MOUNTAIN VIEW, Calif., Jan. 12 /PRNewswire-Asia-FirstCall/ -- Solar
EnerTech Corp. (OTC Bulletin Board: SOEN) (the "Company") today announced
financial results for the fiscal fourth quarter and fiscal year ended
September 30, 2009.
Fourth Quarter 2009 Financial Results
In the 2009 fourth quarter, total module shipments increased 128% compared
to the fourth quarter of the prior year period. Revenue increased 22% to $13.2
million compared to $10.8 million in the fourth quarter of the prior year
period. Revenue for the fiscal year 2009 fourth quarter was comprised of
approximately $11.2 million in solar modules sales, of which more than 95%
were sold to Europe and Australia, and $2.0 million in solar cell sales. The
Company recruited an experienced sales director from the industry and built up
a strong sales and marketing team, which resulted in new key customers. During
the fourth quarter of fiscal year 2009, we acquired a new key customer,
specifically a 10MW contract with a German system integrator contributing to
the increase in sales volume.
The fourth quarter 2009 gross profit increased to positive $2.1 million
compared to negative $2.6 million in the fourth quarter in the prior year
period. Fourth quarter 2009 gross margin was positive at 16% of total sales
compared to negative 24% 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 efficiency of its solar cells. The
increase in sales volume also resulted in lower average fixed manufacturing
cost. Additionally, the Company secured high quality key raw materials on the
spot market with favorable credit terms as well as promoted a lean production
process and zero inventory system to control quality and filter out
unqualified products.
Total operating expenses for the fiscal 2009 fourth quarter were $1.4
million, or 11% of total net sales, which included a $1.1 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 2009
fourth quarter was $2.5 million, or 19% of total net sales. 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 charges
related to the hiring and retention of key executives and $0.2 million of
non-cash charges for loss on debt extinguishment. Excluding these non-cash
charges, the operating expenses for the fiscal 2008 fourth quarter were $3.1
million, or 29% of total net sales. The decrease in operating expenses in the
fiscal 2009 fourth quarter compared to fiscal 2008 fourth quarter was
primarily due to the Company's efforts in various cost cutting programs and
renegotiation of contracts to reduce operating expenses.
Net income for the fourth quarter of fiscal 2009 was $1.9 million, or
$0.02 per basic share or $0.02 per diluted share after excluding anti-dilution
securities in the fourth quarter of fiscal 2009 compared to a net loss of $2.8
million, or negative $0.03 per basic and diluted shares in the same period in
fiscal 2008. In the fourth quarter of fiscal 2009, the Company recorded a
non-cash gain totaling $3.2 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
$4.4 million for these two same items in the fourth quarter of fiscal 2008.
Excluding non-cash items, on a non-GAAP basis, the fourth quarter 2009 net
loss was $1.3 million compared to a net loss of $7.2 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 Young, Chief Executive Officer of Solar EnerTech commented, "We
are pleased to report solid fourth quarter results in what was a transitional
year for our business. We made strategic adjustments to cut costs and
maintained our focus on developing superior products to advance the SolarE
brand name into the marketplace. From a technological standpoint, we made
excellent progress increasing the efficiency of our solar cells that resulted
in higher wattage output panels, which creates more value to our customers and
further reduces our production costs. These efforts resulted in the successful
securing orders from new customers as well as receiving follow-on orders from
existing customers. We were delighted to have achieved positive net income of
$1.9 million and gross margin performance of 16% in our fiscal 2009 fourth
quarter compared to a net loss of $2.8 million and negative 24% gross margin
in the previous year period.
"We continue to make efforts to enhance our sales opportunity on a global
scale. During our fiscal fourth quarter, we made our debut in the U.S. market
through our participation in the InterSolar North America Exhibition and
Conference. This event allowed us to showcase our products and value-added
services to all relevant U.S.-based companies in the solar industry. While
approximately 90% of our products are shipped to Europe and Australia, we
believe the U.S. market will still play a very important role for our company
in the future.
"As part of our product development efforts, we added an infrared scanner
at our Shanghai module production facility to better serve our customers. This
scanning device enables us to execute tighter quality control by x-ray
scanning our panels to detect any material defects hidden underneath the
surface of our solar panels. Each individual solar panel scan will be linked
to a barcode and stored digitally into a proprietary database to facilitate
future customer support and warranties, as well as strengthen our client
relationship efforts. We believe such efforts can further drive more sales
opportunities.
