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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-QSB

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarter endedDecember 31, 2006

OR

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ______________

Commission File Number333-120926

SOLAR ENERTECH CORP.(Exact name of registrant as specified in its charter)

|Nevada                         | 98-0434357         
|------------------------------ | -------------------
|State or other jurisdiction of | (I.R.S. Employer   
|incorporation or organization  | Identification No.)

1600 Adams DriveMenlo Park, CA
94025(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code(650)
  688-5800

Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes [   ] No
[X]

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Number of shares outstanding of Registrant's class of common stock
  as of February 14, 2007:78,807,012

Authorized share capital of the registrant:200,000,000
common shares , par value of $0.001

The Company recorded $0 revenue for the quarter ended December
31, 2006

Page 1

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FORWARD-LOOKING STATEMENTS

This report on Form 10QSB contains forward-looking statements,
in particular in our Plan of Operations, that relate to our current expectations
and views of future events. These statements relate to events that involve known
and unknown risks, uncertainties and other factors, including those listed under
Risk Factors, which may cause our actual results, performance or achievements
to be materially different from any future results, performances or achievements
expressed or implied by the forward-looking statements.

In some cases, these forward-looking statements can be
identified by words or phrases such as may, will, expect, anticipate,
aim, estimate, intend, plan or planned believe, potential,
continue, is/are likely to, hope or other similar expressions. We have
based these forward-looking statements largely on our current expectations and
projections about future events and financial trends that we believe may affect
our financial condition, results of operations, business strategy and financial
needs.

These forward-looking statements include, among other things,
statements relating to:

- 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

The forward-looking statements made in this report on Form
10-QSB relate only to events or information as of the date on which the
statements are made in this report on Form 10-QSB. Except as required by law, we
undertake no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events or otherwise,
after the date on which the statements are made or to reflect the occurrence of
unanticipated events. You should read this report and the documents that we
reference in this report, including documents referenced by incorporation,
completely and with the understanding that our actual future results may be
materially different from what we expect or hope.

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PART I - FINANCIAL INFORMATION

|ITEM 1.      FINANCIAL STATEMENTS                    |            
|---------------------------------------------------- | -----------
|                                                     | Page Number
|                                                     |            
|Consolidated Balance Sheets                          | 5          
|                                                     |            
|Consolidated Statements of
      Operations          | 6          
|                                                     |            
|Consolidated Statement of
      Cash Flows           | 7          
|                                                     |            
|Notes to the Consolidated
      Financial Statements | 9          

Page 3

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SOLAR ENERTECH CORP.(Formerly Safer Residence
Corporation)(A Development Stage Company)









Interim Consolidated Financial Statements
(Unaudited)December 31, 2006





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Solar Enertech Corp.A Development Stage Company Consolidated Balance
Sheets (Unaudited)

|                                                                 |   | December
      31, 2006 |   |   | September
      30, 2006 |  
|---------------------------------------------------------------- | - | ----------------------- | - | - | ------------------------ | -
|                                                                 |   |                         |   |   |                          |  
|ASSETS                                                           |   |                         |   |   |                          |  
|                                                                 |   |                         |   |   |                          |  
|Current assets:                                                  |   |                         |   |   |                          |  
|Cash and cash equivalents                                        | $ | 2,477,945               |   | $ | 2,798,957                |  
|Due from related party                                           |   | 43,894                  |   |   | -                        |  
|Prepaid expenses and advances                                    |   | 36,242                  |   |   | 40,577                   |  
|Inventory                                                        |   | 388,501                 |   |   | -                        |  
|Total current assets                                             |   | 2,946,582               |   |   | 2,839,534                |  
|                                                                 |   |                         |   |   |                          |  
|Equipment, net of accumulated depreciation                       |   | 116,601                 |   |   | 18,751                   |  
|Plant being developed for own use                                |   | 2,131,864               |   |   | 790,036                  |  
|Deposits                                                         |   | 361,221                 |   |   | 572,416                  |  
|                                                                 |   |                         |   |   |                          |  
|Total assets                                                     | $ | 5,556,268               |   | $ | 4,220,737                |  
|                                                                 |   |                         |   |   |                          |  
|LIABILITIES AND STOCKHOLDERS' EQUITY                             |   |                         |   |   |                          |  
|                                                                 |   |                         |   |   |                          |  
|Current liabilities:                                             |   |                         |   |   |                          |  
|Accounts payable and accrued liabilities                         | $ | 404,970                 |   | $ | 64,766                   |  
|Accounts payable and accrued liabilities, related parties        |   | -                       |   |   | 58,168                   |  
|Demand note payable to a related party                           |   | 450,000                 |   |   | 450,000                  |  
|Demand notes payable                                             |   | 600,000                 |   |   | 600,000                  |  
|Total current liabilities                                        |   | 1,454,970               |   |   | 1,172,934                |  
|                                                                 |   |                         |   |   |                          |  
|STOCKHOLDERS' EQUITY:                                            |   |                         |   |   |                          |  
|Capital stock                                                    |   |                         |   |   |                          |  
|Common - 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                  |   |   | 76,307                   |  
|Additional paid in capital                                       |   | 5,222,553               |   |   | 3,664,817                |  
|Other comprehensive loss                                         |   | 30,880                  |   |   | (3,995                   | )
|Deficit accumulated during development stage                     |   | (1,230,942              | ) |   | (689,326                 | )
|Total stockholders' equity                                       |   | 4,101,298               |   |   | 3,047,803                |  
|                                                                 |   |                         |   |   |                          |  
|Total liabilities and stockholders' equity                       | $ | 5,556,268               |   | $ | 4,220,737                |  

The accompanying notes are an integral part of these
consolidated financial statements.

