4Q08 Revenue Increases 163% from 4Q07 MENLO PARK, Calif., Dec. 22
/PRNewswire-Asia-FirstCall/ -- Solar EnerTech Corp. (OTC:SOEN)
(BULLETIN BOARD: SOEN) (the "Company") today announced results for
the fourth quarter and the 2008 fiscal year. Fourth Quarter 2008
Financial Results For the fourth quarter ended September 30, 2008,
Solar EnerTech reported total revenue of $10.8 million compared to
$4.1 million in the fourth fiscal quarter of 2007. This represented
a growth rate of 163% from the fourth quarter of 2007. Total module
shipment reached 2.3 MW in the fourth quarter 2008 and total
production during the quarter was 2.0 MW. During the fourth quarter
of fiscal 2008, all of the Company's solar cell modules were
manufactured using internally produced solar cells versus 0% for
the fourth quarter of fiscal 2007 and 36% for the previous quarter.
Subsequent to the quarter end, the Company completed construction
of its second solar cell production line, which increased its solar
cell capacity from 25MW to 50MW. The Company also has a fully
operational 50MW solar module production facility. The Company
incurred a negative gross margin of $2.6 million for the quarter
ended September 30, 2008 compared to a negative $0.4 million gross
margin in the same period in 2007. The negative gross margin was
primarily a result of the Company selling modules using high price
wafers purchased in prior quarterly periods as well as a $1.0
million inventory provision recorded in the fiscal fourth quarter
2008. The market price for silicon wafers dropped significantly
during the fiscal fourth quarter of 2008 and, as a result of a
mark-to-market inventory valuation analysis, the Company recorded a
$1.0 million inventory write-down. Total operating expense for the
fiscal 2008 fourth quarter was $4.1 million, or 38% of total sales,
which included $0.8 million of non-cash stock compensation charge
related to the hiring and retention of key executives and $0.2
million of non-cash charge for loss on debt extinguishment.
Excluding these non-cash charges, the operating expense for the
quarter was $3.1 million, or 29% of total sales. Total operating
expense for the fiscal 2007 fourth quarter was $4.2 million, or
102% of total sales, which included a $3.0 million non-cash stock
compensation charge related to the hiring and retention of key
executives. Excluding this non-cash charge, the operating expense
for the fourth quarter of 2007 was $1.2 million, or 29% of total
sales. Net loss for the fourth quarter of 2008 was $2.8 million, or
($0.03) per diluted share compared to net income of $5.1 million,
or a loss of $(0.04) per diluted share, after excluding
anti-dilution securities in the fourth quarter of fiscal 2007. In
the fourth quarter of fiscal 2008, the Company recorded a $1.5
million non-cash gain associated with a change in the fair market
value of compound embedded derivative liability and a $2.9 million
gain related to the change in the fair market value of warrant
liability. Excluding these non-cash gains of $4.4 million, on a
non-GAAP basis, the Company had a net loss of $7.2 million. In the
fourth quarter of 2007, the Company recorded a $5.3 million
non-cash gain associated with a change in the fair market value of
compound embedded derivative liability and $5.1 million gain
related to the change in fair market value of warrant liability.
Excluding these non-cash gains of $10.4 million, on a non-GAAP
basis, the Company had a net loss of $5.3 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, "We are pleased to see
continued strong top-line revenue growth in the quarter. We also
made steady progress during the quarter with the subsequent
completion of our second solar cell production line. Our gross
margin in the quarter was impacted by the high price of silicon
feedstock which was purchased on the spot market earlier in our
fiscal year. We did not enter into a long-term polysilicon supply
contract during the fourth quarter. This will benefit our business
ahead given the rapid decline of feedstock over the last several
months. Not being bound by silicon agreements at higher fixed
prices provides us with increased flexibility that can beneficially
impact our gross margin performance ahead. "We are taking the
appropriate stance to position our business for challenging times
ahead. As part of this effort, we have recently taken steps to
reduce both our management staff and operating budget in the
current quarter by 25%. We remain focused on conserving our cash
and reducing non-core operating expenses, which we believe will
allow our products to remain competitive in the key markets in
which we operate. "As our capacity has increased and the quality of
our solar cells becomes further recognized in the industry, we
believe we have the opportunity to secure higher margin contract
manufacturing of solar cells for large players in the industry.
Management has carefully planned and allocated resources for
expansion in this area. As we see a slowdown in the solar power
markets in Spain, we continue to build business relations with our
customers in Italy, the Netherlands and other countries in Europe.
Also, China's domestic market is emerging and serves as a growing
opportunity for our business. In the coming year, we are hoping to
participate in several large PV projects in China, including PV
power stations, rooftop systems, and rural road lighting systems.
We are encouraged with our solar cell and module production
opportunities and remain focused on maximizing our growth in fiscal
2009," concluded Young. Fiscal 2008 Financial Results For the
fiscal year ended September 30, 2008, Solar EnerTech reported total
revenue of $29.4 million, compared to $5.6 million in fiscal 2007.
This represents a growth rate of 425% from fiscal 2007. The Company
incurred a negative gross margin of $3.7 million in fiscal 2008
compared to negative $0.4 million in fiscal 2007. The negative
gross margin in fiscal 2008 resulted from the high price of silicon
wafers purchased from the spot market, higher than average
manufacturing costs incurred during the initial solar cell
production run as well as from the Company's $1.0 million inventory
provision incurred during the fourth quarter 2008 due to an
accelerated market price decline of silicon wafers. Total operating
expense for fiscal 2008 was $16.7 million compared to $12.1 million
in the prior year. In fiscal 2008, the Company recorded $5.6
million of non-cash stock compensation charge and $4.2 million of
non-cash loss on debt extinguishment. Excluding these non-cash
charges of $9.8 million, total operating expense for 2008 fiscal
year was $6.9 million or 23% of total sales. In fiscal 2007, the
Company recorded $9.3 million of non-cash stock compensation
charges. Excluding the non-cash stock compensation charge, total
operating expenses for 2007 fiscal year was $2.8 million or 50% of
total sales. In fiscal 2008, the Company recorded net income of
$5.5 million compared to a loss of $29.4 million in fiscal 2007.
