##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB/A
 
 Amendment
No. 5
 
 (Mark One)þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934For the quarter ended December 31, 2006ORo
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934For the transition period from  to
 Commission File Number333-120926
 SOLAR ENERTECH CORP.
  Nevada
    
    98-0434357State or other jurisdiction of 
incorporation or organization
    
    (I.R.S. Employer
Identification No.)
 1600 Adams Drive  Menlo Park, CA 94025
 (650) 688-5800
 o þ
 þ o
 
 78,827,012
 
 200,000,000 common shares, par value of $0.001




---



##### Table of Contents



FORWARD-LOOKING STATEMENTS
    
    
    our expectations regarding the worldwide demand for electricity and the market for
solar energy;
    
    our beliefs regarding the effects of environmental regulation, lack of infrastructure
reliability and long-term fossil fuel supply constraints;
    
    our beliefs regarding the inability of traditional fossil fuel-based generation
technologies to meet the demand for electricity;
    
    our beliefs regarding the importance of environmentally friendly power generation;
    
    our expectations regarding governmental support for the deployment of solar energy;
    
    our beliefs regarding the acceleration of adoption of solar technologies;
    
    our beliefs regarding the competitiveness of PV products;
    
    our expectations regarding the creation and development of our manufacturing capacity;
    
    our expectations with respect to revenue and sales and our ability to achieve
profitability resulting from increases in production volumes;
    
    our expectations with respect to our ability to secure raw materials in the future;
    
    our future business development, results of operations and financial condition; and
    
    competition from other manufacturers of PV products and conventional energy suppliers.
 YOU SHOULD NOT PLACE UNDUE RELIANCE ON THESE FORWARD LOOKING
STATEMENTS
  EXPLANATORY NOTE
 Restatement of consolidated financial statements
  Page 2




---



##### Table of Contents



Amendment No.1
  Amendment No.2
  Amendment No. 3
  
    
    We recorded an additional compensation expense of $14.4 million related to the
options granted on March 1, 2006 to our President and to a director. The original Black
Scholes model used $0.002 as the fair value of the common stock, based on the most recent
sale of our common stock prior to the issuance date. However, shortly after the grant
dates of these options, our common stock traded at a significantly higher value.
Management revised the assumptions used in the Black Scholes model, most notably
increasing the share price from $0.002 to $0.70 per share based upon a valuation performed
by our management. This resulted in the significantly higher compensation expense.
    
    We recorded an additional compensation expense of $2.9 million related to the
transfer of 5.75 million shares of our common stock by our President to various officers
and employees of Infotech Shanghai. The share price of $1.36 used in the original
calculation was based on an incorrect transaction date. The share price used in the
revised calculation was $1.86 which resulted in the significantly higher compensation
expense.
    
    We recorded a withholding tax expense and liability of $2.1 million related to the
exercise of stock option grants by the President and an employee who reside in the United
States.
    
    We reclassified imputed interest on a related party loan of $31,000 from additional
paid in capital to accrued expense.
  Amendment
No.4
  
 Amendment
No. 5
 
 
  
 Page 3




---



##### Table of Contents



Impact of Error on Previously filed Financial Statements
  December 31, 2006 Original
    
    
    
    December 31, 2006Form 10-QSB
    
    Adjustments
    
    (As Restated)Balance Sheet  December 31, 2006Accounts payable and accrued liabilities
    
    $
    404,970
    
    
    $
    2,118,522
    
    
    $
    2,523,492Accounts
payable and accrued liabilities, related parties
    
    
    
    
    
    $
    31,124
    
    
    $
    31,124Additional paid in capital
    
    $
    5,222,553
    
    
    $
    27,162,492
    
    
    $
    32,385,045Deficit accumulated during development
stage
    
    ($
    1,230,942
    )
    
    ($
    29,312,137
    )
    
    ($
    30,543,079
    )Statement of OperationsFor the Quarter ended December 31, 2006Selling, general and administrative
expense
    
    $
    446,245
    
    
    $
    2,063,154
    
    
    $
    2,509,399Net loss
    
    ($
    541,616
    )
    
    ($
    2,063,154
    )
    
    ($
    2,604,770
    )Net loss per share  Continuing operations
    
    
    ($0.01
    )
    
    
    ($0.02
    )
    
    
    ($0.03
    )Statement of OperationsFrom inception (July 7, 2004) through
December 31, 2006Selling, general and administrative
expense
    
    $
    1,079,535
    
    
    $
    29,312,137
    
    
    $
    30,391,672Net loss
    
    ($
    1,230,942
    )
    
    ($
    29,312,137
    )
    
    ($
    30,543,079
    )
  Statements of Cash Flow
 December 31, 2006Original Form 10-
    
    
    
    
    
    December 31, 2006QSB
    
    Adjustments
    
    (As Restated)For the Quarter ended December 31, 2006Cash Flows from Operating ActivitiesNet Loss
    
    $
    (541,616
    )
    
    $
    (2,063,154
    )
    
    $
    (2,604,770
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation
    
    $
    2,685
    
    
    $
    
    
    
