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Perfectenergy International Reports Record Second Quarter Fiscal 2008 Financial Results

June 17, 2008

Perfectenergy International Ltd., (OTCBB:PFGY), a rapidly growing solar energy company, today announced revenues for the second fiscal quarter ended April 30, 2008 rose to $13.0 million, from $0.5 million for the second fiscal quarter of 2007. This increase is attributable to a recent expansion of the Company’s solar cell and solar module production facility.

Gross profit totaled approximately $1.3 million, or 9.7% of revenues, for the three months ended April 30, 2008, compared with gross profit of $1,287, or 0.2% of revenues, for the same fiscal quarter in 2007. The increase in gross profit was mainly due to increased average selling price of PV module products and increased use of self-manufactured PV cells in the production of the Company’s solar module products.

Selling, general and administrative expenses totaled $1.0 million, or 7.5% of sales, for the three months ended April 30, 2008 compared with $210,000, or 39.5% of sales, for the same period last year. Research and development costs (R&D) were approximately $71,000 for the three months ended April 30, 2008. There were no R&D costs incurred in the second fiscal quarter of 2007.

Net income for the second quarter ended April 30, 2008 was $5.0 million, or $0.17 per share, compared with a net loss of approximately $0.2 million, or $0.01 per share, for the same period in 2007. Net income benefitted from an expanded production facility that allowed for greater economies of scale, and was also attributable to a positive impact from the change in the fair market value of outstanding warrants.

Perfectenergy’s President and Chief Executive Officer Jack Li, stated, “We are pleased with our improved performance and believe we can continue to grow our earnings as we benefit from product improvements, better cost controls and greater integration of the value chain. Demand for our PV solar cells, modules and systems grew primarily in Europe and we have plans to broaden our sales of solar energy product markets into additional countries in Asia, Europe, and the United States. In order to meet increased product demand, we remain focused on the build out of a new solar cell production facility for Perfectenergy in the Shanghai Zizhu Science-Based Industrial District of Shanghai. This new facility will give us lamination and cell production capacity of 200MW. We expect construction to begin later this year and to be completed in the second quarter of 2009. We also expect to benefit from our strong raw material supplier relationships, which support our confidence in obtaining sufficient silicon material to meet our order demand in 2008 and 2009. Moreover, we continue to forge new supplier relationships to keep up with the rapid growth we see longer term.”

Company Contract Backlog

The Company’s backlog of contracts as of April 30, 2008 totaled 17MW, which equates to approximately $74.8 million in revenues. Contracts that are under development and that the Company expects to complete total 8MW, and such contracts, if completed, would represent more than $30 million in revenues. The 17MW in backlogged orders under contract and 8MW of contracts under development that the Company believes it will complete for PV solar cells, modules and systems would represent approximately 80% of the Company’s PV module capacity and would exceed the Company’s solar cell production capacity, which the Company expects to expand to 45MW by July 2008.

Six Months Ended April 30, 2008

Comparing the six months ended April 30, 2008 to the six months ended April 30, 2007:

— Revenues increased to $23.4 million from $2.1 million, due primarily to increased sales of solar cells and solar modules, which was achievable as a result of the expanded production facilities.

— Cost of revenues increased to $21.7 million from $2.0 million and was generally in line with the sales increase and the increase in raw materials costs across the two periods.

— Gross profit was $1.7 million compared with $0.1 million, representing gross margins of approximately 7.3% and 6.2%, respectively. The increase in the Company’s gross profit was mainly due to economic of scales in the production as well as the production and increased sales of higher margin products.

— Selling, general and administrative expenses totaled $2.7 million, versus $0.5 million, an increase of approximately 400%. The increase was primarily attributable to additional expenses incurred in connection with the office facility expansion.

— Research and development costs totaled $102,789 and included salaries, consultant fees, supplies and materials for samples, as well as overhead costs, which include rent, utilities, and other expenses. There were no R&D costs incurred in the prior year period.

— Net income rose to $6.3 million compared with a loss of $0.4 million a year ago. The increase in net income is attributable to additional profits generated from the expanded production facilities as well as the positive impact from the change in fair market value of outstanding warrants.

As of April 30, 2008, Perfectenergy had cash and equivalents totaling $4.9 million, compared with $9.7 million at October 31, 2007.

