares, net of issuance cost


6,900,000



102,811,343



















102,811,343Deferred tax on issuance costs of ordinary shares






1,682,869



















1,682,869Exercise of share options


129,922



674,424



















674,424Paid-in capital from non-controlling interest






















9,173



9,173Sales of subsidiary shares to
    non-controlling
    interest






















143,292



143,292Net income














22,645,884







132,315



22,778,199



22,778,199Foreign currency translation adjustment


















211,773







211,773



211,773Balance at December 31, 2009


42,774,485



500,322,431



(61,268,954
)


11,541,848



15,121,299



284,780



466,001,404



22,989,972    F-5




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  CONSOLIDATED STATEMENTS OF CASH
    FLOWS
  Years Ended December 31,2007


2008


2009(In U.S. dollars)Operating activities:Net Income (loss)


(175,279
)


(7,533,861
)


22,778,199Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities:Depreciation and amortization


1,627,116



9,282,276



20,508,383Loss on disposal of property, plant and equipment


23,806



5,126,852



174,292Gain on change in fair value of derivatives






(14,454,814
)


(9,870,333
)Allowance for doubtful debts


456,570



7,445,028



18,076,416Write down of inventories


482,544



23,784,578



12,478,944Provision for firm purchase commitment










13,822,818Amortization of discount on debt






1,179,446



35,638Gain on debt extinguishment






(2,429,524
)


Share-based compensation


9,101,792



9,102,002



5,436,350Debt conversion inducement expense






10,170,118



Changes in operating assets and liabilities:Inventories


(27,099,561
)


(39,994,140
)


(83,970,843
)Accounts receivable


(37,675,531
)


2,126,297



(116,463,362
)Value added tax recoverable


(9,479,472
)


(2,671,677
)


(21,981,216
)Advances to suppliers


(16,796,871
)


(33,572,770
)


6,751,157Prepaid expenses and other current assets


(4,847,423
)


783,021



(16,899,415
)Accounts payable


719,126



19,261,749



62,855,936Short-term notes payable






423,800



104,588,587Other payables


2,986,846



2,369,498



9,065,342Advances from customers


(1,822,752
)


1,367,209



65,703Amounts due to related parties


60,082



(119,706
)


166,900Accrued warranty costs


2,979,414



6,893,681



6,051,483Other current liabilities


906,584



1,893,489



8,452,665Prepaid land use right


(429,637
)


(10,508,489
)


258,520Liability for uncertain tax positions


1,666,283



6,425,348



2,001,086Deferred taxes


(2,907,625
)


(982,236
)


(10,834,919
)Settlement of foreign currency derivatives






7,825,523



17,367,159Net cash provided by (used in) operating activities


(80,223,988
)


3,192,698



50,915,490Investing activities:Increase in restricted cash


(695,893
)


(17,950,833
)


(158,622,411
)Purchase of long-term investment






(3,000,000
)


Investments in affiliates










(4,100,084
)Purchase of property, plant and equipment


(42,006,616
)


(104,817,010
)


(72,214,660
)Proceeds from disposal of property, plant and equipment


220,009



6,322



220,027Net cash used in investing activities


(42,482,500
)


(125,761,521
)


(234,717,128
)  F-6




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS  (Continued)
  Years Ended December 31,2007


2008


2009(In U.S. dollars)Financing activities:Proceeds from short-term borrowings


92,090,998



234,096,606



481,721,660Repayment of short-term borrowings


(56,157,679
)


(169,919,741
)


(371,676,212
)Proceeds from long-term borrowings


16,712,795



24,964,230



14,633,000Proceeds from disposal of investment on subsidiaries










148,898Cash contributions by non-controlling interest










9,173Proceeds from issuance of convertible notes


75,000,000







Issuance cost paid on convertible notes


(2,970,138
)


(381,900
)


Proceeds from issuance of common shares






112,752,500



103,349,924Issuance costs paid for common shares offering






(2,092,636
)


(538,581
)Proceeds from exercise of stock options


151,823



1,937,330



674,424Net cash provided by (used in) financing activities


124,827,799



201,356,389



228,322,286Effect of exchange rate changes


(5,364,950
)


(793,765
)


(70,682
)Net increase (decrease) in cash and cash equivalents


(3,243,639
)


77,993,801



44,449,966Cash and cash equivalents at the beginning of the year


40,910,759



37,667,120



115,660,921Cash and cash equivalents at the end of the year


37,667,120



115,660,921



160,110,887Supplemental disclosure of cash flow information:Interest paid


(823,040
)