    $
    2,685Stock based compensation
    
    $
    49,352
    
    
    $
    2,053,284
    
    
    $
    2,102,636Changes in:Prepaid expenses
    
    $
    4,848
    
    
    $
    (513
    )
    
    $
    4,335Due from related party
    
    $
    (43,894
    )
    
    $
    
    
    
    $
    (43,894
    )Inventory
    
    $
    (388,501
    )
    
    $
    
    
    
    $
    (388,501
    )Accounts payable and accrued liabilities
    
    $
    341,023
    
    
    $
    39,230
    
    
    $
    380,253Accounts
payable and accrued liabilities, related parties
    
    $
    (57,433
    )
    
    $
    (735
    )
    
    $
    (58,168
    )Cash used in operating activities
    
    $
    (633,536
    )
    
    $
    28,112
    
    
    $
    (605,424
    )Cash flows from investing Activities:Acquisition of equipment
    
    $
    (100,298
    )
    
    $
    
    
    
    $
    (100,298
    )Deposits
    
    $
    218,433
    
    
    $
    (7,238
    )
    
    $
    211,195Leasehold improvements  plant
    
    $
    (1,320,954
    )
    
    $
    (20,874
    )
    
    $
    (1,341,828
    )Cash used in investing actives
    
    $
    (1,202,819
    )
    
    $
    (28,112
    )
    
    $
    (1,230,931
    )For the Quarter ended December 31, 2005Cash Flows from Operating ActivitiesNet Loss
    
    $
    (47,706
    )
    
    $
    41,093

    
    
    $
    (6,613
    )Depreciation
    
    $
    
    
    
    $
    599
    
    
    $
    599Accounts payable and accrued liabilities
    
    $
    1,900
    
    
    $
    (1,677
    )
    
    $
    223Cash used in operating activities
    
    $
    (45,806
    )
    
    $
    40,015
    
    
    $
    (5,791
    )Cash flows from investing Activities:Acquisition of equipment
    
    $
    (7,992
    )
    
    $
    7,992
    
    
    $
    Cash used in investing actives
    
    $
    (7,992
    )
    
    $
    7,992
    
    
    $
    Cash flows from Financing Activities:Proceeds from issue of common stock
    
    $
    80,000
    
    
    $
    (80,000
    )
    
    $
    Cash provided by financing activities
    
    $
    80,000
    
    
    $
    (80,000
    )
    
    $
    Net Increase in Cash
    
    $
    26,202
    
    
    $
    (31,993
    )
    
    $
    (5,791
    )From inception (July 7, 2004) through December 31, 2006Cash Flows from Operating ActivitiesNet Loss
    
    $
    (1,230,942
    )
    
    $
    (29,312,137
    )
    
    $
    (30,543,079
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation
    
    $
    6,619
    
    
    $
    
    
    
    $
    6,619Stock based compensation
    
    $
    49,352
    
    
    $
    27,183,746
    
    
    $
    27,233,098Changes in:
    
    
    
    
    
    $
    
    
    
    $
    Prepaid expenses
    
    $
    (35,729
    )
    
    $
    (513
    )
    
    $
    (36,242
    )Due from related party
    
    $
    (43,894
    )
    
    $
    
    
    
    $
    (43,894
    )Inventory
    
    $
    (388,501
    )
    
    $
    
    
    
    $
    (388,501
    )Accounts payable and accrued liabilities
    
    $
    405,792
    
    
    $
    2,110,432
    
    
    $
    2,516,224Accounts
payable and accrued liabilities, related parties
    
    $
    (15,460
    )
    
    $
    46,584
    
    
    $
    31,124Cash used in operating activities
    
    $
    (1,252,763
    )
    
    $
    28,112
    
    
    $
    (1,224,651
    )Cash flows from investing Activities:Acquisition of equipment
    
    $
    (122,983
    )
    
    $
    
    
    
    $
    (122,983
    )Deposits
    
    $
    (353,983
    )
    
    $
    (7,238
    )
    
    $
    (361,221
    )Leasehold improvements  plant
    
    $
    (2,063,674
    )
    
    $
    (20,874
    )
    
    $
    (2,084,548
    )Cash used in investing actives
    
    $
    (2,540,640
    )
    
    $
    (28,112
    )
    
    $
    (2,568,752
    )
  Page 4




---



##### 



PART I  FINANCIAL INFORMATION
 ITEM 1. FINANCIAL STATEMENTS
 PageNumberConsolidated Balance Sheets
    
    
    6Consolidated Statements of Operations
    
    
    7Consolidated Statement of Cash Flows
    
    
    8Notes to the Consolidated Financial Statements
    
    
    9EX-31.1 CEO CertificationEX-31.2 CFO CertificationEX-32.1 CEO Certification to section 906EX-32.2 Certification to section 906
  Page 5




---



##### Table of Contents



Solar Enertech Corp.
A Development Stage Company
 
 Consolidated Balance Sheets
 (Unaudited)
 December 30, 2006
    
    September 30, 2006(Restated)
    
    (Restated)ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    2,477,945
    
    
    $
    2,798,957Due from related party
    
    
    43,894
    
    
    