ABOUT PERFECTENERGY

Perfectenergy International Limited designs, manufactures, and markets customized and standard photovoltaic (PV) solar cells, modules and systems for the worldwide solar market. Perfectenergy sells its products into Europe, Asia and China. The Company began producing its solar products in 2005 in the Company’s sophisticated 67,000 square foot manufacturing plant in Shanghai, China.

SAFE HARBOR STATEMENT

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 involving known and unknown risks, delays, and uncertainties that may cause actual results or performance to differ materially from those expressed or implied by these forward-looking statements. These risks, delays, and uncertainties include, but are not limited to: risks associated with the uncertainty of future financial and operating results, reliance on a limited number of suppliers, the limited diversification of the Company’s product offerings, additional financing requirements, development of new products, government approval processes, the impact of competitive products or pricing, technological changes, the effect of economic conditions and other uncertainties detailed in the Company’s filings with the Securities and Exchange Commission including without limitation, the Form 10-KSB, as amended, for the Company’s fiscal year ended October 31, 2007. The Company undertakes no obligation to update any forward-looking statements.

  PERFECTENERGY INTERNATIONAL LTD. AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS) FOR THREE MONTHS AND SIX MONTHS ENDED APRIL 30, 2008 AND 2007 (UNAUDITED)  Three Months Ended          Six Months Ended -------------------------  ------------------------- April 30,    April 30,     April 30,    April 30, 2008          2007         2008          2007 ------------ ------------ ------------- ------------ REVENUES         $12,977,830   $   530,866  $23,389,072   $ 2,112,622  COST OF REVENUES  11,714,147       529,579   21,682,737     1,981,756 -----------   -----------  -----------   -----------  GROSS PROFIT       1,263,683         1,287    1,706,335       130,866 -----------   -----------  -----------   -----------  OPERATING EXPENSES Selling, general and administrative     974,711       209,837    2,694,498       537,858 Stock-based compensation       386,770         3,400      778,443         4,555 Research and development         71,217             -      102,789             - -----------   -----------  -----------   ----------- Total operating expenses        1,432,698       213,237    3,575,730       542,413 -----------   -----------  -----------   -----------  LOSS FROM OPERATIONS         (169,015)     (211,950)  (1,869,395)     (411,547) -----------   -----------  -----------   -----------  OTHER INCOME (EXPENSES) Interest expense and other charges      (17,253)          398      (32,543)      (11,115) Interest income       3,924           539       68,708         1,102 Non-operating income              19,781             -       45,120             - Non-operating expense            (32,203)         (147)     (36,776)         (147) Change in fair value of derivative instruments      5,314,731             -    8,277,874             - -----------   -----------  -----------   ----------- Total other income (expense), net             5,288,980           790    8,322,383       (10,160) -----------   -----------  -----------   -----------  INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES      5,119,965      (211,160)   6,452,988      (421,707)  PROVISION FOR INCOME TAXES         86,233             -      138,275             - -----------   -----------  -----------   -----------  NET INCOME (LOSS)            5,033,732      (211,160)   6,314,713      (421,707)  OTHER COMPREHENSIVE INCOME: Foreign currency translation adjustments        472,228        40,258      857,078        61,401 -----------   -----------  -----------   -----------  COMPREHENSIVE INCOME (LOSS)   $ 5,505,960   $  (170,902) $ 7,171,791   $  (360,306) ===========   ===========  ===========   ===========  EARNINGS PER SHARE Basic           $      0.17   $     (0.01) $      0.21   $     (0.02) ===========   ===========  ===========   =========== Diluted         $      0.17   $     (0.01) $      0.21   $     (0.02) ===========   ===========  ===========   ===========  WEIGHTED AVERAGE NUMBER OF SHARES Basic            29,604,210    22,301,158   29,589,829    22,301,158 ===========   ===========  ===========   =========== Diluted          29,702,148    22,301,158   30,579,277    22,301,158 ===========   ===========  ===========   =========== 

