-- Fiscal 3Q08 Revenue Increases 577% to $10.3 Million Compared to
3Q07 -- -- 3Q08 Sequential Revenue Increases 194% from 2Q08 --
MENLO PARK, Calif., Aug. 14 /Xinhua-PRNewswire-FirstCall/ -- Solar
EnerTech Corp. (OTC:SOEN) (BULLETIN BOARD: SOEN) (the "Company")
today announced results for the third quarter of fiscal year 2008.
For the fiscal 2008 third quarter ended June 30, 2008, total
revenue increased 577% to $10.3 million compared to $1.5 million in
the third quarter of the prior year period. This performance also
exceeded the Company's original third quarter 2008 guidance of $8.5
million to $9.5 million published on April 25, 2008. On a quarterly
sequential basis, fiscal third quarter revenue increased 194%, or
$6.8 million to $10.3 million, compared to $3.5 million in the
fiscal 2008 second quarter period. Revenue for the fiscal 2008
third quarter was comprised of approximately $9 million of sales of
the Company's solar modules and approximately $1.3 million of
contract manufacturing revenue. For the contract manufacturing
arrangement, silicon wafers were provided by the customer and Solar
EnerTech produced solar modules based on the customer's
specifications. The Company recorded a gross margin of $37,000 for
the third quarter 2008 compared to $10,000 in the same quarter
2007. The increase in gross margin in the third quarter 2008 was
primarily attributable to sales of the Company's solar modules
compared to the prior year period when gross margin primarily
resulted from the resale of raw materials. Selling, general and
administrative expense for the three months ended June 30, 2008
decreased 43% to $1.6 million from $2.8 million for the three
months ended June 30, 2007. The selling, general and administrative
expense included stock-based compensation expense related to
employee options of $0.5 million and $2.1 million for the three
months ended June 30, 2008 and 2007, respectively. Excluding
stock-based compensation expense, our selling, general &
administrative costs increased by approximately $0.4 million
largely from increases in professional fees, the number of
employees added as we grow our business, and increased sales and
marketing activities. Total operating expense for the fiscal 2008
third quarter was $3.3 million compared to $2.8 million in the
prior year period. In the 2008 third quarter, the Company incurred
$2.1 million in non-cash expenses which consisted of a non-cash
loss on debt extinguishment of $1.5 million related to the
conversion of convertible notes into common stock and a $0.6
million non-cash stock-based compensation expense as described
above. Non-cash stock compensation charges for the third quarter of
2007 were $2.1 million. Excluding these non-cash charges of $2.1
million in both the fiscal third quarter of 2008 and 2007,
operating expense on a non-GAAP basis, for the third quarter of
2008 was $1.2 million, or 12% of sales, compared to $0.7 million,
or 47% of sales, in the prior year third quarter period. The
Company incurred interest expense charges of $238,000 in the third
fiscal quarter of 2008, primarily associated with Series A and B
convertible notes. It also recorded gains of $107,000 on the change
in fair market value of warrant liability. Net loss for the fiscal
2008 third quarter was $3.5 million. Diluted earnings per share for
the third quarter of both 2008 and 2007 showed a loss of ($0.03).
As of June 30, 2008, the Company had $2.7 million in cash, $2.6
million of accounts receivables, $5.0 million of prepayments
primarily for purchase of raw materials, as well as $9.3 million of
inventories on hand. Additionally, the Company had $2.3 million of
accounts payable and accrued liabilities and $4 million of accounts
payable and accrued liabilities due to related parties. Mr. Leo
Young, Chief Executive Officer of Solar EnerTech commented, 'We
continue to make steady progress in our business and are pleased
with the better than expected increase in revenues during our
fiscal third quarter. We saw strong demand from our key customer
'Sky Solar' during the quarter. Other customers we shipped to
during the quarter were in Australia, Germany, Belgium, Holland and
Switzerland. Ongoing margin improvement remains a high priority for
our business. Our gross margin was positive this quarter and we
believe we can continue to show improvement in this area of our
operations. During the third quarter of 2008, approximately 36% of
our solar cell modules were manufactured using internally produced
solar cells which improved our margin performance, but still
resulted in higher manufacturing costs due to relatively low
manufacturing volume. For our upcoming fiscal fourth quarter, we
expect to produce nearly all of our modules using our own cells
further increasing our manufacturing volume and improving our gross
margin. We continue to focus on the highest quality of solar cell
and module products for growing our customer base and view this as
a differentiating factor for our company. In fact, one of our
largest customers recently commented on the superiority of our
branded SolarE products compared to the other vendors they use. Our
product quality has benefitted significantly from our research
& development effort as well as from the experienced
individuals we have brought on board over the past year. As part of
our efforts to improve the quality and reputation of our solar cell
products, we were also pleased to have recently secured our VDE
certification which allows us to develop additional new business
opportunities in the European marketplace. We plan to continue to
enhance our profile and further expand our international presence
by securing additional certifications, including UL and CSA
certifications. As we enter into the second half of the calendar
year, we remain on plan with our goal to complete our second cell
production line by year end. Doing so will allow us to double our
solar cell production capacity to 50MW. We also are in ongoing
discussions with various suppliers in China and abroad regarding a
long-term polysilicon supply contract. We expect doing so will
allow us to reduce our short term polysilicon supply contracts,
eliminate our need for spot market purchases and thus beneficially
impact our overall margin performance. Increased global demand for
highly efficient, state-of-the-art solar cells and modules
continues to provide our business with very compelling growth
opportunity ahead. We are encouraged with our opportunities and
believe our fiscal fourth quarter revenue results have the ability
to exceed our third quarter performance and believe that our gross
margin will continue to show steady improvement,' concluded Young.