    Prepaid expenses and advances
    
    
    36,242
    
    
    
    40,579Inventory
    
    
    388,501
    
    
    
    Total Current Assets
    
    
    2,946,582
    
    
    
    2,839,536Equipment, net of accumulated depreciation
    
    
    116,601
    
    
    
    18,751Plant being developed for own use
    
    
    2,131,864
    
    
    
    790,036Deposits
    
    
    361,221
    
    
    
    572,416Total Assets
    
    $
    5,556,268
    
    
    $
    4,220,739LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable and accrued liabilities
    
    $
    2,523,492
    
    
    $
    2,183,289Accounts payable and accrued liabilities,
related parties
    
    
    31,124
    
    
    
    89,292Demand note payable to a related party
    
    
    450,000
    
    
    
    450,000Demand notes payable
    
    
    600,000
    
    
    
    600,000Total Current Liabilities
    
    
    3,604,616
    
    
    
    3,322,581STOCKHOLDERS EQUITY:Capital StockCommon  200,000,000 shares authorized at
$0.001 par value 78,807,012 and 76,307,012 shares
issued and outstanding at December 31, 2006 and
September 30, 2006, respectively
    
    
    78,807
    
    
    
    76,307Additional paid in capital
    
    
    32,385,045
    
    
    
    28,764,155Other comprehensive loss
    
    
    30,879
    
    
    
    (3,995
    )Deficit accumulated during development stage
    
    
    (30,543,079
    )
    
    
    (27,938,309
    )Total Stockholders Equity
    
    
    1,951,652
    
    
    
    898,158Total Liabilities and Stockholders Equity
    
    $
    5,556,268
    
    
    $
    4,220,739
  Page 6




---



##### Table of Contents



Solar Enertech Corp.
A Development Stage Company
 
 Consolidated Statements of Operations
 (Unaudited)
 Cumulative From July7, 2004 (inception) toQuarter Ended December 31,
    
    December 31,2006(Restated)
    
    2005
    
    2006 (Restated)ExpensesSelling, general and administrative expense
    
$
    2,509,399
    
    
    
    
    
    
$
    30,391,672Research and development
    
    
    101,798
    
    
    
    
    
    
    
    101,798Total Expenses
    
    
    2,611,197
    
    
    
    
    
    
    
    30,493,470Other income (expenses)Interest income
    
    
    6,427
    
    
    
    
    
    
    
    14,920Loss from Continuing Operations
    
    
    (2,604,770
    )
    
    
    
    
    
    
    (30,478,550
    )Loss from
Discontinued Operations
    
    
    
    
    
    
    (6,613
    )
    
    
    (64,529
    )Net Loss
    
    $
    (2,604,770
    )
    
    $
    (6,613
    )
    
    $
    (30,543,079
    )Net Loss per Share Basic and DilutedContinuing operations
    
    $
    (0.03
    )
    
    $
    Discontinued operations
    
    $
    
    
    
    $
    Net Loss
    
    $
    (0.03
    )
    
    $
    Weighted Average Shares Outstanding
    
    
    77,176,577
    
    
    
    136,400,000
  Page 7




---



##### Table of Contents



Solar Enertech Corp.
A Development Stage Company
 
 Consolidated Statements of Cash Flows
 (Unaudited)
 Cumulative fromJuly 7, 2004Three Months Ended December 31,
    
    (Inception) to2006
    
    2005
    
    December 31, 2006(Restated)
    
    
    
    
    
    (Restated)Cash Flows from Operating ActivitiesNet Loss
    
    $
    (2,604,770
    )
    
    $
    (6,613
    )
    
    $
    (30,543,079
    )Adjustments to reconcile net loss to net
cash used in operating activities:Depreciation
    
    
    2,685
    
    
    
    599
    
    
    
    6,619Stock based compensation
    
    
    2,102,636
    
    
    
    
    
    
    
    27,233,098Changes in:Prepaid expenses
    
    
    4,335
    
    
    
    
    
    
    
    (36,242
    )Due from related party
    
    
    (43,894
    )
    
    
    
    
    
    
    (43,894
    )Inventory
    
    
    (388,501
    )
    
    
    
    
    
    
    (388,501
    )Accounts payable and accrued liabilities
    
    
    380,253
    
    
    
    223
    
    
    
    2,516,224Accounts payable and accrued liabilities,
related parties
    
    
    (58,168
    )
    
    
    
    
    
    
    31,124Cash used in operating activities
    
    $
    (605,424
    )
    
    $
    (5,791
    )
    
    $
    (1,224,651
    )Cash flows from investing Activities:Acquisition of equipment
    
    
    (100,298
    )
    
    
    
    
    
    
    (122,983
    )Deposits
    
    
    211,195
    
    
    
    
    
    
    
    (361,221
    )Leasehold improvements  plant
    
    
    (1,341,828
    )
    
    
    
    
    
    
    (2,084,548
    )Cash used in investing actives
    
    $
    (1,230,931
    )
    
    $
    
    
    
    $
    (2,568,752
    )Cash flows from Financing Activities:Proceeds from note payables
    
    
    