"We are encouraged with our financial results for the fourth quarter and
are excited by our opportunities heading into fiscal 2010. We are enhancing
our manufacturing facilities to meet increased customer demands for our solar
cell and module products, explore new technological advancements and focus on
minimizing our operating expenses in order to maximize our performance. Our
efforts and changes made over the course of the past year have positioned us
for greater performance in fiscal 2010," concluded Mr. Young.
Fiscal 2009 Financial Results
For the fiscal year ended September 30, 2009, Solar EnerTech reported
total revenue of $32.8 million, compared to $29.4 million in fiscal 2008. This
represents a 12% growth from fiscal 2008. The increase in revenue resulted
from increases in solar module shipments from 6.67 MW in fiscal year 2008 to
10.50MW in fiscal year 2009, partially offset by a 25% decrease in average
selling prices from $4.10 per watt in fiscal year 2008 to $3.07 per watt in
fiscal year 2009.
The Company incurred a negative gross margin of $1.0 million in fiscal
2009 compared to negative $3.7 million in fiscal 2008. The improvement in
fiscal 2009 gross margin compared to fiscal 2008 was due to lower raw material
prices, specifically silicon wafer prices which offset the decrease in module
sales prices. Silicon wafer prices decreased approximately 65% from
RMB46/piece during fiscal year 2008 to RMB16/piece during fiscal year 2009, as
compared to module sales prices that decreased approximately 41% from
EUR2.2/watt during fiscal year 2008 to EUR1.3/watt during fiscal year 2009.
Total operating expense for fiscal 2009 was $11.4 million compared to
$16.7 million in the prior year. In fiscal 2009, the Company recorded $3.2
million of non-cash stock compensation charge, $1.0 million of non-cash
impairment loss on property and equipment, and $0.5 million of non-cash loss
on debt extinguishment. Excluding these non-cash charges of $4.7 million,
total operating expense for the 2009 fiscal year was $6.7 million, or 20% of
total sales. 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 the 2008 fiscal year was $6.9 million, or 23% of total
sales.
In fiscal 2009, the Company recorded a net loss of $14.2 million compared
to net income of $5.5 million in fiscal 2008. The Company's fiscal 2009 net
loss included a $0.8 million non-cash gain associated with a change in the
fair market value of compound embedded derivative liability and a $1.3 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 $2.1 million, on a non-GAAP
basis, the Company had a net loss of $16.3 million in fiscal 2009. Included in
the fiscal 2008 net income of $5.5 million was a $27.8 million gain on
issuance of convertible notes. Excluding this non-cash charge of $27.8 million,
the Company had a net loss of $22.3 million, on a non-GAAP basis. The Company
had a loss of $0.16 per diluted share in fiscal 2009 compared to a loss of
$0.18 per diluted share, after excluding for anti-dilution securities in
fiscal 2008.
Financial Position
As of September 30, 2009, the Company had $1.7 million in cash, $7.4
million of accounts receivables, $0.8 million of prepayment primarily for
purchase of raw materials, $4.0 million of inventories on hand, $1.3 million
of deferred financing cost associated to the convertible notes and $0.7
million of VAT and other receivables. Additionally, as of September 30, 2009,
the Company had $6.9 million of accounts payable, customer advance payment and
accrued liabilities, $5.6 million of accrued liability due to related party,
$0.2 million of derivative liabilities and $11.6 million in principal of
convertible notes outstanding, which are recorded at carrying value at $3.1
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 Notes to
modify the terms of the Notes. Pursuant to the terms of the Conversion
Agreement, the Notes will be automatically converted into shares of our common
stock at a conversion price of $0.15 per share and be 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") have agreed to enter into an Amendment to the Series A, B and C
Warrants (the "Warrant Amendment") upon the closing of the transactions
contemplated in the Conversion Agreement. Pursuant to the terms of the Warrant
Amendment, the PIPE Warrants shall be amended to reduce their exercise prices
from $1.21, $0.90 and $1.00, respectively, to $0.15. The PIPE Warrants shall
also be 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.
