Solar EnerTech Corp. (OTCBB:SOEN) (the "Company") today
announced financial results for the first quarter of fiscal year
2010.
First Quarter Highlights:
- Shipments increased 448%
compared to the first quarter in the prior year period.
- Revenue increased 248% to $17.7
million compared to $5.1 million in the first quarter of the prior
year.
- The first quarter 2010 gross
profit increased to positive $1.9 million, compared to negative
$2.3 million in the first quarter in the prior year period.
Total module shipments increased 448% in the first fiscal
quarter 2010, compared to the first fiscal quarter of the prior
year. Revenue increased 248% to $17.7 million compared to $5.1
million in the first fiscal quarter of the prior year. Revenue for
fiscal 2010 first quarter was comprised of approximately $15.3
million in solar modules sales, of which more than 95% were sold to
Europe and Australia, and $2.4 million in solar cell sales. The
increase in revenue was due to increased sales orders from new and
existing customers as a result of heightened efforts by the
Company’s sales and marketing team. Specifically, during the last
quarter of fiscal year 2009, the Company acquired a 10MW contract
from a new customer in Europe, contributing to the increased sales
volume.
The first fiscal quarter 2010 gross profit increased to positive
$1.9 million, compared to negative $2.3 million in the first
quarter in the prior year period. First quarter 2010 gross margin
was positive at 11% of total sales compared to negative 46% of
total sales in the prior year period. The improvement in gross
profit margin was primarily due to cost restructuring and the
Company’s ability to increase the manufacture efficiency of its
solar cells. Additionally, the Company secured high quality raw
materials with favorable credit terms as well as promoted a lean
production process and filtered out unqualified products.
Total operating expenses for the fiscal 2010 first quarter were
$2.3 million, or 13% of total net sales, which included a $0.6
million non-cash stock compensation credit related to the
restructuring of the management team. Excluding these non-cash
items, the operating expense for the fiscal 2010 first quarter was
$1.7 million, or 10% of total net sales. This is to be compared
with the 2009 first quarter total operating expense of $3.2
million, or 63% of total sales, which included $1.4 million of
non-cash stock compensation charges related to the hiring and
retention of key executives and $0.3 million of non-cash charges
for loss on debt extinguishment. The increase in operating expenses
in the fiscal 2010 first quarter compared to fiscal 2009 first
quarter was primarily due to increase shipping rates and
volume.
Net loss for the first quarter of fiscal 2010 was $3.9 million,
or negative $0.04 per basic and diluted share compared to a net
loss of $3.8 million, or negative $0.04 per basic and diluted
shares in the same period in fiscal 2009. In the first quarter of
fiscal 2010, the Company recorded a non-cash gain totaling $1.0
million associated with a change in the fair market value of
warrant liability and a change in the fair market value of compound
embedded derivative liability compared to a total non-cash gain of
$2.1 million for these two same items in the first quarter of
fiscal 2009. Excluding non-cash items, on a non-GAAP basis, the
first quarter 2010 net loss was $4.9 million compared to a net loss
of $5.9 million in the prior year period. 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 S. Young, Chief Executive Officer of Solar EnerTech
commented, “Fiscal first quarter result indicates a significant
accomplishment for Solar EnerTech during the past six months since
we made a strategic adjustment to focus on supplying superior
products to our customers. We are pleased to see continued strong
top-line growth in the quarter – our main product shipment
increased four times and revenue increased nearly 250% compared to
the same period last year. As our capacity has increased and the
quality of our solar cells becomes further recognized in the
industry, we now have the opportunity to focus on advancing our
brand name recognition.”
“While we have been experiencing volatile market conditions for
the last several months, the entire management team is up to the
challenge. Our focus on product quality, coupled with our efforts
in support services, has provided satisfaction among our major
customers in Europe and Australia, and that in turn enabled us to
acquire new customers. We are encouraged with the demand trends
we’re seeing in our business and believe the quality of our
products differentiate Solar EnerTech from many of other players in
the global PV business,” concluded Mr. Young.
Financial Position
As of December 31, 2009, the Company had $1.6 million in cash,
$8.4 million of accounts receivables, $0.6 million of prepayment
primarily for purchase of raw materials, $5.8 million of
inventories on hand, $0.7 million of deferred financing cost
associated to the convertible notes and $1.1 million of VAT and
other receivables. Additionally, as of December 31, 2009, the
Company had $9.9 million of accounts payable, customer advance
payment and accrued liabilities, $5.7 million of accrued liability
due to related party, $0.1 million of derivative liabilities and
$11.6 million in principal of convertible notes outstanding, which
are recorded at carrying value at $6.8 million.