    
    
    
    
    
    
    
    600,000Proceeds from advances from a related party
    
    
    
    
    
    
    
    
    
    
    450,000Proceeds from issue of common stock
    
    
    1,500,000
    
    
    
    
    
    
    
    5,210,000Cash provided by financing activities
    
    
    1,500,000
    
    
    
    
    
    
    
    6,260,000Effect of exchange rates on cash
    
    
    15,343
    
    
    
    
    
    
    
    11,348Net Increase in Cash
    
    
    (321,012
    )
    
    
    (5,791
    )
    
    
    2,477,945Cash, Beginning of Period
    
    
    2,798,957
    
    
    
    48,401
    
    
    
    Cash, End of Period
    
    $
    2,477,945
    
    
    $
    42,610
    
    
    $
    2,477,945Non-cash investing and financing activities:Capitalized interest related to leasehold
improvements  plant
    
    $
    11,982
    
    
    $
    
    
    
    $
    43,106
  Page 8




---



##### Table of Contents



SOLAR ENERTECH CORP.
A Development Stage Company
 
 Notes to Consolidated Financial Statements
 December 31, 2006
 NOTE 1  BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
   Variable Interest Entities
    Page 9




---



##### Table of Contents



Stock-based
Compensation
 Accounting for Stock Issued to Employees,
 Determining
Fair Value
       Valuation of Privately-Held-Company Equity Securities Issued as
Compensation.
  
 NOTE 2  INVENTORY
    Raw materials
    
    $
    294,723Low value consumption goods
    
    
    470Work in progress
    
    
    93,308$
    388,501
  NOTE 3  RELATED PARTY TRANSACTIONS
 Due from related party
  Page 10




---



##### Table of Contents



NOTE 4  EQUITY TRANSACTIONS
 Common stock issued for cash
  Warrants
    
    
    risk-free interest rate of 4.50%
    
    no dividend yield
    
    volatility of 82.57%
    
    expected lives  1 year
  Number of
    
    
    Exercise
    
    
    Expiration
    
    
    FairShares
    
    
    Price
    
    
    Date
    
    
    ValueOutstanding at March 31, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Granted in connection with
Common Stock Purchase
    
    
    2,825,000
    
    
    
    1.00
    
    
    May-June 2007
    
    $
    915,616Outstanding at June 30, 2006
    
    
    2,825,000
    
    
    
    
    
    
    
    
    
    
    
    915,616Granted in connection with
Common Stock Purchase
    
    
    782,000
    
    
    
    1.00
    
    
    July-Sept 2007
    
    
    233,008Outstanding at September 30, 2006
    
    
    3,607,000
    
    
    
    
    
    
    
    
    
    
    
    1,148,624Granted in connection with
Common Stock Purchase
    
    
    2,500,000
    
    
    
    1.00
    
    
    November 2007
    
    
    364,950Outstanding at December 31, 2006
    
    
    6,107,000
    
    
    
    
    
    
    
    
    
    
    $
    1,513,574
  Options
  Page 11




---



##### Table of Contents



n
    
    Volatility of 82.57%n
    
    Risk- free interest rate of 4.65%n
    
    Expected lives  4 yearsn
    
    No dividend yieldn
    
    Market value per share of stock on measurement date of $0.70.
 
  
 Valuation of Privately-Held-Company Equity Securities Issued as
Compensation.
    NOTE 5  COMMITMENTS AND CONTINGENCIES
 Capital investments
  Year
    
    Amount2007
    
    $
    414,0002008
    
    
    723,0002009
    
    
    826,0002010
    
    
    826,0002011
    
    
    981,000Total
    
    $
    3,770,000
   Page 12




---



##### Table of Contents



NOTE 6  RESTATEMENT
  December 31, 2006 Original
    
    
    
    
    
    December 31, 2006 (AsForm 10-QSB
    
    Adjustments
    
    Note
    
    Restated)Balance Sheet December 31, 2006Accounts payable and accrued liabilities
    
    $
    404,970
    
    
    $
    2,118,522
    
    
    
    B
    
    
    $
    2,523,492Accounts payable and accrued liabilities, related parties
    
    
    
    
    
    $
    31,124
    
    
    
    C
    
    
    
    31,124Additional paid in capital
    
    $
    5,222,553
    
    
    $
    27,162,492
    
    
    
    D
    
    
    
    32,385,045Deficit accumulated during development stage
    
    ($
    1,230,942
    )
    
    ($
    29,312,137
    )
    
    
    A
    
    
    (
    30,543,079
    )Statement
of OperationsFor the Quarter ended December 31, 2006Selling, general and administrative expense
    
    $
    446,245
    
    
    $
    2,063,154
    
    
    
    A
    
    
    $
    2,509,399Net loss
    
    ($
    541,616
    )
    
    ($
    2,063,154
    )
    
    
    A
    
    
    ($
    2,604,770
    )Net loss per share  Continuing operations
    
    ($
    0.01
    )
    
    ($
    0.02
    )
    
    
    A
    
    
    ($
    0.03
    )Statement
of OperationsFrom inception (July 7, 2004) through
December 31, 2006Selling, general and administrative expense
    
    $
    1,079,535
    
    
    $
    29,312,137
    
    
    
    A
    
    
    $
    30,391,672Net loss
    
    ($
    1,230,942
    )
    
    ($
    29,312,137
    )
    
    
    A
    
    
    ($
    30,543,079
    )
    Page 13




---



##### Table of Contents



1.
    