Page 5

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Solar Enertech Corp.A Development Stage Company Consolidated
Statements of Operations (Unaudited) For the Periods Ended

|                                       |   |                         |   |   |                         |   |   | Cumulative from July 7, |  
|-------------------------------------- | - | ----------------------- | - | - | ----------------------- | - | - | ----------------------- | -
|                                       |   |                         |   |   |                         |   |   | **2004 (Inception) to** |  
|                                       |   | December
      31, 2006 |   |   | December
      31, 2005 |   |   | December 31, 2006       |  
|                                       |   |                         |   |   |                         |   |   |                         |  
|Expenses                               |   |                         |   |   |                         |   |   |                         |  
|Selling, general & administrative      | $ | 446,245                 |   |   | -                       |   |   | 1,080,035               |  
|Research and development               |   | 101,798                 |   |   | -                       |   |   | 101,798                 |  
|Total expenses                         |   | 548,043                 |   |   | -                       |   |   | 1,181,333               |  
|                                       |   |                         |   |   |                         |   |   |                         |  
|Loss from continuing operations        |   | (548,043                | ) |   | -                       |   |   | (1,181,333              | )
|                                       |   |                         |   |   |                         |   |   |                         |  
|Loss from discontinued operations      |   | -                       |   |   | (6,613                  | ) |   | (64,529                 | )
|                                       |   |                         |   |   |                         |   |   |                         |  
|Other income (expense)                 |   |                         |   |   |                         |   |   |                         |  
|Interest income                        |   | 6,427                   |   |   | -                       |   |   | 14,920                  |  
|Net loss                               | $ | (541,616                | ) | $ | (6,613                  | ) | $ | (1,230,942              | )
|                                       |   |                         |   |   |                         |   |   |                         |  
|Net loss per share - basic and diluted |   |                         |   |   |                         |   |   |                         |  
|                                       |   |                         |   |   |                         |   |   |                         |  
|Continuing operations                  | $ | (0.01                   | ) | $ | -                       |   |   |                         |  
|Discontinued operations                | $ | -                       |   | $ | (0.00                   | ) |   |                         |  
|                                       |   |                         |   |   |                         |   |   |                         |  
|Weighted Average Shares Outstanding    |   | 77,176,577              |   |   | 136,400,000             |   |   |                         |  

The accompanying notes are an integral part of these
consolidated financial statements.

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Solar Enertech Corp.A Development Stage Company Consolidated
Statements of Cash Flows (Unaudited) For the Periods Ended

|                                                                     |   |                   |   |   |                   |   |   | Cumulative from July 7, |  
|-------------------------------------------------------------------- | - | ----------------- | - | - | ----------------- | - | - | ----------------------- | -
|                                                                     |   |                   |   |   |                   |   |   | 2004 (Inception) to     |  
|                                                                     |   | December 31, 2006 |   |   | December 31, 2005 |   |   | December 31, 2006       |  
|                                                                     |   |                   |   |   |                   |   |   |                         |  
|Cash Flows from Operating Activities                                 |   |                   |   |   |                   |   |   |                         |  
|Net loss                                                             | $ | (541,616          | ) | $ | (47,706           | ) | $ | (1,230,942              | )
|Adjustments to reconcile net loss to                                 |   |                   |   |   |                   |   |   |                         |  
|net cash used in operating activities:                               |   |                   |   |   |                   |   |   |                         |  
|Depreciation                                                         |   | 2,685             |   |   | -                 |   |   | 6,619                   |  
|Stock based compensation                                             |   | 49,352            |   |   |                   |   |   | 49,352                  |  
|Changes in:                                                          |   |                   |   |   |                   |   |   |                         |  
|Prepaid expenses                                                     |   | 4,848             |   |   | -                 |   |   | (35,729                 | )
|Due from related party                                               |   | (43,894           | ) |   |                   |   |   | (43,894                 | )
|Inventory                                                            |   | (388,501          | ) |   | -                 |   |   | (388,501                | )
|Accounts payable and
      accrued expenses                          |   | 341,023           |   |   | 1,900             |   |   | 405,792                 |  
|Accounts payable and accrued expenses,
      related parties         |   | (57,433           | ) |   | -                 |   |   | (15,460                 | )
|Cash used in operating activities                                    |   | (633,536          | ) |   | (45,806           | ) |   | (1,252,763              | )
|                                                                     |   |                   |   |   |                   |   |   |                         |  
|Cash flows from Investing
      Activities:                          |   |                   |   |   |                   |   |   |                         |  
|Acquisition of equipment                                             |   | (100,298          | ) |   | (7,992            | ) |   | (122,983                | )
|Deposits                                                             |   | 218,433           |   |   | -                 |   |   | (353,983                | )
|Leasehold improvements - plant                                       |   | (1,320,954        | ) |   | -                 |   |   | (2,063,674              | )
|Cash used in investing activities                                    |   | (1,202,819        | ) |   | (7,992            | ) |   | (2,540,640              | )
|                                                                     |   |                   |   |   |                   |   |   |                         |  
|Cash flows from Financing
      Activities:                          |   |                   |   |   |                   |   |   |                         |  
|Proceeds from notes payable                                          |   | -                 |   |   | -                 |   |   | 600,000                 |  
|Proceeds from advances from a related
      party                    |   | -                 |   |   | -                 |   |   | 450,000                 |  
|Proceeds from issue of common stock                                  |   | 1,500,000         |   |   | 80,000            |   |   | 5,210,000               |  
|Cash provided by financing
      activities                          |   | 1,500,000         |   |   | 80,000            |   |   | 6,260,000               |  
|                                                                     |   |                   |   |   |                   |   |   |                         |  
|Effect of exchange rates on cash                                     |   | 15,343            |   |   | -                 |   |   | 11,348                  |  
|                                                                     |   |                   |   |   |                   |   |   |                         |  
|Net Increase in Cash                                                 |   | (321,012          | ) |   | 26,202            |   |   | 2,477,945               |  
|                                                                     |   |                   |   |   |                   |   |   |                         |  
|Cash, Beginning of Period                                            |   | 2,798,957         |   |   | 21,799            |   |   | -                       |  
|                                                                     |   |                   |   |   |                   |   |   |                         |  
|Cash, End of Period                                                  | $ | 2,477,945         |   | $ | 48,001            |   | $ | 2,477,945               |  
|                                                                     |   |                   |   |   |                   |   |   |                         |  
|SUPPLEMENTAL DISCLOSURES:                                            |   |                   |   |   |                   |   |   |                         |  
|Cash paid for:                                                       |   |                   |   |   |                   |   |   |                         |  
|Income tax                                                           | $ | -                 |   | $ | -                 |   | $ | -                       |  
|Interest                                                             | $ | -                 |   | $ | -                 |   | $ | -                       |  
|                                                                     |   |                   |   |   |                   |   |   |                         |  
|Non-cash investing and financing activities:                         |   |                   |   |   |                   |   |   |                         |  
|Capitalized interest related to
      leasehold improvements - plant | $ | 11,982            |   | $ | -                 |   | $ | 43,106                  |  

The accompanying notes are an integral part of these
consolidated financial statements.