On January 7, 2010, the Company entered into a Series A Notes
and Series B Notes Conversion Agreement (the “Conversion
Agreement”) with the holders holding over 75% of the outstanding
principal amounts owed under the Series A and Series B Notes to
modify the terms of the notes. Pursuant to the terms of the
Conversion Agreement, the notes were automatically converted into
shares of the Company’s common stock at a conversion price of $0.15
per share and amended to eliminate the maximum ownership percentage
restriction prior to such conversion.
In addition, the Company and the holders of over 50% of each of
the outstanding Series A, Series B and Series C Warrants
(collectively the “PIPE Warrants”) entered into an Amendment to the
Series A, B and C Warrants (the “Warrant Amendment”) in conjunction
with the Conversion Agreement. Pursuant to the terms of the Warrant
Amendment, the PIPE Warrants were amended to reduce their exercise
prices from $1.21, $0.90 and $1.00, respectively, to $0.15. The
PIPE Warrants were also amended to (a) waive the anti-dilution
provisions of the PIPE Warrants that would increase the number of
shares issuable pursuant to the PIPE Warrants in inverse proportion
to the reduction in the exercise price, (b) waive all anti-dilution
protections as to future transactions and (c) eliminate maximum
ownership percentage restrictions.
About Solar EnerTech Corp.
Solar EnerTech is a photovoltaic solar energy cell manufacturing
enterprise incorporated in the United States with its corporate
office in Mountain View, California. The Company has established a
sophisticated 67,107-square-foot manufacturing facility at Jinqiao
Modern Technology Park in Shanghai, China. The Company currently
has two 25MW solar cell production lines and a 50MW solar module
production facility.
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.
Solar EnerTech Corp Unaudited Consolidated Statements of
Operations Quarter Ended December 31,
2009 2008 Sales $
17,693,000 $ 5,084,000 Cost of sales (15,762,000 )
(7,420,000 ) Gross profit (loss) 1,931,000
(2,336,000 ) Operating expenses: Selling, general and
administrative 2,218,000 2,561,000 Research and development 108,000
335,000 Loss on debt extinguishment - 310,000
Total operating expenses 2,326,000
3,206,000 Operating loss (395,000 ) (5,542,000 )
Other income (expense): Interest income 3,000 7,000 Interest
expense (4,425,000 ) (365,000 ) Gain on change in fair market value
of compound embedded derivative 104,000 475,000 Gain on change in
fair market value of warrant liability 921,000 1,644,000 Other
expense (132,000 ) (20,000 ) Net loss $ (3,924,000 )
$ (3,801,000 ) Net loss per share - basic $ (0.04 ) $
(0.04 ) Net loss per share - diluted $ (0.04 ) $ (0.04 )
Weighted average shares outstanding - basic 88,256,706 87,043,800
Weighted average shares outstanding - diluted 88,256,706 87,043,800
Solar EnerTech Corp Consolidated Balance
Sheets December 31, 2009
September 30, 2009 (Unaudited) (Audited)
ASSETS Current assets: Cash and cash equivalents $
1,633,000 $ 1,719,000
Accounts receivable, net of
allowance for doubtful account of $96,000 and $96,000 at December
31, 2009 and September 30, 2009, respectively
8,446,000 7,395,000 Advance payments and other 629,000 799,000
Inventories, net 5,798,000 3,995,000 Deferred financing costs, net
of accumulated amortization 705,000 1,250,000 VAT receivable
878,000 334,000 Other receivable 231,000
408,000 Total current assets 18,320,000 15,900,000 Property
and equipment, net 10,509,000 10,509,000 Investment 1,000,000
1,000,000 Deposits 101,000 87,000 Total
assets $ 29,930,000 $ 27,496,000
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable $ 8,437,000 $ 5,794,000 Customer advance payment
26,000 27,000 Accrued expenses 1,424,000 1,088,000 Accounts payable
and accrued liabilities, related parties 5,688,000 5,646,000
Derivative liabilities 74,000 178,000 Convertible notes, net of
discount 6,767,000 3,061,000 Total
current liabilities 22,416,000 15,794,000 Warrant liabilities
1,147,000 2,068,000 Total liabilities
23,563,000 17,862,000
STOCKHOLDERS' EQUITY:
Common stock - 400,000,000 shares
authorized at $0.001 par value 111,106,696 and 111,406,696 shares
issued and outstanding at December 31, 2009 and September 30, 2009,
respectively
111,000 111,000 Additional paid in capital 76,040,000 75,389,000
Other comprehensive income 2,462,000 2,456,000 Accumulated deficit
(72,246,000 ) (68,322,000 ) Total stockholders'
equity 6,367,000 9,634,000 Total
liabilities and stockholders' equity $ 29,930,000 $
27,496,000
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