    The fair value of the options granted under the option agreements to the President
and CEO and a director was estimated using the Black-Scholes stock price valuation model
with the following assumptions:
 n
    
    Volatility of 82.57%n
    
    Risk- free interest rate of 4.65%n
    
    Expected lives  4 yearsn
    
    No dividend yieldn
    
    Market value per share of stock on measurement date of $0.70.
 The Black Scholes model valued the options at $26,406,296 which is amortized over the
service period: $14,435,461 in fiscal year 2006, $8,450,026 in fiscal year 2007 and
$3,520,809 in fiscal year 2008. Based on the revised calculation, we increased stock
compensation by $14,435,461 in fiscal year 2006 and $2,063,154 in the quarter ended
December 31, 2006.2.
    
    The fair value of the shares transferred to employees was $10,695,000, using the
market price on July 6, 2007, the date of transfer. We recorded $10,695,000 of
compensation expense in fiscal year 2006.3.
    
    The Company recorded an additional compensation expense of $2,118,522, related to
withholding tax obligations that arose from the exercise of stock options by our President
and an employee who resides in the United States.
  
 
 
    Page 14




---



##### Table of Contents




    
    The Company recorded an additional compensation expense of $14.4 million related to
the options granted on March 1, 2006 to the current President and a director. The
original Black Scholes model used $0.002 as the fair value of the common stock, based on
the most recent sale of our common stock prior to the issuance date. However, shortly
after the grant dates of these options, the Companys shares traded at a significantly
higher value. Management revised the assumptions used in the Black Scholes model, most
notably increasing the share price from $0.002 to $0.70 per share based upon a valuation
performed by our management. This resulted in significantly higher compensation expense.
    
    The Company recorded an additional compensation expense of $2.9 million related to
the 5.75 million shares transferred from the President to various officers and employees
of Infotech Shanghai. The share price of $1.36 used in the original calculation was
based on an incorrect transaction date. The share price used in the revised calculation
was $1.86 which resulted in significantly higher compensation expense.
    
    The Company recorded a withholding tax expense and liability of $2.1million related
to the exercise of stock options by the President and an employee residing in the United
States.
    
    The Company reclassified imputed interest on a related party loan of $31,000 from
additional paid in capital to accrued expense.
  
  
  Statements of Cash Flow
 December 31, 2006Original Form 10-
    
    
    
    
    
    
    
    
    
    December 31, 2006QSB
    
    Adjustments
    
    Note
    
    (As Restated)For the Quarter ended December 31, 2006Cash Flows from Operating ActivitiesNet Loss
    
    $
    (541,616
    )
    
    $
    (2,063,154
    )
    
    
    E
    
    
    $
    (2,604,770
    )Adjustments to reconcile net loss to net cash
used in operating activities:Depreciation
    
    $
    2,685
    
    
    $
    
    
    
    
    
    
    
    $
    2,685Stock based compensation
    
    $
    49,352
    
    
    $
    2,053,284
    
    
    
    F
    
    
    $
    2,102,636Changes in:Prepaid expenses
    
    $
    4,848
    
    
    $
    (513
    )
    
    
    M
    
    
    $
    4,335Due from related party
    
    $
    (43,894
    )
    
    $
    
    
    
    
    
    
    
    $
    (43,894
    )Inventory
    
    $
    (388,501
    )
    
    $
    
    
    
    
    
    
    
    $
    (388,501
    )Accounts payable and accrued liabilities
    
    $
    341,023
    
    
    $
    39,230
    
    
    
    G
    
    
    $
    380,253Accounts
payable and accrued liabilities,
related parties
    
    $
    (57,433
    )
    
    $
    (735
    )
    
    
    M
    
    
    $
    (58,168
    )Cash used in operating activities
    
    $
    (633,536
    )
    
    $
    28,112
    
    
    
    
    
    
    $
    (605,424
    )Cash flows from investing Activities:Acquisition of equipment
    
    $
    (100,298
    )
    
    $
    
    
    
    
    
    
    
    $
    (100,298
    )Deposits
    
    $
    218,433
    
    
    $
    (7,238
    )
    
    
    M
    
    
    $
    211,195Leasehold improvements  plant
    
    $
    (1,320,954
    )
    
    $
    (20,874
    )
    
    
    M
    
    
    $
    (1,341,828
    )Cash used in investing actives
    
    $
    (1,202,819
    )
    
    $
    (28,112
    )
    
    
    
    
    
    $
    (1,230,931
    )For the Quarter ended December 31, 2005Cash Flows from Operating ActivitiesNet Loss
    
    $
    (47,706
    )
    
    $
    41,093
    
    
    
    H
    
    
    $
    (6,613
    )Depreciation
    
    $
    
    
    
    $
    599
    
    
    