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SOLAR ENERTECH CORP. 
  A Development Stage Company Notes to Consolidated Financial Statements
December 31, 2006

NOTE 1  BASIS OF PRESENTATION

The accompanying unaudited interim financial statements of
Solar Enertech Corp. have been prepared in accordance with accounting principles
generally accepted in the United States of America and the rules of the
Securities and Exchange Commission, and should be read in conjunction with the
audited consolidated financial statements and notes thereto contained in Solar
Enertech's Annual Report filed with the SEC on Form 10-KSB. In the opinion of
management, all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of financial position and the results of
operations for the interim periods presented have been reflected herein. The
results of operations for interim periods are not necessarily indicative of the
results to be expected for the full year. Notes to the financial statements
which would substantially duplicate the disclosure contained in the audited
consolidated financial statements for fiscal 2006 as reported elsewhere in this
Form 10-QSB have been omitted.

NOTE 2  INVENTORY

Inventory consists of silicon and photovoltaic cells and other
component material are valued at lower of cost (first-in, first-out) or market.
Management provides a reserve to reduce inventory to its net realizable value.
Certain factors could impact the realizable value of inventory, so management
continually evaluates the recoverability based on assumptions about customer
demand and market conditions. The evaluation may take into consideration
expected demand, new product development, the effect new products might have on
the sale of existing products, product obsolescence, and other factors. The
reserve or write-down is equal to the difference between the cost of inventory
and the estimated market value based upon assumptions about future demand and
market conditions. If actual market conditions are less favorable than those
projected by management, additional inventory reserves or write-downs may be
required. If actual market conditions are more favorable, reserves or
write-downs may be reversed.

At December 31, 2006, inventory consists of:

Raw materials
    $
    294,723Low value consumption goods
    
    470Work in progress
    
    93,308Total inventory
    $
    388,501


Inventory is shown net of reserves for slow moving and obsolete
inventory of $nil as of December 31, 2006.

NOTE 3 - RELATED PARTY TRANSACTIONS

Due from related party:

During the quarter ended December 31, 2006, a company controlled
  by a director and officer received reimbursement for pre-operating expenditures
  incurred on behalf of Solar Enertech. The payment made to this related party
  exceeded the expenses incurred by $43,894, and included in due from a related
  party on the balance sheet. It is anticipated that subsequent to quarter end,
  these funds will be transferred back to Solar Enertech.

NOTE 4 EQUITY TRANSACTIONS

Common stock issued for cash:

In November 2006, Solar Enertech sold 2,500,000 units at $0.60
per unit, for net proceeds of $1,500,000. Each unit consisted of one common
share and one common share purchase warrant entitling the holder to acquire an
additional common share at an exercise price of $1.00, expiring November 28,
2007.

Page 8

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Warrants:

In November 2006, Solar Enertech repriced all of the 3,607,000
  warrants outstanding at September 30, 2006 from $1.60 to $1.00 per warrant for
  the remainder of the warrants’ terms. Consequently, the relative fair
  value attributed to the warrants changed from $1,106,000 to $1,481,000 using
  the same assumptions used at the date of grant.



The allocation of proceeds from the sale in November 2006 of
  2,500,000 capital stock units to the share purchase warrants was estimated at
  $750,900 using the same assumptions described above.

Options:

Pursuant to an option agreement dated March 1, 2006 with a
former officer and director of the Company, the President and CEO of the Company
has the right and option to purchase a total of 36,000,000 shares of common
stock of the Company at a price of $0.0001 per share, until February 10, 2010.
The options granted under the agreement vest in 3 equal installments over a
period of 3 years, with the first installment vesting immediately, and the
remaining options vesting upon 12 and 24 months after the date of the agreement.

Pursuant to an option agreement dated March 1, 2006 with a
former officer and director of the Company, a director of the Company has the
right and option to purchase a total of 1,500,000 shares of common stock of the
Company at a price of $0.0001 per share, until February 10, 2010. The options
granted under the agreement vested immediately.

The fair value of the options granted under these agreements
was estimated at $82,253 using the Black-Scholes stock price valuation model
with the following assumptions: i) Expected share price volatility of 80.21%;
ii) Risk free interest rate of 4.65%; iii) Expected weighted average life  4
years; and iv) No dividend yield.

For the quarter ended December 31, 2006, the Company had recorded
  compensation expense $49,352 in relation to these options.



NOTE 5 - COMMITMENTS AND CONTINGENCIES

Capital investments:

Pursuant to a joint research and development laboratory agreement
  with Shanghai University, adopted December 15, 2006 and expiring on December
  15, 2016, Solar Enertech is committed to fund the establishment of laboratories
  and completion of research and development activities, as follows:

MinimumFiscal Year
    
    CapitalEnding
    
    Investments2007
    $
    941,6322008
    
    788,9352009
    
    814,3842010
    
    928,9072011
    
    241,770$
    3,715,628


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Item 2.      MANAGEMENT DISCUSSION
AND ANALYSIS OR PLAN OF OPERATIONS

We have not generated any revenues from products, services or
operations since the inception of our company. The foregoing analysis should be
read jointly with the financial statements, related notes, and the cautionary
statement regarding forward-looking statements, which appear elsewhere in this
filing.

The following Risk Factors summarize some of the risks inherent
in our business and to our company in particular:

RISKS RELATED TO OUR BUSINESS

Investors should carefully consider the risks described
below before deciding whether to invest in our common stock. The risks described
below are not the only ones we face. Additional risks not presently known to us
or that we currently believe are immaterial may also impair our business
operations and financial results. If any of the following risks actually occurs,
our business, financial condition or results of operations could be adversely
affected. In such case, the trading price of our common stock could decline and
you could lose all or part of your investment. Our filings with the Securities
and Exchange Commission also contain forward-looking statements that involve
risks and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including the risks we face described below. See "Forward-Looking Statements."

