-- Fiscal 1Q09 Revenue Increases 5% to $5.1 Million Compared to
1Q08 -- MENLO PARK, Calif., Feb. 13 /PRNewswire-Asia-FirstCall/ --
Solar EnerTech Corp. (OTC:SOEN) (BULLETIN BOARD: SOEN) (the
"Company") today announced results for the first quarter of fiscal
year 2009. For the fiscal 2009 first quarter ended December 31,
2008, total revenue increased 5% to $5.1 million compared to $4.8
million in the first quarter of the prior year period. Revenue for
the fiscal 2009 first quarter was comprised of $4.8 million of
sales of the Company's solar modules, of which more than 95% were
sold to Europe and Australia. The Company incurred a negative gross
margin of $2.3 million for the quarter ended December 31, 2008
compared to a negative $0.5 million gross margin in the same period
in fiscal 2008. The negative gross margin was primarily a result of
the Company selling modules using high price wafers purchased in
prior quarters. Additionally, the market price for silicon wafers
dropped significantly and, as a result of a lower of cost or market
inventory valuation analysis, the Company recorded a $1.0 million
inventory write-down in the quarter ended December 31, 2008. Total
operating expense for the fiscal 2009 first quarter was $3.2
million, or 63% of total sales, which included $1.4 million of
non-cash stock compensation charge related to the hiring and
retention of key executives and $0.3 million of non-cash charge for
loss on debt extinguishment. Excluding these non-cash charges, the
operating expense for the quarter was $1.5 million, or 29% of total
sales. Total operating expense for the fiscal 2008 first quarter
was $4.3 million, or 90% of total sales, which included a $2.4
million non-cash stock compensation charge related to the hiring
and retention of key executives and $0.4 million of non-cash charge
for loss on debt extinguishment. Excluding this non-cash charge,
the operating expense for the first quarter of 2008 was $1.5
million, or 31% of total sales. Net loss for the first quarter of
2009 was $3.8 million, or ($0.04) per basic and diluted share
compared to a net loss of $3.9 million, or ($0.05) per basic and
diluted share in the same period in fiscal 2008. In the first
quarter of fiscal 2009, the Company recorded a non-cash gain of
$0.5 million associated with a change in the fair market value of
compound embedded derivative liability and a $1.6 million non-cash
gain related to the change in the fair market value of warrant
liability. Excluding these non-cash gains of $2.1 million, on a
non-GAAP basis, the Company had a net loss of $5.9 million. In the
first quarter of 2008, the Company recorded a non-cash gain of $1.1
million associated with a change in the fair market value of
compound embedded derivative liability and a $0.1 million non-cash
gain related to the change in fair market value of warrant
liability. Excluding these non-cash gains of $1.2 million, on a
non-GAAP basis, the Company had a net loss of $5.1 million. Both
the compound embedded derivative and warrant liabilities were
recorded in conjunction with the convertible notes transaction
entered into by the Company in March 2007. Mr. Leo Young, Chief
Executive Officer of Solar EnerTech, commented, "Despite of the
difficulties in the worldwide solar market, we've managed to
achieve a top-line increase of 5% in the first quarter. Our gross
margins, however, were adversely affected by the high price of
silicon feedstock purchased during previous quarters, and lower
selling prices for PV modules in the major markets in which we
operate. We have worked through our higher priced silicon feedstock
and are now paying current market prices, which are approximately
45% lower on average compared to our fiscal first quarter. "We
believe Solar EnerTech will benefit from the rapid decline in
polysilicon prices in recent months due to the flexibility of our
supply contracts which have erased some of the traditional
disadvantages we've had to our competitors. The competitive playing
field has leveled in recent months and we are now able to compete
more effectively and aggressively due to technological improvements
that have resulted in improved solar cell conversation rates and
beneficial innovations in critical phases of solar cell processing.
Additionally, we continue to take steps to control our operational
costs for margin improvement going forward. "We are encouraged with
our capacity expansion implemented over the past quarter and the
quality of our products is resulting in increased demand from
customers in Europe and Australia. For the remainder of the
calendar year, we believe our overall shipments will continue to
increase over the prior year period. "To facilitate growth in other
markets, particularly China, we have recently established a
Division of PV Integration and Applications and have added
experienced engineers for PV system design and installation. With
the establishment of this new division, we will participate in a 10
MW PV power project in southern China, for which Solar EnerTech
expects to supply 50% of total panels needed. We view this new area
as a growing opportunity for our business. Overall, we are making
steady progress with the growth and development of our business and
will continue to focus on steady revenue and margin improvement
ahead," concluded Young. Financial Position As of December 31,
2008, the Company had $5.7 million in cash and $2.2 million of
working capital. The Company had $0.3 million of accounts
receivables, $1.0 million of prepayment primarily for purchase of
raw materials and $2.9 million of inventories on hand.