About Solar EnerTech Corp. Solar EnerTech is a photovoltaic ("PV")
solar energy cell manufacturing enterprise based in Shanghai,
China, where the Company has established a sophisticated 63,000
square foot manufacturing plant in Shanghai's Jinqiao Modern
Technology Park. Currently, the Company is capable of producing
25MW of solar cells from its existing production line and the
company is in the process of completing its second 25 MW production
line to better utilize capacity and meet expected future customer
demand. Solar EnerTech has also established a Joint R&D Lab at
Shanghai University to research and 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. The
Company has also established a marketing, purchasing and
distribution arm in Northern California's Silicon Valley. 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 Follow) Solar EnerTech Corp. Consolidated
Statements of Operations (Unaudited) Three Months Ended June 30,
Nine Months Ended June 30, 2008 2007 2008 2007 Net sales
$10,272,000 $1,517,000 $18,582,000 $1,520,000 Cost of sales
(10,235,000) (1,507,000) (19,680,000) (1,513,000) Gross profit
(loss) 37,000 10,000 (1,098,000) 7,000 Operating expenses: Selling,
general & administrative 1,606,000 2,798,000 8,185,000
7,733,000 Research & development 198,000 7,000 483,000 113,000
Loss on debt extinguishment 1,529,000 -- 3,996,000 -- Total
operating expenses 3,333,000 2,805,000 12,664,000 7,846,000
Operating loss (3,296,000) (2,795,000) (13,762,000) (7,839,000)
Other income (expense): Interest income 24,000 27,000 80,000 40,000
Interest expense (238,000) (280,000) (814,000) (334,000) Loss on
issuance of Convertible notes -- -- -- (15,209,000) Gain (loss) on
change in fair market value of compound embedded derivative
(22,000) 7,100,000 12,267,000 (5,500,000) Gain (loss) on change in
fair market value of warrant liability 107,000 4,532,000 11,030,000
(5,427,000) Other expense (107,000) (267,000) (435,000) (267,000)
Net income (loss) $(3,532,000) $8,317,000 $8,366,000 $(34,536,000)
Net income (loss) per share - basic $(0.03) $0.11 $0.09 $(0.44) Net
income (loss) per share - diluted $(0.03) $(0.03) $(0.10) $(0.44)
Weighted average shares outstanding - basic 104,528,145 78,807,012
97,518,130 78,257,561 Weighted average shares outstanding - diluted
104,528,145 119,343,005 120,531,481 78,257,561 Solar EnerTech Corp.
Consolidated Balance Sheet June 30, September 30, 2008 2007
(Unaudited) (Audited) ASSETS Current assets: Cash and cash
equivalents $ 2,681,000 $ 3,908,000 Accounts receivable 2,568,000
913,000 Advance payments and other 4,955,000 6,500,000 Inventories,
net 9,312,000 5,708,000 VAT taxes receivable 2,601,000 -- Other
receivable 1,438,000 590,000 Total current assets 23,555,000
17,619,000 Fixed assets, net of accumulated depreciation 8,300,000
3,215,000 Deferred financing costs, net of accumulated amortization
1,860,000 2,540,000 Deposits 3,105,000 1,741,000 Total assets $
36,820,000 $ 25,115,000 LIABILITIES AND STOCKHOLDER'S EQUITY
(DEFICIT) Current liabilities: Accounts payable $ 589,000 $
2,891,000 Customer advance payment 1,184,000 1,603,000 Accrued
interest expense -- 615,000 Accrued expenses 485,000 507,000
Accounts payable and accrued liabilities, related parties 3,969,000
3,969,000 Demand note payable to a related party -- 450,000 Demand
notes payable -- 700,000 Derivative liabilities 2,500,000
16,800,000 Warrant liabilities 6,360,000 17,390,000 Total current
liabilities 15,087,000 44,925,000 Convertible notes, net of
discount 55,000 7,000 Total liabilities 15,142,000 44,932,000
STOCKHOLDER'S EQUITY (DEFICIT): Common stock - 200,000,000 shares
authorized at $0.001 par value 111,616,855 and 78,827,012 shares
issued and outstanding at June 30, 2008 and September 30, 2007,
respectively 112,000 79,000 Additional paid in capital 70,519,000
39,192,000 Other comprehensive income 2,361,000 592,000 Accumulated
deficit (51,314,000) (59,680,000) Total stockholders' equity
(deficit) 21,678,000 (19,817,000) Total liabilities and
stockholders' equity (deficit) $ 36,820,000 $ 25,115,000
DATASOURCE: Solar EnerTech Corp. Contact: Bill Zima of ICR Inc. for
Solar EnerTech Corp., +1-203-682-8200 (Investor Relations)
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