Our limited operating history may not serve as an
adequate basis to judge our future prospects and results of operations.

We have a limited operating history. As such, our historical
operating results may not provide a meaningful basis for evaluating our
business, financial performance and prospects. We may not be able to achieve a
similar growth rate in future periods. Accordingly, you should not rely on our
results of operations for any prior periods as an indication of our future
performance.

We have incurred losses in prior periods and may incur
losses in the future.

We incurred a net loss in all prior financial periods and we
have not yet completed a full financial year as a solar industry company. We
expect our operating expenses to increase as we expand our operations. Our
ability to achieve profitability depends on the growth rate of the PV
(photovoltaic or solar power) market, the continued market acceptance of PV
products, the competitiveness of products and services as well as our ability to
provide new products and services to meet the demands of our customers.

Failure to obtain sufficient quantities of silicon and
silicon wafers could decrease our revenues and limit our ability to expand as
planned.

Silicon wafers are the most important raw materials for making
PV products. To maintain competitive manufacturing operations, we will depend on
our suppliers timely delivery of quality silicon wafers in sufficient
quantities and at acceptable prices. Silicon wafer suppliers, in turn, depend on
silicon manufacturers to supply silicon required for the production of silicon
wafers. The significant growth of the PV industry has resulted in a significant
increase in demand for silicon and silicon wafers, and some producers have, from
time to time, experienced late delivery and supply shortages. In particular,
some suppliers of silicon also supply to silicon wafer manufacturers for the
semiconductor industry, which typically have greater buying power and market
influence than manufacturers for the PV industry. As a result, increases in the
demand for silicon from the semiconductor industry may in the future result in
late deliveries or supply shortages with respect to the specialized silicon that
silicon wafer suppliers need as raw materials. This could result in our reducing
manufacturing output, assuming that manufacturing commences, delayed or missed
shipments, damaged customer relationships and decreased revenues.

We may not be able to manage our expansion of operations
effectively.

We announced an entrance into the PV industry or solar industry
in March 2006. We anticipate significant continued expansion of our business to
address growth in demand for our PV products and services, as well as to capture
market opportunities. To manage the potential growth of our operations, we will
be required to improve our operational and financial systems, procedures and
controls, create manufacturing capacity and output, and hire, expand, train and
manage an employee base. Furthermore, our management will be required to create,
maintain and expand relationships with our customers, suppliers and other third
parties. We cannot assure you that our current and planned operations,
personnel, systems, internal procedures and controls will be adequate to support
future growth, if such growth occurs. If we are unable to manage our growth
effectively, we may not be able to take advantage of market opportunities,
execute our business strategies or respond to competitive pressures.

If PV technology is not suitable for widespread adoption,
or sufficient demand for PV products does not develop or takes longer to develop
than we anticipated, sales may not develop or continue to increase or may even
decline, and we may be unable to sustain profitability.

The PV market is at a relatively early stage of development and
the extent to which PV products will be widely adopted is uncertain. Market data
in the PV industry are not as readily available as those in other more
established industries where trends can be assessed more reliably from data
gathered over a longer period of time. If PV technology proves unsuitable for
widespread adoption or if demand for PV products fails to develop sufficiently,
we may not be able to grow our business or generate sufficient revenues to
sustain profitability. In addition, demand for PV products in targeted markets,
including China, may not develop or may develop to a lesser extent than we
anticipated. Many factors may affect the viability of widespread adoption of PV
technology and demand for PV products, including:

- cost-effectiveness of PV products compared to conventional and other
  non-solar energy sources and products;

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- performance and reliability of PV products compared to conventional and
  other non-solar energy sources and products;
- availability of government subsidies and incentives to support the
  development of the PV industry;
- success of other alternative energy generation technologies, such as fuel
  cells, wind power and biomass;
- fluctuations in economic and market conditions that affect the viability
  of conventional and non- solar alternative energy sources, such as increases
  or decreases in the prices of oil and other fossil fuels;
- capital expenditures by end users of PV products, which tend to decrease
  when economy slows down; and
- deregulation of the electric power industry and broader energy industry.

We face intense competition from other companies
producing solar energy and other renewable energy products.

The PV market is intensely competitive and rapidly evolving.
According to Photon Internationals survey in March 2005, as of the end of 2004,
approximately 90 companies in the world produced PV cells and approximately 130
companies produced PV modules. Many of our competitors have established more
prominent market positions, and if we fail to attract and retain customers and
establish successful distribution networks in our target markets for our
anticipated products, we will be unable to create or increase our sales.

Our competitors include PV divisions of large conglomerates
such as BP, Royal Dutch Shell and Sharp Corporation, specialized cell and module
manufacturers such as Q-Cells, as well as integrated manufacturers of PV
products such as SolarWorld AG. Some of our competitors have also become
vertically integrated, from upstream silicon wafer manufacturing to PV system
integration. We expect to compete with future entrants to the PV market that
offer new technological solutions. We may also face competition from
semiconductor manufacturers, a few of which have already announced their
intention to start production of PV cells. Many of our competitors are
developing or currently producing products based on new PV technologies,
including amorphous silicon, ribbon, sheet and nano technologies, which they
believe will ultimately cost the same as or less than crystalline silicon
technologies similar to ours. In addition, the entire PV industry also faces
competition from conventional and non-solar renewable energy technologies. Due
to the relatively high manufacturing costs compared to most other energy
sources, solar energy is generally not competitive without government incentive
programs.