Pursuant to the Conversion Agreement, after the closing of the
transactions contemplated by it, the Company shall issue to its employees
additional options to purchase shares of the Company's common stock equal to
approximately 30% of each employee's pre-closing option holdings. This is to
provide for additional equity incentives to the Company's employees in order
to account for the dilution from the conversion of the Notes and re-pricing of
the PIPE Warrants. These additional options shall be priced at $0.15 per share.
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.
For more information, please contact:
Bill Zima
ICR Inc.
Phone: +1-203-682-8200 (Investor Relations)
(Unaudited Financial Statements Follow)
Solar EnerTech Corp
Unaudited Consolidated Statements of Operations
Three Months Ended Year Ended
September 30, September 30,
2009 2008 2009 2008
Sales $13,196,000 $10,830,000 $32,835,000 $29,412,000
Cost of sales (11,085,000) (13,424,000) (33,876,000) (33,104,000)
Gross profit
(loss) 2,111,000 (2,594,000) (1,041,000) (3,692,000)
Operating expenses:
Selling, general
and administrative 1,000,000 3,593,000 9,224,000 11,778,000
Research and
development (534,000) 219,000 700,000 702,000
Loss on debt
extinguishment -- 244,000 527,000 4,240,000
Impairment loss on
property and
equipment 960,000 -- 960,000 --
Total operating
expenses 1,426,000 4,056,000 11,411,000 16,720,000
Operating income
(loss) 685,000 (6,650,000) (12,452,000) (20,412,000)
Other income
(expense):
Interest income 3,000 7,000 16,000 87,000
Interest expense (2,060,000) (221,000) (3,998,000) (1,035,000)
Gain on change in
fair market value
of compound
embedded derivative 420,000 1,500,000 770,000 13,767,000
Gain on change in
fair market value
of warrant
liability 2,759,000 2,948,000 1,344,000 13,978,000
Other income
(expense) 136,000 (411,000) 139,000 (846,000)
Net income (loss) $1,943,000 $(2,827,000) $(14,181,000) $5,539,000
Net income (loss)
per share - basic $0.02 $(0.03) $(0.16) $0.07
Net income (loss)
per share -
diluted $0.02 $(0.03) $(0.16) $(0.18)
Weighted average
shares outstanding
- basic 88,256,706 86,650,407 87,817,762 75,944,461
Weighted average
shares outstanding
- diluted 88,315,499 86,650,407 87,817,762 98,124,574
Solar EnerTech Corp
Consolidated Balance Sheets
September 30,
2009 2008
ASSETS
Current assets:
Cash and cash equivalents $1,719,000 $3,238,000
Accounts receivable, net of
allowance for doubtful account of
$96,000 and $21,000 at September
30, 2009 and 2008, respectively 7,395,000 1,875,000
Advance payments and other 799,000 3,175,000
Inventories, net 3,995,000 4,886,000
Deferred financing costs, net of
accumulated amortization 1,250,000 1,812,000
VAT receivable 334,000 2,436,000
Other receivable 408,000 730,000
Total current assets 15,900,000 18,152,000
Property and equipment, net 10,509,000 12,934,000
Investment 1,000,000 1,000,000
Deposits 87,000 701,000
Total assets $27,496,000 $32,787,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $5,794,000 $1,771,000
Customer advance payment 27,000 96,000
Accrued expenses 1,088,000 910,000
Accounts payable and accrued
liabilities, related parties 5,646,000 5,450,000
Derivative liabilities 178,000 980,000
Convertible notes, net of discount 3,061,000 85,000
Total current liabilities 15,794,000 9,292,000
Warrant liabilities 2,068,000 3,412,000
Total liabilities 17,862,000 12,704,000
STOCKHOLDERS' EQUITY:
Common stock - 400,000,000 shares
authorized at $0.001 par value
111,406,696 and 112,052,012 shares
issued and outstanding at September
30, 2009 and 2008, respectively 111,000 112,000
Additional paid in capital 75,389,000 71,627,000
Other comprehensive income 2,456,000 2,485,000
Accumulated deficit (68,322,000) (54,141,000)
Total stockholders' equity 9,634,000 20,083,000
Total liabilities and stockholders'
equity $27,496,000 $32,787,000
SOURCE Solar EnerTech Corp.