    
    
    
    $
    599Accounts payable and accrued liabilities
    
    $
    1,900
    
    
    $
    (1,677
    )
    
    
    H
    
    
    $
    223Cash used in operating activities
    
    $
    (45,806
    )
    
    $
    40,015
    
    
    
    H
    
    
    $
    (5,791
    )Cash flows from investing Activities:Acquisition of equipment
    
    $
    (7,992
    )
    
    $
    7,992
    
    
    
    H
    
    
    $
    Cash used in investing actives
    
    $
    (7,992
    )
    
    $
    7,992
    
    
    
    H
    
    
    $
    Cash flows from Financing Activities:Proceeds from issue of common stock
    
    $
    80,000
    
    
    $
    (80,000
    )
    
    
    H
    
    
    $
    Cash provided by financing activities
    
    $
    80,000
    
    
    $
    (80,000
    )
    
    
    H
    
    
    $
    Net Increase in Cash
    
    $
    26,202
    
    
    $
    (31,993
    )
    
    
    H
    
    
    $
    (5,791
    )From inception (July 7, 2004) through
December 31, 2006Cash Flows from Operating ActivitiesNet Loss
    
    $
    (1,230,942
    )
    
    $
    (29,312,137
    )
    
    
    I
    
    
    $
    (30,543,079
    )Adjustments to reconcile net loss to net cash
used in operating activities:Depreciation
    
    $
    6,619
    
    
    $
    
    
    
    
    
    
    
    $
    6,619Stock based compensation
    
    $
    49,352
    
    
    $
    27,183,746
    
    
    
    J
    
    
    $
    27,233,098Changes in:
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    Prepaid expenses
    
    $
    (35,729
    )
    
    $
    (513
    )
    
    
    M
    
    
    $
    (36,242
    )Due from related party
    
    $
    (43,894
    )
    
    $
    
    
    
    
    
    
    
    $
    (43,894
    )Inventory
    
    $
    (388,501
    )
    
    $
    
    
    
    
    
    
    
    $
    (388,501
    )Accounts payable and accrued liabilities
    
    $
    405,792
    
    
    $
    2,110,432
    
    
    
    K
    
    
    $
    2,516,224Accounts
payable and accrued liabilities,
related parties
    
    $
    (15,460
    )
    
    $
    46,584
    
    
    
    L
    
    
    $
    31,124Cash used in operating activities
    
    $
    (1,252,763
    )
    
    $
    28,112
    
    
    
    
    
    
    $
    (1,224,651
    )Cash flows from investing Activities:Acquisition of equipment
    
    $
    (122,983
    )
    
    $
    
    
    
    
    
    
    
    $
    (122,983
    )Deposits
    
    $
    (353,983
    )
    
    $
    (7,238
    )
    
    
    M
    
    
    $
    (361,221
    )Leasehold improvements  plant
    
    $
    (2,063,674
    )
    
    $
    (20,874
    )
    
    
    M
    
    
    $
    (2,084,548
    )Cash used in investing actives
    
    $
    (2,540,640
    )
    
    $
    (28,112
    )
    
    
    
    
    
    $
    (2,568,752
    )
      Item 2. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
  GENERAL
  Page 15




---



##### Table of Contents



RESULTS OF OPERATIONS
  Limited Operating History
   Page 16




---



##### Table of Contents



Restatements
  December 31, 2006 Original
    
    
    
    
    
    December 31, 2006 (AsForm 10-QSB
    
    Adjustments
    
    Note
    
    Restated)Balance
Sheet  December 31, 2006Accounts payable and accrued liabilities
    
    $
    404,970
    
    
    $
    2,118,522
    
    
    
    B
    
    
    $
    2,523,492Accounts payable and accrued
liabilities, related parties
    
    
    
    
    
    $
    31,124
    
    
    
    C
    
    
    
    31,124Additional paid in capital
    
    $
    5,222,553
    
    
    $
    27,162,492
    
    
    
    D
    
    
    
    32,385,045Deficit accumulated during development stage
    
    ($
    1,230,942
    )
    
    ($
    29,312,137
    )
    
    
    A
    
    
    (
    30,543,079
    )Statement of OperationsFor the Quarter ended December 31, 2006Selling, general and administrative
expense
    
    $
    446,245
    
    
    $
    2,063,154
    
    
    
    A
    
    
    $
    2,509,399Net loss
    
    ($
    541,616
    )
    
    ($
    2,063,154
    )
    
    
    A
    
    
    ($
    2,604,770
    )Net loss per share  Continuing
operations
    
    ($
    0.01
    )
    
    ($
    0.02
    )
    
    
    A
    
    
    ($
    0.03
    )Statement of OperationsFrom inception (July 7, 2004) through
December 31, 2006Selling, general and administrative
expense
    
    $
    1,079,535
    
    
    $
    29,312,137
    
    
    
    A
    
    
    $
    30,391,672Net loss
    
    ($
    1,230,942
    )
    
    ($
    29,312,137
    )
    
    
    A
    
    
    ($
    30,543,079
    )
   Page 17




---



##### Table of Contents



1.
    