  PERFECTENERGY INTERNATIONAL LTD. AND SUBSIDIARIES  CONSOLIDATED BALANCE SHEETS AS OF APRIL 30, 2008 AND OCTOBER 31, 2007  ASSETS ---------------------------------------------------------------------- April 30,    October 31, 2008         2007 ----------   ----------- Unaudited ---------- CURRENT ASSETS: Cash                                        $ 4,856,432  $ 9,701,545 Accounts receivable                           1,291,596       13,834 Other receivables                                63,703            - Refundable deposit                              350,575       14,901 Inventories Raw materials                                2,227,913    1,941,734 Work in process                              2,084,220      310,192 Finished goods                               2,291,829    1,854,882 Prepayments                                   2,502,646    1,375,401 Deferred expenses                               914,833      348,993 Deferred tax assets                                   -       75,725 ----------   ----------- Total current assets                    16,583,747   15,637,207 ----------   -----------  EQUIPMENT AND LEASEHOLD IMPROVEMENTS, net      4,300,184    1,866,527 ----------   -----------  OTHER ASSETS: Advances on equipment purchases               2,329,176    1,169,616 ----------   -----------  Total assets                              $23,213,107  $18,673,350 ==========   ===========  LIABILITIES AND SHAREHOLDERS' EQUITY ----------------------------------------------------------------------  CURRENT LIABILITIES: Accounts payable and other payable          $ 2,566,947  $   509,077 Accrued liabilities                             858,490       55,403 Customer deposits                             2,685,655    1,348,574 Taxes payable                                   479,761        3,772 ----------   ----------- Total current liabilities                    6,590,853    1,916,826 ----------   -----------  FAIR VALUE OF DERIVATIVE INSTRUMENTS           4,188,812   12,466,686 ----------   -----------  COMMITMENTS AND CONTINGENCIES                          -            - ----------   -----------  SHAREHOLDERS' EQUITY: Common stock, $.001 par value, 94,250,000 shares authorized, 29,626,916 and 29,575,761 shares issued and outstanding as of April 30, 2008 and October 31, 2007, respectively                                    29,627       29,576 Additional paid-in capital                    5,689,268    4,717,506 Statutory reserves                              110,068      110,068 Retained earnings (deficit)                   5,554,935     (759,778) Accumulated other comprehensive income        1,049,544      192,466 ----------   ----------- Total shareholders' equity                  12,433,442    4,289,838 ----------   -----------  Total liabilities and shareholders' equity                                   $23,213,107  $18,673,350 ==========   =========== 

  PERFECTENERGY INTERNATIONAL LTD. AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF CASH FLOWS FOR SIX MONTHS ENDED APRIL 30, 2008 AND 2007 (UNAUDITED) Six Months Ended ---------------------- April 30,    April 30, 2008        2007 -----------  --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss)                             $ 6,314,713  $(421,707) Adjustments to reconcile net income to cash (used in) provided by operating activities: Depreciation                                    131,757     97,515 Inventory write-off                              79,851     20,868 Loss from disposal of equipment                       -     33,799 Compensation expense for options issued to employees                                      778,443      4,555 Change in fair value of derivative instruments                                 (8,277,874)         - Late registration penalties                   1,079,467          - Changes in assets and liabilities: Accounts receivable                          (1,234,069)   351,308 Other receivables                              (269,209)   181,610 Refundable deposit                             (334,629)         - Inventories                                  (2,215,191)   348,163 Prepayments                                  (1,001,516)    60,030 Deferred expenses                              (520,308)    (9,897) Deferred tax assets                              78,455          - Accounts payable and other payable            2,184,542   (243,912) Accrued liabilities                              78,535      1,537 Customer deposits                             1,200,859     46,954 Taxes payable                                   457,208    (33,885) -----------  --------- Net cash (used in) provided by operating activities                                 (1,468,966)   436,938 -----------  ---------  CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of equipment                            (514,077)   (46,079) Construction in progress                       (1,846,693)   (96,728) Advances on equipment purchases                (1,043,173)   (49,779) -----------  --------- Net cash used in investing activities       (3,403,943)  (192,586) -----------  ---------  CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock             26,250          - Borrowings from shareholders and officers               -     32,348 Payments on shareholders and officers loan              -   (256,937) Payment on late registration penalties           (194,316)         - -----------  --------- Net cash used in financing activities         (168,066)  (224,589) -----------  ---------  EFFECT OF EXCHANGE RATE CHANGES ON CASH            195,862      1,810 -----------  ---------  (DECREASE) INCREASE IN CASH                     (4,845,113)    21,573  CASH, beginning of period                        9,701,545     66,870 -----------  ---------  CASH, end of period                            $ 4,856,432  $  88,443 ===========  ========= 



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