-- 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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