The Company's fiscal 2008 net income included a $13.8 million
non-cash gain associated with a change in the fair market value of
compound embedded derivative liability and a $14.0 million gain
associated with a change in the fair market value of warrant
liability. 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. Excluding
these non-cash gains of $27.8 million, on a non-GAAP basis, the
Company had a net loss of $22.3 million in fiscal 2008. Included in
the fiscal 2007 net loss of $29.4 million, was a $15.2 million loss
on issuance of convertible notes. Excluding this non-cash charge of
$15.2 million, the Company had a net loss of $14.2 million, on a
non GAAP basis. After excluding for anti-dilution securities, the
Company had a loss of $(0.18) per diluted share in fiscal 2008
compared to a loss of $(0.38) in fiscal 2007. Financial Position As
of September 30, 2008, the Company had $3.2 million in cash and
$3.7 million of working capital. The Company had $1.9 million of
accounts receivables, $3.2 million of prepayment primarily for
purchase of raw materials and $4.9 million of inventories on hand.
Additionally, the Company had $2.8 million of accounts payable and
accrued liabilities, $5.5 million of accrued liability due to
related party, $1.0 million of derivative liabilities and $3.4
million of warrant liabilities. 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 any
forward-looking statements. Solar EnerTech Corp Consolidated
Statements of Operations For the Three Months For the Fiscal Years
Ended September 30, Ended September 30, 2008 2007 2008 2007*
(Unaudited) (Unaudited) (Unaudited) Net sales 10,830,000 4,053,000
29,412,000 $5,573,000 Cost of sales (13,424,000) (4,421,000)
(33,104,000) (5,934,000) Gross loss (2,594,000) (368,000)
(3,692,000) (361,000) Operating expenses: Selling, general &
administrative 3,593,000 4,132,000 11,778,000 11,865,000 Research
& development 219,000 85,000 702,000 198,000 Loss on debt
extinguishment 244,000 -- 4,240,000 -- Total operating expenses
4,056,000 4,217,000 16,720,000 12,063,000 Operating loss
(6,650,000) (4,585,000) (20,412,000) (12,424,000) Other income
(expense): Interest income 7,000 22,000 87,000 62,000 Interest
expense (221,000) (471,000) (1,035,000) (1,086,000) Loss on
issuance of convertible notes -- -- -- (15,209,000) Gain (loss) on
change in fair market value of compound embedded derivative
1,500,000 5,300,000 13,767,000 (200,000) Gain (loss) on change in
fair market value of warrant liability 2,948,000 5,137,000
13,978,000 (290,000) Other expense (411,000) (300,000) (846,000)
(285,000) Net income (loss) $(2,827,000) $5,103,000 $5,539,000
$(29,432,000) Net income (loss) per share - basic ($0.03) $0.06
$0.07 $(0.38) Net income (loss) per share - diluted $(0.03) $(0.04)
$(0.18) $(0.38) * Derived from fiscal year 2007 annual report.
Solar EnerTech Corp Unaudited Consolidated Balance Sheets September
30, 2008 2007* (Unaudited) ASSETS Current assets: Cash and cash
equivalents $3,238,000 $3,908,000 Accounts receivable, net of
allowance for doubtful account of $21,000 and $0 at September 30,
2008 and 2007, respectively 1,875,000 913,000 Advance payments and
other 3,175,000 6,500,000 Inventories, net 4,886,000 5,708,000 VAT
receivable 2,436,000 480,000 Other receivable 730,000 110,000 Total
current assets 16,340,000 17,619,000 Property and equipment, net
12,934,000 3,215,000 Investment 1,000,000 -- Deferred financing
costs, net of accumulated amortization 1,812,000 2,540,000 Deposits
701,000 1,741,000 Total assets $32,787,000 $25,115,000 LIABILITIES
AND STOCKHOLDER'S EQUITY (DEFICIT) Current liabilities: Accounts
payable $1,771,000 $2,891,000 Customer advance payment 96,000
1,603,000 Accrued interest expense -- 615,000 Accrued expenses
910,000 507,000 Accounts payable and accrued liabilities, related
parties 5,450,000 3,969,000 Demand note payable to a related party
-- 450,000 Demand notes payable -- 700,000 Derivative liabilities
980,000 16,800,000 Warrant liabilities 3,412,000 17,390,000 Total
current liabilities 12,619,000 44,925,000 Convertible notes, net of
discount 85,000 7,000 Total liabilities 12,704,000 44,932,000
STOCKHOLDER'S EQUITY (DEFICIT): Common stock - 400,000,000 shares
authorized at $0.001 par value 112,052,012 and 78,827,012 shares
issued and outstanding at September 30, 2008 and September 30,
2007, respectively 112,000 79,000 Additional paid in capital
71,627,000 39,192,000 Other comprehensive income 2,485,000 592,000
Accumulated deficit (54,141,000) (59,680,000) Total stockholders'
equity (deficit) 20,083,000 (19,817,000) Total liabilities and
stockholders' equity (deficit) $32,787,000 $25,115,000 * Derived
from fiscal year 2007 annual report. DATASOURCE: Solar EnerTech
Corp. CONTACT: Investor Relations, ICR Inc., Bill Zima,
+1-203-682-8200 for Solar EnerTech Corp.
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