(11,103,634
)


(10,729,375
)Income taxes paid


(177,790
)


(2,683,014
)


(4,367,772
)Supplemental schedule of non-cash activities:Issuance cost included in other payables


(381,496
)






Income from disposal of subsidiaries included in prepaid
    expenses and other current assets










2,345,557Property, plant and equipment cost included in other payables


(1,712,773
)


(17,339,148
)


(18,943,086
)Conversion of convertible notes to equity






72,106,800



    F-7




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009
 (In U.S. dollars)
  1.
    ORGANIZATION
    AND PRINCIPAL ACTIVITIES      2.
    SUMMARY
    OF PRINCIPAL ACCOUNTING POLICIES  (a)
    Basis
    of presentation    (b)
    Basis
    of consolidation    (c)
    Use of
    estimates    (d)
    Cash
    and cash equivalents      (e)
    Advances
    to suppliers   F-8




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    At December 31,


At December 31,2008


2009$


$Supplier A


12,528,000



20,768,495Supplier B


25,583,405



11,716,080Supplier C


9,027,574



8,640,609Supplier D


15,997,973



7,951,591   (f)
    Inventories      work-in-process
  take-or-pay
 F-9




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (g)
    Property,
    plant and equipment      Buildings

20 yearsLeasehold improvements

Over the shorter of the lease term or their estimated useful
    livesMachinery

5-10 yearsFurniture, fixtures and equipment

5 yearsMotor vehicles

5 years     (h)
    Prepaid
    land use right    (i)
    Long-term
    Investment    (j)
    Investments
    in affiliates    other-than-temporary. other-than-temporary.
  (k)
    Impairment
    of long-lived assets   F-10




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (l)
    Income
    taxes      (m)
    Revenue
    recognition         F-11




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (n)
    Cost
    of revenues    (o)
    Shipping
    and handling costs    (p)
    Research
    and development    (q)
    Advertising
    expenses    (r)
    Warranty
    cost  10-year 25-year
  (s)
    Foreign
    currency translation     F-12




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (t)
    Foreign
    currency risk    (u)
    Concentration
    of credit risk      (v)
    Fair
    value of derivatives and financial instruments    (w)
    Earnings
    per Share    (x)
    Share-based
    compensation   F-13




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (y)
    Recently
    issued accounting pronouncements  ASC 810-10, 810-10
  2009-05, 2009-05 2009-05
  2009-13, EITF 08-1,
  2009-17, 2009-17 2009-17 2009-17 2009-17
  2010-02, 2010-02 2010-02
 F-14




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  2010-02 2010-02
  2010-06, 2010-06 2010-06
  3.
    ACCOUNTING
    CHANGES  ASC 470-20, No. 14-1 ASC 470-20
  ASC 470-20
  Consolidated
    Statements of Operations:
  Year Ended December 31, 2007As Originally

As

Effect ofReported

Adjusted

Change$

$

$Interest expense


(2,367,131
)


(2,311,270
)


55,861Income before income taxes


(394,654
)


(338,793
)


55,861Income tax expense


184,978



163,514



(21,464
)Net loss


(209,676
)


(175,279
)


34,397   Year Ended December 31, 2008As Originally

As

Effect ofReported

Adjusted

Change$

$

$Interest expense


(11,265,576
)


(12,201,293
)


(935,717
)Gain on debt extinguishment






2,429,524



2,429,524Foreign exchange gain


(20,087,375
)


(19,989,123
)


98,252Income before income taxes


527,860



2,119,919



1,592,059Income tax expense


(9,916,106
)


(9,653,780
)


262,326Net loss


(9,388,246
)


(7,533,861
)


1,854,385  F-15




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Consolidated
    Balance Sheets:
  At December 31, 2008As Originally


As


Effect ofReported


Adjusted


Change$


$


$Prepaid expenses and other current assets


9,325,486



9,316,554



(8,932
)Total current assets


339,023,269



339,014,337



(8,932
)Deferred tax assets


6,997,918



6,965,503



(32,415
)Other non-current assets


299,038



263,281



(35,757
)Total assets


570,731,399



570,654,295



(77,104
)Convertible notes


1,000,000



830,362



(169,638
)Total liabilities


238,569,952



238,400,314



(169,638
)Common shares


294,707,048



395,153,795



100,446,747Additional paid-in capital


35,537,691



(66,705,304
)