Many of our existing and potential competitors have
substantially greater financial, technical, manufacturing and other resources
than we do. Our competitors greater size in some cases provides them with a
competitive advantage with respect to manufacturing costs because of their
economies of scale and their ability to purchase raw materials at lower prices.
For example, those of our competitors that also manufacture semiconductors may
source both semiconductor grade silicon wafers and solar grade silicon wafers
from the same supplier. As a result, those competitors may have stronger
bargaining power with the supplier and have an advantage over us in negotiating
favorable pricing, as well as securing silicon wafer supplies at times of
shortages. Many of our competitors also have greater brand name recognition,
more established distribution networks and larger customer bases. In addition,
many of our competitors have well-established relationships with our current and
potential distributors and have extensive knowledge of our target markets. As a
result, they may be able to devote greater resources to the research,
development, promotion and sale of their products or respond more quickly to
evolving industry standards and changes in market conditions than we can. Our
failure to adapt to changing market conditions and to compete successfully with
existing or new competitors may materially and adversely affect our financial
condition and results of operations.

Our failure to refine technology and develop and
introduce new PV products could render our anticipated products uncompetitive or
obsolete, and reduce our sales and market share, should we develop sales or
market share.

The PV industry is rapidly evolving and competitive. We will
need to invest significant financial resources in research and development to
keep pace with technological advances in the PV industry and to effectively
compete in the future. However, research and development activities are
inherently uncertain, and we might encounter practical difficulties in
commercializing our research results. Our significant expenditures on research
and development may not reap corresponding benefits. A variety of competing PV
technologies that other companies may develop could prove to be more
cost-effective and have better performance than our PV products. Therefore, our
development efforts may be rendered obsolete by the technological advances of
others. Breakthroughs in PV technologies that do not use crystalline silicon
could mean that companies such as us that rely entirely on crystalline silicon
would encounter a sudden, sharp drop in sales.

Our failure to further refine our technology and develop and
introduce new PV products could render our anticipated products uncompetitive or
obsolete, and result in a decline in our market share. We do not have the
working capital, at this time, to make a significant investment in research and
development activities although we have hired personnel in the days prior to
this filing who have significant industry and PV expertise.

Our future success substantially depends on our ability
to develop manufacturing capacity and output. Our ability to achieve our
expansion goals is subject to a number of risks and uncertainties.

Our future success depends on our ability to significantly
develop manufacturing capacity and output. If we are unable to do so, we may be
unable to expand our business, decrease our costs per watt, maintain our
competitive position and improve profitability. Our ability to establish
manufacturing capacity and increase output is subject to significant risks and
uncertainties, including:

- the need to raise significant additional funds to purchase and prepay for
  raw materials or to buy equipment for our recently secured manufacturing
  facilities, which we may be unable to obtain on reasonable terms or at all;

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- delays and cost overruns as a result of a number of factors, many of which
  may be beyond our control, such as increases in raw materials prices and
  problems with manufacturing equipment vendors;
- delays or denial of required approvals by relevant government authorities;
- diversion of significant management attention and other resources; and
- failure to execute our plan of operations effectively.

If we are unable to establish or successfully operate
manufacturing capacity or to increase manufacturing output, or if we encounter
any of the risks described above, we may be unable to expand our business as
planned. Moreover, we cannot assure you that if we do establish or expand our
manufacturing capacity and output we will be able to generate sufficient
customer demand for our PV products to support production levels.

Our costs and expenses may increase as a result of
entering into fixed price, prepaid arrangements with our suppliers.

We plan to secure our supply of silicon and silicon wafers
increasingly through fixed-price, prepaid supply arrangements with both overseas
and domestic suppliers. If the prices of silicon or silicon wafers were to
decrease in the future and we were locked into fixed price, prepaid
arrangements, we may not be able to adjust our materials costs and thus, our
cost of revenues will be negatively affected. Additionally, if demand for PV
products decreases, we may incur costs associated with carrying excess
materials, which may have a material adverse effect on our operating expenses.
To the extent we are not able to pass these increased costs and expenses to our
customers, our business, results of operations and financial condition may be
materially and adversely affected.

Our dependence on a limited number of third-party
suppliers for key raw materials and customized manufacturing equipment could
prevent us from timely delivering our anticipated products to our customers in
the required quantities, which could result in order cancellations and decreased
revenues.

If we fail to develop or maintain our relationships with
suppliers, we may be unable to manufacture our anticipated products or our
anticipated products may be available at a higher cost or after a long delay,
and we could be prevented from delivering our anticipated products to potential
customers in the required quantities and at prices that are profitable. Problems
of this kind could cause us to experience order cancellations and loss of market
share. The failure of a supplier to supply materials and components that meet
quality, quantity and cost requirements in a timely manner could impair our
ability to manufacture products or increase our expected costs, particularly if
we are unable to obtain these materials and components from alternative sources
on a timely basis or on commercially reasonable terms.

Our dependence on a limited number of customers may cause
significant fluctuations or declines in our revenues.

As we develop our business, we will likely have a limited
number of customers initially and will be dependent on these customers for our
continued operations. We anticipate that our dependence on a limited number of
customers will continue for the foreseeable future. Consequently, any one of the
following events may cause material fluctuations or declines in our revenues and
have a material adverse effect on our results of operations:

- reduction, delay or cancellation of orders from one or more significant
  customers;
- selection by one or more significant distributor customers of products
  competitive with ours;
- loss of one or more significant customers and failure to identify
  additional or replacement customers; and
- failure of any significant customers to make timely payment for products.

We face risks associated with the marketing, distribution
and sale of PV products internationally, and if we are unable to effectively
manage these risks, they could impair our ability to expand our business
abroad.

We hope to market PV products outside of China. The marketing,
international distribution and sale of PV products would expose us to a number
of risks, including:

- fluctuations in currency exchange rates;
- difficulty in engaging and retaining distributors who are knowledgeable
  about and, can function effectively in, overseas markets;
- increased costs associated with maintaining marketing efforts in various
  countries;
- difficulty and cost relating to compliance with the different commercial
  and legal requirements of the overseas markets in which we offer our
  anticipated products;
- inability to obtain, maintain or enforce intellectual property rights; and
- trade barriers such as export requirements, tariffs, taxes and other
  restrictions and expenses, which could increase the prices of our anticipated
  products and make us less competitive in some countries.

Our business depends substantially on the continuing
efforts of our executive officers and our ability to maintain a skilled labor
force, and our business may be severely disrupted if we lose their services.