Additionally, the Company had $2.0 million of accounts payable and
accrued liabilities, $5.5 million of accrued liability due to
related party, $0.5 million of derivative liabilities, $1.8 million
of warrant liabilities and $0.4 million of convertible notes. About
Solar EnerTech Corp. Solar EnerTech is a photovoltaic ("PV") solar
energy cell manufacturing enterprise incorporated in the United
States with its corporate office in Menlo Park, California. The
Company has established a sophisticated 63,000 square foot
manufacturing plant located in China, in Shanghai's Jinqiao Modern
Technology Park. Currently, the Company is capable of producing
50MW of solar cells from its existing production line. Solar
EnerTech has also established a Joint R&D Lab at Shanghai
University to develop higher efficiency cells and to put the
results of that research to use in its manufacturing processes. Led
by one of the industry's top scientists, the Company expects its
R&D program to help bring Solar EnerTech to the forefront of
advanced solar technology research and production. Safe Harbor
Statement Statements contained in this press release, which are not
historical facts, are forward-looking statements as that term is
defined in the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are based largely on current
expectations and are subject to a number of known and unknown
risks, uncertainties and other factors beyond our control that
could cause actual events and results to differ materially from
these statements. These statements are not guarantees of future
performance, and readers are cautioned not to place undue reliance
on these forward-looking statements, which are relevant as of the
date of the given press release and should not be relied upon as of
any subsequent date. Solar EnerTech undertakes no obligation to
update publicly any forward-looking statements. -- Unaudited
Financial Statements -- Solar EnerTech Corp Unaudited Consolidated
Statements of Operations Quarter Ended December 31, 2008 2007 Net
sales $5,084,000 $4,839,000 Cost of sales (7,420,000) (5,305,000)
Gross loss (2,336,000) (466,000) Operating expenses: Selling,
general & administrative 2,561,000 3,885,000 Research &
development 335,000 97,000 Loss on debt extinguishment 310,000
362,000 Total operating expenses 3,206,000 4,344,000 Operating loss
(5,542,000) (4,810,000) Other income (expense): Interest income
7,000 10,000 Interest expense (365,000) (278,000) Gain on change in
fair market value of compound embedded derivative 475,000 1,099,000
Gain on change in fair market value of warrant liability 1,644,000
115,000 Other expense (20,000) (38,000) Net loss $(3,801,000)
$(3,902,000) Net loss per share - basic $(0.04) $(0.05) Net loss
per share - diluted $(0.04) $(0.05) Weighted average shares
outstanding - basic 87,043,800 79,168,174 Weighted average shares
outstanding - diluted 87,043,800 79,168,174 Solar EnerTech Corp
Consolidated Balance Sheets December 31, 2008 September 30, 2008*
(Unaudited) ASSETS Current assets: Cash and cash equivalents
$5,675,000 $3,238,000 Accounts receivable, net 327,000 1,875,000
Advance payments and other 1,047,000 3,175,000 Inventories, net
2,902,000 4,886,000 VAT receivable 1,919,000 2,436,000 Other
receivable 134,000 730,000 Total current assets 12,004,000
16,340,000 Property and equipment, net 13,176,000 12,934,000
Investment 1,000,000 1,000,000 Deferred financing costs, net of
accumulated amortization 1,721,000 1,812,000 Deposits 167,000
701,000 Total assets $28,068,000 $32,787,000 LIABILITIES AND
STOCKHOLDER'S EQUITY Current liabilities: Accounts payable
$1,072,000 $1,771,000 Customer advance payment 233,000 96,000
Accrued expenses 730,000 910,000 Accounts payable and accrued
liabilities, related parties 5,512,000 5,450,000 Derivative
liabilities 491,000 980,000 Warrant liabilities 1,768,000 3,412,000
Total current liabilities 9,806,000 12,619,000 Convertible notes,
net of discount 354,000 85,000 Total liabilities 10,160,000
12,704,000 STOCKHOLDER'S EQUITY: Common stock - 400,000,000 shares
authorized at $0.001 par value 112,624,550 and 112,052,012 shares
issued and outstanding at December 31, 2008 and September 30, 2008,
respectively 113,000 112,000 Additional paid in capital 73,291,000
71,627,000 Other comprehensive income 2,446,000 2,485,000
Accumulated deficit (57,942,000) (54,141,000) Total stockholders'
equity 17,908,000 20,083,000 Total liabilities and stockholders'
equity $28,068,000 $32,787,000 * - Derived from fiscal year 2008
annual report. DATASOURCE: Solar EnerTech Corp CONTACT: Bill Zima
(Investor Relations) of ICR Inc. for Solar EnerTech Corp.,
+1-203-682-8200
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