(102,242,995
)Accumulated deficit


(12,992,818
)


(11,104,036
)


1,888,782Total stockholders equity


332,161,447



332,253,981



92,534Total liabilities and stockholders equity


570,731,399



570,654,295



(77,104
)   Consolidated
    Statements of Cash Flows:
  Year Ended December 31, 2007As Originally


As


Effect ofReported


Adjusted


Change$


$


$Net loss


(209,676
)


(175,279
)


34,397Amortization of discount on debt


55,861







(55,861
)Deferred taxes


(2,929,089
)


(2,907,625
)


21,464   Year Ended December 31, 2008As Originally


As


Effect ofReported


Adjusted


Change$


$


$Net loss


(9,388,246
)


(7,533,861
)


1,854,385Amortization of discount on debt


243,729



1,179,446



935,717Gain on debt extinguishment






(2,429,524
)


(2,429,524
)Deferred taxes


(621,658
)


(982,236
)


(360,578
)   4.
    ALLOWANCE
    FOR DOUBTFUL RECEIVABLES      2007


2008


2009$


$


$Beginning of the year






376,178



5,605,983Allowances made during the year


456,570



5,218,944



16,536,592Accounts written-off against allowances


(83,954
)


(19,000
)


(4,113,307
)Foreign exchange effect


3,562



29,861



172Closing balance


376,178



5,605,983



18,029,440  F-16




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      2007


2008


2009$


$


$Beginning of the year










2,341,685Allowances made during the year






2,226,084



8,641,316Foreign exchange effect






115,601



2,194Closing balance






2,341,685



10,985,195   5.
    INVENTORIES    At December 31,


At December 31,2008


2009$


$Raw materials


46,121,994



53,711,941Work-in-process


17,220,906



22,806,716Finished goods


29,339,647



87,794,79192,682,547



164,313,448     6.
    PROPERTY,
    PLANT AND EQUIPMENT, NET    At December 31,


At December 31,2008


2009$


$Buildings


23,854,814



63,340,108Leasehold improvements


1,674,838



3,226,741Machinery


72,017,929



136,755,699Furniture, fixtures and equipment


5,569,500



7,563,437Motor vehicles


1,055,123



1,325,384104,172,204



212,211,369Less: Accumulated depreciation


(11,888,864
)


(31,862,352
)92,283,340



180,349,017Construction in process


73,258,545



36,786,523Property, plant and equipment, net


165,541,885



217,135,540  F-17




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    7.
    FAIR
    VALUE MEASUREMENT    Fair Value Measurements at Reporting Date UsingQuoted PricesTotal Fair


in Active


SignificantValue and


Markets for


Other


SignificantCarrying


Identical


Observable


UnobservableValue on the


Assets


Inputs


InputsAs of December 31, 2008

Balance Sheet


(Level 1)


(Level 2)


(Level 3)Assets:Foreign exchange option contracts

$
6,136,044


$



$
6,136,044


$
Foreign exchange forward contracts

$
838,020


$



$
838,020


$
Total Assets

$
6,974,064






$
6,974,064



   Fair Value Measurements at Reporting Date UsingQuoted PricesTotal Fair


in Active


SignificantValue and


Markets for


Other


SignificantCarrying


Identical


Observable


UnobservableValue on the


Assets


Inputs


InputsAs of December 31, 2009

Balance Sheet


(Level 1)


(Level 2)


(Level 3)Liabilities:Foreign exchange forward contracts

$
523,462


$



$
523,462


$
Total Liabilities

$
523,462






$
523,462



        F-18




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    At December 31, 2008


At December 31, 2009Carrying Value


Fair Value


Carrying Value


Fair ValueConvertible notes

$
830,362


$
830,362


$
866,000


$
1,458,502           Derivatives not

Fair Values of Derivatives AssetDesignated as

At December 31, 2009


At December 31, 2008Hedging Instruments

Balance Sheet Location

Fair Value


Balance Sheet Location

Fair ValueForeign exchange option contracts







Foreign currency derivative assets

$
6,136,044Foreign exchange forward contracts







Foreign currency derivative assets


838,020Total derivatives









$
6,974,064   Derivatives not

Fair Values of Derivatives LiabilityDesignated as

At December 31, 2009


At December 31, 2008Hedging Instruments

Balance Sheet Location

Fair Value


Balance Sheet Location

Fair ValueForeign exchange forward contracts

Foreign currency derivative liabilities

$
523,462





Total derivatives



$
523,462





   Derivative not



Amount of Gain Recognized in Income on DerivativesDesignated as

Location of Gain Recognized

Year Ended Dec 31,Hedging Instruments

in Income on Derivatives

2008


2009Foreign exchange option contracts

Gain on foreign currency
    derivatives

$
13,616,794


$
4,783,240Foreign exchange forward contracts

Gain on foreign currency
    derivatives


838,020



5,087,093Total



$
14,454,814


$
9,870,333  F-19




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  8.
    INVESTMENTS
    IN AFFILIATES    At December 31,2008