Our future success depends substantially on the continued
services of our executive officer, especially Leo Shi Young, our President and
chief executive officer, and Mr. Frank Fang Xie and Mr. Shi Jian Yin, our two
other directors. We do not maintain key man life insurance on our executive
officer. If our executive officer is unable or unwilling to continue in his
present positions, we may not be able to replace him readily, if at all.
Therefore, our business may be severely disrupted, and we may incur additional
expenses to recruit and retain new officers. Our executive officer has entered
into an employment agreement with the Company, which contains confidentiality
and non-competition provisions. However, we cannot assure you the extent to
which any of these agreements could be

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enforced in China, where our executive officer resides and hold
some assets. See Risks Related to Doing Business in China Uncertainties with
respect to the PRC legal system could have a material adverse effect on us.

If we are unable to attract, train and retain technical
personnel, our business may be materially and adversely affected.

Our future success depends, to a significant extent, on our
ability to attract, train and retain technical personnel. Recruiting and
retaining capable personnel, particularly those with expertise in the PV
industry, are vital to our success. There is substantial competition for
qualified technical personnel, and there can be no assurance that we will be
able to attract or retain our technical personnel. If we are unable to attract
and retain qualified employees, our business may be materially and adversely
affected.

We may be exposed to infringement or misappropriation
claims by third parties, which, if determined adversely to us, could cause us to
pay significant damage awards.

Our success also depends largely on our ability to use and
develop our technology and know-how without infringing the intellectual property
rights of third parties. The validity and scope of claims relating to PV
technology patents involve complex scientific, legal and factual questions and
analysis and, therefore, may be highly uncertain. We may be subject to
litigation involving claims of patent infringement or violation of intellectual
property rights of third parties. The defense and prosecution of intellectual
property suits, patent opposition proceedings and related legal and
administrative proceedings can be both costly and time consuming and may
significantly divert the efforts and resources of our technical and management
personnel. An adverse determination in any such litigation or proceedings to
which we may become a party could subject us to significant liability to third
parties, require us to seek licenses from third parties, to pay ongoing
royalties, or to redesign our anticipated products or subject us to injunctions
prohibiting the manufacture and sale of our anticipated products or the use of
our technologies. Protracted litigation could also result in our customers or
potential customers deferring or limiting their purchase or use of our
anticipated products until resolution of such litigation.

Fluctuations in exchange rates could adversely affect our
business.

Our financial statements are expressed in U.S. dollars but our
functional currency is likely to be Renminbi. Our results may be affected by the
foreign exchange rate between U.S. dollars and Renminbi. To the extent we hold
assets denominated in U.S. dollars, any appreciation of the Renminbi against the
U.S. dollar could result in a change to our income statement and a reduction in
the value of our U.S. dollar denominated assets. On the other hand, a decline in
the value of Renminbi against the U.S. dollar could reduce the U.S. dollar
equivalent amounts of our financial results which may have a material adverse
effect on the prices of our shares.

We have limited insurance coverage and may incur losses
resulting from product liability claims or business interruptions.

We anticipate we will be exposed to risks associated with
product liability claims in the event that the use of the PV products we hope to
sell results in injury. Since our anticipated products will be electricity
producing devices, it is possible that users could be injured or killed by our
anticipated products, whether by product malfunctions, defects, improper
installation or other causes. We have not commenced commercial shipment of
products and, due to the resulting limited historical experience, we are unable
to predict whether product liability claims will be brought against us in the
future or the effect of any resulting adverse publicity on our business.
Moreover, we do not have any product liability insurance and may not have
adequate resources to satisfy a judgment in the event of a successful claim
against us. The successful assertion of product liability claims against us
could result in potentially significant monetary damages and require us to make
significant payments. In addition, as the insurance industry in China is still
in an early stage of development, business interruption insurance available in
China offers limited coverage compared to that offered in many other countries.
We do not have any business interruption insurance. Any business disruption or
natural disaster could result in substantial costs and diversion of
resources.

Our existing shareholders have substantial influence over
our company and their interests may not be aligned with the interests of our
other shareholders.

The Companys President, Leo Shi Young, has substantial or
complete influence over our business, including decisions regarding mergers,
consolidations and the sale of all or substantially all of our assets, election
of directors and other significant corporate actions. He has the right to
purchase 36,000,000 shares of our common stock from the previous President and
CEO, Jean Blanchard for nominal consideration. This represents approximately 46%
of the issued and outstanding shares of the Company. To date, he has exercised
the option as to 12,000,000 shares.

If we grant employee share options and other share-based
compensation in the future, our net income could be adversely affected.
The Company may grant share purchase options to employees in the future although
it does not have a share based compensation plan in place as of today. If the
Company does this, it will account for options granted to our directors and
employees in accordance with Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees, or APB 25, and its related
interpretations, and according FASB Statement No. 123 (Revised 2004),
Share-Based Payments, or SFAS 123R, which requires all companies to recognize,
as an expense, the fair value of share options and other share-based
compensation to employees. As a result, if we were to grant options to directors
and employees, we would have to account for compensation costs for all share
options using a fair-value based method and recognize expenses in our
consolidated statement of operations in accordance with the relevant rules under
U.S. GAAP, which may have a material and adverse effect on our reported
earnings. If we try to avoid incurring these compensation costs, we may not be
able to attract and retain key personnel, as share options are an important
employee recruitment and retention tool. If we grant employee share options or
other share-based compensation in the future, our net income could be adversely
affected.

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Existing regulations and changes to such regulations may
present technical, regulatory and economic barriers to the purchase and use of
solar power products, which may significantly reduce demand for our products.

The market for electricity generation products is heavily
influenced by foreign, federal, state and local government regulations and
policies concerning the electric utility industry, as well as internal policies
and regulations promulgated by electric utilities. These regulations and
policies often relate to electricity pricing and technical interconnection of
customer-owned electricity generation. In the United States and in a number of
other countries, these regulations and policies are being modified and may
continue to be modified. Customer purchases of, or further investment in the
research and development of, alternative energy sources, including solar power
technology, could be deterred by these regulations and policies, which could
result in a significant reduction in the potential demand for our PV
products.

Problems with product quality or product performance may
cause us to incur warranty expenses and prevent us from achieving sales and
market share, particularly if we introduce new technologies.