    The fair value of the options granted under the option agreements to the President and CEO
and a director was estimated using the Black-Scholes stock price valuation model with the
following assumptions:
 n
    
    Volatility of 82.57%n
    
    Risk- free interest rate of 4.65%n
    
    Expected lives  4 yearsn
    
    No dividend yieldn
    
    Market value per share of stock on measurement date of $0.70.
 The Black Scholes model valued the options at $26,406,296 which is amortized over the
service period: $14,435,461 in fiscal year 2006, $8,450,026 in fiscal year 2007 and
$3,520,809 in fiscal year 2008. Based on the revised calculation, we increased stock
compensation by $14,435,461 in fiscal year 2006 and $2,063,154 in the quarter ended
December 31, 2006.
 2.
    
    The fair value of the shares transferred to employees was $10,695,000, using the
market price on July 6, 2007, the date of transfer. We recorded $10,695,000 of
compensation expense in fiscal year 2006.
 3.
    
    The Company recorded an additional compensation expense of $2,118,522, related to
withholding tax obligations that arose from the exercise of stock options by our President
and an employee who resides in the United States.
  
 
 
   Page 18




---



##### Table of Contents




    
    The Company recorded an additional compensation expense of $14.4 million related to the
options granted on March 1, 2006 to the current President and a director. The original
Black Scholes model used $0.002 as the fair value of the common stock, based on the most
recent sale of our common stock prior to the issuance date. However, shortly after the
grant dates of these options, the Companys shares traded at a significantly higher value.
Management revised the assumptions used in the Black Scholes model, most notably
increasing the share price from $0.002 to $0.70 per share based upon a valuation performed
by our management. This resulted in significantly higher compensation expense.
    
    The Company recorded an additional compensation expense of $2.9 million related to the
5.75 million shares transferred from the President to various officers and employees of
Infotech Shanghai. The share price of $1.36 used in the original calculation was based
on an incorrect transaction date. The share price used in the revised calculation was
$1.86 which resulted in significantly higher compensation expense.
    
    The Company recorded a withholding tax expense and liability of $2.1million related to
the exercise of stock options by the President and an employee residing in the United
States.
    
    The Company reclassified imputed interest on a related party loan of $31,000 from
additional paid in capital to accrued expense.
  
  
  December 31, 2006Original Form 10-
    
    
    
    
    
    
    
    
    
    December 31, 2006Statements of Cash Flow
    
    QSB
    
    Adjustments
    
    Note
    
    (As Restated)For the Quarter ended December 31,
2006Cash Flows from Operating ActivitiesNet Loss
    
    $
    (541,616
    )
    
    $
    (2,063,154
    )
    
    
    E
    
    
    $
    (2,604,770
    )Adjustments to reconcile net loss to
net cash used in operating
activities:Depreciation
    
    $
    2,685
    
    
    $
    
    
    
    
    
    
    
    $
    2,685Stock based compensation
    
    $
    49,352
    
    
    $
    2,053,284
    
    
    
    F
    
    
    $
    2,102,636Changes in:Prepaid expenses
    
    $
    4,848
    
    
    $
    (513
    )
    
    
    M
    
    
    $
    4,335Due from related party
    
    $
    (43,894
    )
    
    $
    
    
    
    
    
    
    
    $
    (43,894
    )Inventory
    
    $
    (388,501
    )
    
    $
    
    
    
    
    
    
    
    $
    (388,501
    )Accounts payable and accrued
liabilities
    
    $
    341,023
    
    
    $
    39,230
    
    
    
    G
    
    
    $
    380,253Accounts payable and
accrued liabilities, related parties
    
    $
    (57,433
    )
    
    $
    (735
    )
    
    
    M
    
    
    $
    (58,168
    )Cash used in operating activities
    
    $
    (633,536
    )
    
    $
    28,112
    
    
    
    
    
    
    $
    (605,424
    )Cash flows from investing Activities:Acquisition of equipment
    
    $
    (100,298
    )
    
    $
    
    
    
    
    
    
    
    $
    (100,298
    )Deposits
    
    $
    218,433
    
    
    $
    (7,238
    )
    
    
    M
    
    
    $
    211,195Leasehold improvements  plant
    
    $
    (1,320,954
    )
    
    $
    (20,874
    )
    
    
    M
    
    
    $
    (1,341,828
    )Cash used in investing actives
    
    $
    (1,202,819
    )
    
    $
    (28,112
    )
    
    
    
    
    
    $
    (1,230,931
    )For the Quarter ended December 31,
2005Cash Flows from Operating ActivitiesNet Loss
    
    $
    (47,706
    )
    
    $
    41,093
    
    
    
    H
    
    
    $
    (6,613
    )Depreciation
    
    $
    
    
    
    $
    599
    
    
    
    M
    
    
    $
    599Accounts payable and accrued
liabilities
    
    $
    1,900
    
    
    $
    (1,677
    )
    
    
    H
    
    
    $
    223Cash used in operating activities
    
    $
    (45,806
    )
    
    $
    40,015
    
    
    