2009Carrying


Ownership


Carrying


OwnershipValue


Percentage


Value


Percentage$


(%)


$


(%)GD Inner Mongolia Jingyang Energy Co., Ltd.










659,030



15
%Ningxia GD CSI New Energy Co., Ltd.










512,578



35
%Suzhou Gaochuangte New Energy Co., Ltd.










2,929,020



40
%







4,100,628           9.
    BANK
    BORROWING  At December 31,


At December 31,2008


2009$


$Bank borrowings


156,022,153



280,992,349Analysis as:Short-term


94,317,899



211,595,078Long-term, current portion


16,346,914



40,107,071Subtotal for short term


110,664,813



251,702,149Long-term, non-current portion


45,357,340



29,290,200Total


156,022,153



280,992,349      F-20




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  a)
    Short-term    At December 31,


At December 31,2008


2009$


$Short-term borrowings guaranteed by Dr. Shawn Qu


5,706,246



37,012,750Short-term Borrowing secured by account receivable






2,912,634Short-term Borrowings secured by restricted cash






60,813,374Short-term Borrowings secured by inventory






5,764,876Short-term Borrowings secured by property, plant and equipment






8,787,060Short-term Borrowings secured by land use right






1,464,510Unsecured short-term borrowings


65,198,396



91,910,854Notes


23,410,240



2,929,020Long-term Loans due within one yearUnsecured


5,852,560



14,645,100Secured by property, plant and equipment


10,497,371



25,461,971Total


110,664,813



251,702,149        F-21




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    b)
    Long-term    At December 31,


At December 31,2008


2009$


$Unsecured


45,357,340



10,983,825Long-term Borrowings secured by property, plant and equipment






14,645,100Long-term Borrowings secured by land use right






3,661,275Total


45,357,340



29,290,200            F-22




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2010

$
40,107,0712011


20,503,1402012


4,393,5302013


2,929,0202014 and after


1,464,510Total


69,397,271Less: future principal repayment related to long-term loan,
    current portion


(40,107,071
)Total long-term portion

$
29,290,200   c)
    Interest
    expense  Years Ended December 312007


2008


2009$


$


$Interest capitalized


46,617



1,188,135



1,306,686Interest expense


2,311,270



12,201,293



9,458,983Total interest incurred


2,357,887



13,389,428



10,765,669   10.
    SHORT-TERM
    NOTES PAYABLE    11.
    ACCRUED
    WARRANTY COSTS    2007


2008


2009$


$


$Beginning balance


874,673



3,878,755



10,846,719Warranty provision


3,015,715



6,978,411



6,199,240Warranty costs incurred


(11,633
)


(10,447
)


(146,437
)Ending balance


3,878,755



10,846,719



16,899,522  F-23




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  12.
    CONVERTIBLE
    NOTES  2007
    Convertible Note Subscription Agreement
      Maturity date.
  Interest.
  Conversion.
  Redemption.
  ASC 470-20 14-1),
     F-24




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      At December 31,


At December 31,2008


2009$


$Carrying amount of the equity component


156,848



156,848Principal amount of the debt component


1,000,000



1,000,000Unamortized debt discount


169,638



134,000Net carrying amount of the debt component


830,362



866,000   if-converted
  13.
    RESTRICTED
    NET ASSETS       F-25




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  14.
    INCOME
    TAXES    Years Ended December 31,2007


2008


2009$


$


$Income (Loss) before Income TaxCanada


(2,572,182
)


(31,376,639
)


(8,876,370
)Other


2,233,389



33,496,558



30,352,504(338,793
)


2,119,919



21,476,134Current TaxCanada


569,396



9,268,794



4,790,780Other


471,220



2,837,939



5,608,1271,040,616



12,106,733



10,398,907Deferred TaxCanada


(241,815
)


571,861



(3,213,987
)Other


(962,315
)


(3,024,814
)


(8,486,985
)(1,204,130
)


(2,452,953
)


(11,700,972
)Total Income Tax Provision (Benefit)Canada


327,581



9,840,655



1,576,793Other


(491,095
)


(186,875
)


(2,878,858
)(163,514
)


9,653,780



(1,302,065
)            F-26




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Company

Tax Rate under the old FEIT law

Transitional Tax rate under the new EIT LawCSI Solartronics (Changshu) Co., Ltd.