As is consistent with standard practice in our industry, the
duration of our product warranties is likely to be lengthy relative to expected
product life. Our PV product warranty is for a 20-year period. Due to the long
warranty period, we bear the risk of extensive warranty claims long after we
have shipped product and recognized revenues. Our products have not been
installed yet, therefore we are not able to evaluate their performance over a
20-year period.

The reduction or elimination of government economic
incentives could prevent us from achieving sales and market share.

We believe that the near-term growth of the market for PV
products depend in large part on the availability and size of government and
economic incentives. The reduction or elimination of government economic
incentives may adversely affect the growth of this market or result in increased
price competition, which could prevent us from achieving sales and market share.

Today, the cost of solar power exceeds the cost of power
furnished by the electric utility grid in many locations. As a result, federal,
state and local government bodies in many countries, most notably Germany, Japan
and the United States, have provided incentives in the form of rebates, tax
credits and other incentives to end users, distributors, system integrators and
manufacturers of solar power products to promote the use of solar energy in
on-grid applications and to reduce dependency on fossil fuels. These government
economic incentives could be reduced or eliminated altogether, which would
significantly harm our business if we developed sales and product markets in
those economies.

We are subject to new corporate governance and internal
control reporting requirements, and our costs related to compliance with, or our
failure to comply with existing and future requirements, could adversely affect
our business.

We may face new corporate governance requirements under the
Sarbanes-Oxley Act of 2002, as well as new rules and regulations subsequently
adopted by the SEC and the Public Company Accounting Oversight Board. These
laws, rules and regulations continue to evolve and may become increasingly
stringent in the future. In particular, under rules proposed by the SEC on
August 6, 2006 we will be required to include management's report on internal
controls as part of our annual report for the fiscal year ending September 30,
2008 pursuant to Section 404 of the Sarbanes-Oxley Act. Furthermore, under the
proposed rules, an attestation report on our internal controls from our
independent registered public accounting firm will be required as part of our
annual report for the fiscal year ending September 30, 2009. We are in the
process of evaluating our control structure to help ensure that we will be able
to comply with Section 404 of the Sarbanes-Oxley Act. The financial cost of
compliance with these laws, rules and regulations is expected to be substantial.
We cannot assure you that we will be able to fully comply with these laws, rules
and regulations that address corporate governance, internal control reporting
and similar matters. Failure to comply with these laws, rules and regulations
could materially adversely affect our reputation, financial condition and the
value of our securities.

Risks Related to Doing Business in China

Adverse changes in political and economic policies of the
PRC government could have a material adverse effect on the overall economic
growth of China, which could reduce the demand for our anticipated products and
materially and adversely affect our competitive position.

All of our business operations are conducted in China and some
or most of our sales are likely to be made in China in the near future, although
we are in the process of attempting to establish US distribution for our future
products. Accordingly, our business, financial condition, results of operations
and prospects are affected significantly by economic, political and legal
developments in China. The Chinese economy differs from the economies of most
developed countries in many respects, including:

- the amount of government involvement;
- the level of development;
- the growth rate;
- the control of foreign exchange; and
- the allocation of resources.

While the Chinese economy has grown significantly in the past
20 years, the growth has been uneven, both geographically and among various
sectors of the economy. The PRC government has implemented various measures to
encourage economic growth and guide the allocation of resources. Some of these
measures benefit the overall Chinese economy, but may also have a negative
effect on us. For example, our financial condition and results of operations may
be adversely affected by government control over capital investments or changes
in tax regulations that are applicable to us.

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The Chinese economy has been transitioning from a planned
economy to a more market-oriented economy. Although in recent years the PRC
government has implemented measures emphasizing the utilization of market forces
for economic reform, the reduction of state ownership of productive assets and
the establishment of sound corporate governance in business enterprises, a
substantial portion of the productive assets in China is still owned by the PRC
government. The continued control of these assets and other aspects of the
national economy by the PRC government could materially and adversely affect our
business. The PRC government also exercises significant control over Chinese
economic growth through the allocation of resources, controlling payment of
foreign currency-denominated obligations, setting monetary policy and providing
preferential treatment to particular industries or companies. Efforts by the PRC
government to slow the pace of growth of the Chinese economy could result in
decreased capital expenditure by solar energy users, which in turn could reduce
demand for our anticipated products.

Any adverse change in the economic conditions or government
policies in China could have a material adverse effect on the overall economic
growth and the level of renewable energy investments and expenditures in China,
which in turn could lead to a reduction in demand for our anticipated products
and consequently have a material adverse effect on our businesses.

Uncertainties with respect to the Chinese legal system
could have a material adverse effect on us.

We plan to conduct substantially all of our business through a
subsidiary which is in the process of being established in China. This
subsidiary will be generally subject to laws and regulations applicable to
foreign investment in China and, in particular, laws applicable to wholly
foreign-owned enterprises. The PRC legal system is based on written statutes.
Prior court decisions may be cited for reference but have limited precedential
value. Since 1979, PRC legislation and regulations have significantly enhanced
the protections afforded to various forms of foreign investments in China.
However, since these laws and regulations are relatively new and the PRC legal
system continues to rapidly evolve, the interpretations of many laws,
regulations and rules are not always uniform and enforcement of these laws,
regulations and rules involve uncertainties, which may limit legal protections
available to us. In addition, any litigation in China may be protracted and
result in substantial costs and diversion of resources and management
attention.

Restrictions on currency exchange may limit our ability
to receive and use our revenues effectively.

Foreign exchange transactions by companies under Chinas
capital account continue to be subject to significant foreign exchange controls
and require the approval of PRC governmental authorities, including the SAFE.

Risks Relating to an Investment in our Securities

The market price for our shares may be volatile.

As we are a development stage company, the market price for our
shares is likely to be highly volatile and subject to wide fluctuations in
response to factors including the following:

- Announcements of technological or competitive developments;
- regulatory developments in our target markets affecting us, our customers
  or our competitors;
- Announcements regarding patent litigation or the issuance of patents to us
  or our competitors;
- Announcements of studies and reports relating to the conversion
  efficiencies of our anticipated products or those of our competitors;
- actual or anticipated fluctuations in our quarterly operating results;
- changes in financial estimates by securities research analysts;
- changes in the economic performance or market valuations of other PV 
  solar industry companies;
- addition or departure of our executive officers and key personnel;
- release or expiry of resale restrictions on other outstanding common
  shares; and
- sales or perceived sales of additional shares to raise working capital.