    H
    
    
    $
    (5,791
    )Cash flows from investing Activities:Acquisition of equipment
    
    $
    (7,992
    )
    
    $
    7,992
    
    
    
    H
    
    
    $
    Cash used in investing actives
    
    $
    (7,992
    )
    
    $
    7,992
    
    
    
    H
    
    
    $
    Cash flows from Financing Activities:Proceeds from issue of common stock
    
    $
    80,000
    
    
    $
    (80,000
    )
    
    
    H
    
    
    $
    Cash provided by financing activities
    
    $
    80,000
    
    
    $
    (80,000
    )
    
    
    H
    
    
    $
    Net Increase in Cash
    
    $
    26,202
    
    
    $
    (31,993
    )
    
    
    H
    
    
    $
    (5,791
    )From inception (July 7, 2004)
through December 31, 2006Cash Flows from Operating ActivitiesNet Loss
    
    $
    (1,230,942
    )
    
    $
    (29,312,137
    )
    
    
    I
    
    
    $
    (30,543,079
    )Adjustments to reconcile net loss to
net cash used in operating
activities:Depreciation
    
    $
    6,619
    
    
    $
    
    
    
    
    
    
    
    $
    6,619Stock based compensation
    
    $
    49,352
    
    
    $
    27,183,746
    
    
    
    J
    
    
    $
    27,233,098Changes in:
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    Prepaid expenses
    
    $
    (35,729
    )
    
    $
    (513
    )
    
    
    M
    
    
    $
    (36,242
    )Due from related party
    
    $
    (43,894
    )
    
    $
    
    
    
    
    
    
    
    $
    (43,894
    )Inventory
    
    $
    (388,501
    )
    
    $
    
    
    
    
    
    
    
    $
    (388,501
    )Accounts payable and accrued
liabilities
    
    $
    405,792
    
    
    $
    2,110,432
    
    
    
    K
    
    
    $
    2,516,224Accounts payable and
accrued liabilities, related parties
    
    $
    (15,460
    )
    
    $
    46,584
    
    
    
    L
    
    
    $
    31,124Cash used in operating activities
    
    $
    (1,252,763
    )
    
    $
    28,112
    
    
    
    
    
    
    $
    (1,224,651
    )Cash flows from investing Activities:Acquisition of equipment
    
    $
    (122,983
    )
    
    $
    
    
    
    
    
    
    
    $
    (122,983
    )Deposits
    
    $
    (353,983
    )
    
    $
    (7,238
    )
    
    
    M
    
    
    $
    (361,221
    )Leasehold improvements  plant
    
    $
    (2,063,674
    )
    
    $
    (20,874
    )
    
    
    M
    
    
    $
    (2,084,548
    )Cash used in investing actives
    
    $
    (2,540,640
    )
    
    $
    (28,112
    )
    
    
    
    
    
    $
    (2,568,752
    )
      Three-month period ended December 31, 2006
  ExpensesSelling, general & administrative, and
research & development expenses
    
    $
    (2,611,197
    )Interest income
    
    
    6,427Net loss
    
    $
    (2,604,770
    )
  Page 19




---



##### Table of Contents



Revenues
  Expenses
  Discontinued Operations
  Net Loss
  Liquidity and Capital Resources
  Page 20




---



##### Table of Contents



Recent Financings
 Common stock issued for cash
  Critical Accounting Policies
   Page 21




---



##### Table of Contents



Variable Interest Entities
     Page 22




---



##### Table of Contents



Currency and foreign exchange
  Foreign Currency Translation,
  Inventory
  Stock-based Compensation
 Share-Based Payment
 Share-Based Payment, Accounting for Stock Issued to Employees,
 Page 23




---



##### Table of Contents



Determining Fair Value
      
  
 Valuation of Privately-Held-Company Equity Securities Issued as
Compensation.
  Plan of Operations
   Projected Expenditures Over The Next 12 Months
  (a)
    
    Personnel costs in Shanghai, China and the United States:
    
    $
    2,151,000(b)
    
    Production development / factory leasing costs:
    
    
    371,000(c)
    
    Administration, sales and marketing office:
    
    
    1,150,000(d)
    
    General and administrative expenses:
    
    
    1,050,000(e)
    
    PV production and manufacturing equipment:
    
    
    10,554,000(f)
    
    Silicon material purchase
    
    
    47,000,000(g)
    
    Professional fees and expenses, regulatory expenses:
    
    
    105,000(h)
    
    Shareholder communications:
    
    
    208,000(i)
    
    Other capital expenditures
    
    
    700,000(j)
    
    Research & development
    
    
    1,246,000(j)
    
    Travel, miscellaneous and unallocated
    
    
    64,000Total:
    
    
    
    $
    64,599,000
     Off-Balance Sheet Arrangements
  Page 24




---



##### Table of Contents



SIGNATURES
 
 th
 
 
 SOLAR ENERTECH CORP.Date: November 9, 2007
    By:
    /s/ Leo Shi YoungLeo Shi YoungDirector, President/CEODate: November 9, 2007
    By:
    /s/ Ming Wai Anthea ChungMing Wai Anthea ChungChief Financial Officer 
 Page 25