27% (24% state tax + 3% local tax)

15% (obtained HNTE status under  the new EIT law in 2008) for
    2008, 2009, and 2010CSI Solar Manufacture Inc.

18% (15% state tax + 3% local tax)

12.5% (half reduction on 25%) for 2008 and 2009 and 25% for 2010
    and onwardsCSI Cells Co., Ltd.

27% (24% state tax + 3% local tax)

Exempted for 2008 and 12.5% for 2009, 2010 and 2011 (half
    reduction on 25%)CSI Central Solar Power Co., Ltd.

33% (30% state tax + 3% local tax)

Exempted for 2008 and 12.5% for 2009, 2010 and 2011 (half
    reduction on 25%)Changshu CSI Advanced Solar Inc.

27% (24% state tax + 3% local tax)

Exempted for 2008 and 2009 and 12.5% for 2010, 2011 and 2012
    (half reduction on 25%)    F-27




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      At December 31,


At December 31,2008


2009$


$Beginning balance


2,278,482



8,703,830Gross increases  additions for tax positions and the
    additional interest and penalties taken for the year


6,425,348



2,001,086Ending balance


8,703,830



10,704,916         At December 31,


At December 31,2008


2009$


$Deferred tax assets:Accrued warranty costs


3,448,387



5,126,058Bad debt provision


361,023



4,604,892Issuance costs


3,163,556



3,414,898Inventory write-down


2,138,259



2,989,772Depreciation difference of property, plant and equipment


1,169,510



2,903,356Loss on firm purchase commitment






1,727,852Net operating loss carried forward






2,901,339Others


806,395



2,134,867Total deferred tax assets


11,087,130



25,803,034Valuation allowance






(2,194,062
)Total deferred tax assets net off valuation allowance


11,087,130



23,608,972Analysis as:Current


4,121,627



12,699,194Non-current


6,965,503



10,909,77811,087,130



23,608,972  F-28




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      At December 31,


Expiration2009


Year$Net operating loss carried forward:CSI Solartronics (Changshu) Co., Ltd.


270,906



2014CSI Solar Technologies Inc.


255,953



2014CSI Solar Power Inc.


196,674



2014Canadian Solar Solutions Inc.


711,197



2029Canadian Solar (USA) Inc.


1,466,609



2029Total


2,901,339     Years Ended December 31,2007


2008


2009$


$


$Combined federal and provincial income tax rate


36
%


34
%


33
%Taxable income (loss) not included in pre-tax income (loss)


817
%


384
%


0
%Expenses not deductible for tax purpose


(1,312
)%


220
%


31
%Tax exemption and tax relief granted to the Company


397
%


(249
)%


(64
)%Effect of different tax rate of subsidiary operation in other
    jurisdiction


154
%


(176
)%


(16
)%Unrecognized tax benefits


(168
)%


372
%


9
%Change of tax rates in the following years


75
%


(161
)%


(8
)%Valuation allowance










10
%Exchange gain (loss)


49
%


31
%


(1
)%48
%


455
%


(6
)%     Years Ended December 31,2007


2008


2009$


$


$The aggregate dollar effect


1,345,726



5,281,258



13,702, 582Per share effect  basic


0.05



0.17



0.37Per share effect  diluted


0.05



0.17



0.36  F-29




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  15.
    EARNINGS
    PER SHARE    Years Ended December 31,2007


2008


2009$


$


$Net income (loss) attributable to Canadian Solar
    Inc.  basic and diluted

$
(175,279
)

$
(7,533,861
)

$
22,645,884Weighted average number of common shares   basic


27,283,305



31,566,503



37,137,004Diluted share number from share options and restricted shares










590,134Weighted average number of common shares   diluted


27,283,305



31,566,503



37,727,138Basic earnings (loss) per share

$
(0.01
)

$
(0.24
)

$
0.61Diluted earning (loss) per share

$
(0.01
)

$
(0.24
)

$
0.60     Years Ended December 31,2007


2008


2009$


$


$Convertible notes


218,374



50,607



50,607Share options and restricted shares


250,573



740,326



597,842468,947



790,933



648,449   16.
    RELATED
    PARTY BALANCES AND TRANSACTIONS  Related
    party balances:
    Related
    party transactions:
      17.
    FIRM
    PURCHASE COMMITMENTS  take-or-pay
 F-30




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    18.
    COMMITMENTS
    AND CONTINGENCIES  a)
    Operating
    lease commitments      Year Ending December 31:

$2010


1,503,9412011


302,4512012


102,6852013


49,2052014


49,205Thereafter


71,098Total


2,078,585   b)
    Property,
    plant and equipment purchase commitments    c)
    Supply
    purchase commitments       F-31




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Year Ending December 31:

$2010


429,807,2872011


479,203,1492012


509,222,8312013


509,047,3212014


508,871,810Thereafter


772,000,449Total


3,208,152,847   d)
    Contingencies    Year Ending December 31:

$2010


23,882,6672011


23,932,0512012


23,756,5412013


23,581,0312014


23,405,521Thereafter


91,866,984Total


210,424,795   19.
    SEGMENT
    INFORMATION      Years Ended December 31,2007


2008


2009$


$


$Europe: Germany


206,740,573



427,656,269



272,744,921 Spain


64,628,868



188,133,256



62,109,973 Czech






10,445,389



151,342,770 Others


15,218,476



4,912,021



36,889,655Europe Total


286,587,917



631,146,935



523,087,319Asia: China


6,608,046



25,356,557



25,915,331 Others


6,996,651



16,214,174



45,050,772Asia Total


13,604,697



41,570,731



70,966,103America


2,605,057



32,288,690



36,907,743Total net revenues


302,797,671



705,006,356



630,961,165  F-32




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     20.
    MAJOR
    CUSTOMERS    Years Ended December 312007


2008


2009$


$


$Company A






10,445,389



151,342,770Company B


60,119,666



103,620,514



122,904,506Company C


43,540,156



88,628,315



3,409,460Company D


60,361,058



76,660,435



4,436,180Company E


63,926,118



50,637,781



     21.
    EMPLOYEE
    BENEFIT PLANS      22.
    SHARE
    OPTIONS      Options
    to Employees
   F-33




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        2007

2008

2009Risk free rate

5.31%~6.15%

5.14%~5.95%

4.67%~5.72%Average expected exercise term

n/a

n/a

n/aVolatility ratio

79%~81%

78%~79%

81%-84%Dividend yield





Annual exit rate

6%

8%

3.56%-5.24%Suboptimal exercise factor

3.27

3.27~3.70

5.40~6.20     WeightedWeighted


AverageAverage


RemainingNumber


Exercise


Contract


Aggregateof Options


Price


Terms


Intrinsic Value$





$Options outstanding at January 1, 2009


1,368,873



10.33Granted


798,900



7.18Exercised


(129,922
)


5.19Forfeited


(73,844
)


11.76Options outstanding at December 31, 2009


1,964,007



9.34



8 years



39,995,464Options vested or expected to vest at December 31, 2009


1,862,267



9.42



8 years



37,823,847Options exercisable at December 31, 2009


847,440



11.37



7 years



16,125,513     Options
    and Restricted shares to Non-employees
    Restricted
    shares to Employees
   F-34




---



##### Table of Contents



CANADIAN
    SOLAR INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Weighted AverageNumber of


Grant-DateShares


Fair Value$Unvested at January 1, 2009


58,250



14.12Granted






Vested


29,125



14.12Cancelled or Forfeited






Unvested at December 31, 2009


29,125



14.12     23.
    INVESTMENT
    INCOME    24.
    SUBSEQUENT
    EVENTS   F-35




---



##### Table of Contents



Appendix 1
  Subsidiaries
    of CSI
    AttributablePlace and date

EquitySubsidiary

of Incorporation

Interest Held


Principal ActivityCSI Solartronics (Changshu) Co., Ltd.)

PRC
    November 23, 2001


100
%

Developing solar power
    projectCSI Solar Technologies Inc.

PRC
    August 8, 2003


100
%

Research and developing solar
    modulesCSI Solar Manufacture Inc.

PRC
    January 7, 2005


100
%

Production of  solar modulesCSI Central Solar Power Co., Ltd.

PRC
    February 24, 2006


100
%

Manufacture of solar modules,
    ingots and wafersChangshu CSI Advanced Solar Inc.

PRC
    August 1, 2006


100
%

Production of solar modulesCSI Cells Co., Ltd.

PRC
    August 23, 2006


100
%

Manufacture of solar cellsCanadian Solar (USA) Inc.

USA
    June 8, 2007


100
%

Sale of solar modules*CSI Solar Power Inc.

PRC
    April 28, 2008


100
%

Planned expansion of existing
    solar module manufacturing
    capacityCSI Project Consulting GmbH

Germany
    May 26, 2009


70
%

Developing solar power projectCVB Solar GmbH

Germany
    May 26, 2009


70
%

Developing solar power projectCanadian Solar Japan K.K.

Japan
    June 21, 2009


86
%

Sales and marketing
    modules in JapanCanadian Solar Solutions Inc.

Canada
    June 22, 2009


100
%

Developing solar power projectCSI Solar Power (China) Inc.

PRC
    July 7, 2009


100
%

Planned investment holdingCanadian Solar (Deutschland) GmbH

Germany
    August 21, 2009


100
%

Planned  sales agency of solar
    modules     *
    
    On January 20, 2010, CSI Solar Power Inc. was merged into
    Changshu CSI Advanced Solar Inc. F-36




---



##### Table of Contents



Additional
    Information  Financial Statements Schedule I
    Canadian Solar Inc.



Schedule I has been provided pursuant to the requirements
    of
    Rule 12-04(a)
    and 4-08(e)(3) of
    Regulation S-X,
    which require condensed financial information as to financial
    position, changes in financial position and results of
    operations of a parent company as of the same dates and for the
    same periods for which audited consolidated financial statements
    have been presented as the restricted net assets of Canadian
    Solar Inc.s consolidated and unconsolidated subsidiaries
    not available for distribution to Canadian Solar Inc. as of
    December 31, 2009 of $258,891,055 , exceeded the 25%
    threshold.



These financial statements have been prepared in conformity with
    accounting principles generally accepted in the United States
    except that the equity method has been used to account for
    investments in subsidiaries.


F-37




---



##### Table of Contents



Financial
    Information of Parent CompanyBalance Sheets
  December 31,


December 31,2008


2009(In U.S. dollars, except share andper share data)ASSETSCurrent assets:Cash and cash equivalents


13,289,610



49,935,750Restricted cash






150,000Accounts receivable, net of allowance for doubtful accounts of
    $5,062,312 and $14,446,746 at December 31, 2008 and 2009,
    respectively


46,682,715



138,326,367Inventories


3,257,231



32,563,622Advances to suppliers


1,005,903



Amounts due from related parties


83,496,732



92,599,693Deferred tax assets


1,387,922



4,194,303Prepaid expenses and other current assets


624,118



6,254,889Total current assets


149,744,231



324,024,624Advances to suppliers


12,528,000



20,768,495Investment in subsidiaries


229,598,581



336,827,824Deferred tax assets


5,479,787



7,570,263Other non-current assets


3,021,418



3,019,466TOTAL ASSETS


400,372,017



692,210,672LIABILITIES AND EQUITYCurrent liabilities:Accounts payable


124,742



6,150,845Amounts due to related parties


44,986,636



184,066,898Other current liabilities


3,981,007



9,595,268Total current liabilities


49,092,385



199,813,011Accrued warranty costs


9,491,459



15,110,121Convertible notes


830,362



866,000Liability for uncertain tax positions


8,703,830



10,704,916TOTAL LIABILITIES


68,118,036



226,494,048Equity:Common shares  no par value: unlimited authorized
    shares, 35,744,563 and 42,774,485 shares issued and
    outstanding at December 31, 2008 and 2009, respectively


395,153,795



500,322,431Additional paid-in capital


(66,705,304
)


(61,268,954
)Retained earnings (accumulated deficit)


(11,104,036
)


11,541,848Accumulated other comprehensive income


14,909,526



15,121,299Total equity


332,253,981



465,716,624TOTAL LIABILITIES AND EQUITY


400,372,017



692,210,672  F-38




---



##### Table of Contents



Financial
    Information of Parent CompanyStatements of Operations
  Years Ended December 312007


2008


2009(In U.S. dollars, except share and per share data)Net revenues


323,884,241



624,574,503



602,999,324Cost of revenues


313,554,507



624,628,119



591,746,362Gross profit (loss)


10,329,734



(53,616
)


11,252,962Operating expenses:Selling expenses


3,382,165



4,455,132



8,510,250General and administrative expenses


12,504,867



19,553,100



17,258,546Research and development expenses


405,784



622,383



664,102Total operating expenses


16,292,816



24,630,615



26,432,898Loss from operations


(5,963,082
)


(24,684,231
)


(15,179,936
)Other income (expenses):Interest expense


(353,318
)


(4,400,736
)


(140,314
)Interest income


316,175



3,557,683



2,153,462Gain on debt extinguishment






2,429,524



Debt conversion inducement expense






(10,170,118
)


Foreign exchange gain


2,582,256



1,888,000



4,281,909Other  net


(140,972
)






Loss before income taxes


(3,558,941
)


(31,379,878
)


(8,884,879
)Income tax expense


(166,605
)


(9,840,655
)


(1,576,793
)Equity in earnings of subsidiaries


3,550,267



33,686,672



33,107,556Net Income (loss)


(175,279
)


(7,533,861
)


22,645,884  F-39




---



##### Table of Contents



Financial
    Information of Parent CompanyStatements of Cash Flows
  Years Ended December 31,2007


2008


2009(In U.S. dollars)Operating activities:Net Income (loss)


(175,279
)


(7,533,861
)


22,645,884Depreciation and amortization






757



5,450Allowance for doubtful debts


188,894



4,880,241



8,208,800Amortization of discount on debt






1,179,446



35,638Equity in earnings of subsidiaries


(3,550,266
)


(33,686,672
)


(33,107,556
)Share-based compensation


9,101,792



9,102,002



5,436,350Gain on debt extinguishment






(2,429,524
)


Debt conversion inducement expense






10,170,118



Changes in operating assets and liabilities:Inventories


1,519,318



(2,361,759
)


(29,306,391
)Accounts receivable


(53,876,699
)


8,430,376



(105,141,401
)Amounts due from related parties


(16,306,266
)


(40,246,289
)


(9,102,961
)Advances to suppliers


(1,742,545
)


(6,074,708
)


(7,248,785
)Other current assets


214,999



224,152



(327,630
)Accounts payable


2,026,184



(2,411,261
)


6,026,101Advances from customers


1,198,017



(1,483,914
)


1,713,862Amounts due to related parties


16,392,265



22,314,717



139,080,262Accrued warranty costs


2,817,725



6,069,954



5,618,662Other current liabilities


597,410



(100,189
)


3,900,397Liability for uncertain tax positions


1,666,283



6,425,348



2,001,087Deferred taxes


(937,791
)


2,068,575



(3,213,988
)Net cash provided by (used in) operating activities


(40,865,959
)


(25,462,491
)


7,223,781  F-40




---



##### Table of Contents



Financial
    Information of Parent CompanyStatements of Operations
  Years Ended December 31,2007


2008


2009$


$


$(In U.S. dollars)Investing activities:Increase in restricted cash










(150,000
)Investment in subsidiaries


(20,460,000
)


(93,600,000
)


(74,120,415
)Purchase of equity investment






(3,000,000
)


Purchases of property, plant and equipment






(22,174
)


(3,497
)Net cash used in investing activities


(20,460,000
)


(96,622,174
)


(74,273,912
)Financing activities:Proceeds from short-term borrowings






30,000,000



Repayment of short-term borrowings






(30,000,000
)


Proceeds from issuance of convertible notes


75,000,000







Issuance costs paid on convertible notes


(2,970,138
)


(381,900
)


Proceeds from issuance of common shares






112,752,500



103,349,924Issuance costs paid for common shares offering






(2,092,636
)


(538,581
)Proceeds from exercise of stock options


151,823



1,937,330



674,424Net cash provided by financing activities


72,181,685



112,215,294



103,485,767Effect of exchange rate changes


(4,789,309
)


747,321



210,504Net increase in cash and cash equivalents


6,066,417



(9,122,050
)


36,646,140Cash and cash equivalents at the beginning of the year


16,345,243



22,411,660



13,289,610Cash and cash equivalents at the end of the year


22,411,660



13,289,610



49,935,750Supplemental disclosure of cash flow information:Interest paid


(58,814
)


(2,601,581
)


(104,676
)Income taxes paid


(98,681
)






(1,680,672
)Supplemental schedule of non-cash activities:Issuance cost included in other payable


(381,496
)






Conversion of convertible notes to stockholders equity






72,106,800



  F-41