In addition, the securities market has from time to time
experienced significant price and volume fluctuations that are not related to
the operating performance of particular companies. These market fluctuations may
also have a material adverse effect on the market price of our shares.

The execution of our business plan will require
substantial funds. Our stockholders may be adversely affected if we issue
additional debt or equity securities to obtain financing.

We will require substantial funds to execute our business plan.
We anticipate that such funds will be obtained from external sources and intend
to seek additional equity or debt financing to fund future operations.

Our actual capital requirements may vary. Additional funding
may not be available on favorable terms, if at all. Additional funding may only
be available on terms that may, for example, cause substantial dilution to
common stockholders, and have liquidation preferences or pre-emptive rights. If
we raise additional funds by issuing debt or equity securities, existing
stockholders may be adversely affected because new investors may have rights
superior to those of current stockholders, and current stockholders may be
diluted. If we do not succeed in raising needed funds, we could be forced to
discontinue operations entirely.

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There are 6,107,000 shares underlying our presently
outstanding warrants that may be available for future sale. Our existing
stockholders will experience immediate and substantial dilution resulting from
the issuance of these shares and the sale of these shares may depress the future
market price of our common stock. At this time, the exercise price of these
outstanding warrants is $1.00 per share, which is above the recent trading price
for our shares.

GENERAL

Solar Enertech Corporation (formerly Safer Residence
Corporation) (Solar or the Company) was incorporated under the laws of the
state of Nevada on July 7, 2004, and was engaged in a variety of business until
March 206, when it began its current operations as a photovoltaic solar energy
cell (PV Cell) manufacturer. Effective February 27, 2006, the Company forward
split its issued common shares on the basis of forty-four new shares for one old
share. The number of shares referred to in these consolidated financial
statements has been restated wherever applicable, except where noted, to give
retroactive effect on the forward stock split.

The retroactive restatement of the issued common shares is
required by the Securities and Exchange Commissions Staff Accounting Bulletin
No. 1, Topic 4(c). The number of common shares outstanding pre-forward stock
split was 1,652,273, and after giving effect to the forward split, the
outstanding common shares totaled 72,700,012.

On March 1, 2006, the Company authorized the increase of its
authorized capital stock from 75,000,000 common shares with a par value of
$0.001 to 200,000,000 common shares with a par value of $0.001. This increase in
its authorized capital has been filed with the Nevada Secretary of State.

On April 7, 2006, the Company changed its name to Solar
Enertech Corp. to reflect its engaging business in the solar energy industry.

The Companys goal is to maximize its value through
manufacturing and distribution of PV Cells in China and California. The
Company's current focus is to establish itself as a sophisticated
42,000-square-foot manufacturing and research facility in Shanghai's Jinqiao
Modern Science and Technology Park. Solar plans to invest in PV cell research to
develop higher efficiency cells and put the results of that research to use
immediately in its manufacturing processes. The Company has also established a
marketing, purchasing and distribution arm in Northern California's Silicon
Valley. The Company currently has no other operations.

The Companys future operations are dependent upon the
identification and successful completion of additional long-term or permanent
equity financing, the support of creditors and shareholders, and, ultimately,
the achievement of profitable operations. There can be no assurances that we
will be successful, which would in turn significantly affect our ability to roll
out our business plan. If not, we will likely be required to reduce operations
or liquidate assets. We will continue to evaluate our projected expenditures
relative to our available cash and to seek additional means of financing in
order to satisfy our working capital and other cash requirements.

RESULTS OF OPERATIONS

The following discussion of the plan of operation, financial
condition, results of operations, cash flows and changes in financial position
of our Company should be read in conjunction with our audited consolidated
financial statements and notes filed on Form 10-KSB on December 28, 2006.

Limited Operating History

There is limited historical financial information about our
company upon which to base an evaluation of our future performance. Our company
has yet to generate revenues from operations. We cannot guarantee that we will
be successful in our business. We are subject to risks inherent in a fast
growing company, including limited capital resources, possible delays in product
development and manufacturing, and possible cost overruns due to price and cost
increases. There is no assurance that future financing will be available to our
company on acceptable terms. Additional equity financing could result in
dilution to existing shareholders.

We have financed our operations since inception primarily
through private sales of securities. As of December 31, 2006 we had
approximately $2.49 million in cash, and working capital of $1.1 million.

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Three-month period ended December 31, 2006

The following table sets forth our consolidated statements of
operations for the quarter ended December 31, 2006.

RevenuesInterest
      income
    $
    6,427ExpensesCorporate development and
      promotion
    
    31,578Investor
      relations
    
    36,375Professional fees
    
    101,607Rent
    
    55,300Salaries and benefits
    
    56,314Other, general and administrative
    
    260,442Loss
      from continuing operations
    
    (548,043
    )Loss
      from discontinued operations
    
    -Net loss
    $
    (541,616
    )


As discussed above, in 2006, our business focus began to change
to solar energy, from home security assistance services, with the set up of our
manufacturing plant in China and the manufacturing of our first SolarE solar
modules in November 2006. Due to the significant changes, part of our results
for the September 30, 2006 and all the results for the year ended September 30,
2005 were reported as discontinued operations, and we believe that a comparison
of results of operations for the first and second quarters of the years ended
September 30, 2007 and September 30, 2007 should not be relied on as an
indication of future performance. Factors that may cause our results of
operations to fluctuate include those discussed in the Risk Factors.

Revenues

For the quarter ended December 31, 2006, we had no revenues
from operations, and interest income of $6,427. We expect to start earning
revenues in our second or third quarter of fiscal 2007, as production of the
SolarE solar modules began in our first quarter of fiscal 2007. As of December
31, 2006, we have manufactured approximately 125 panels, 75 of which are being
used as demos and test panels, with the remaining panels being available for
sale, commencing towards the end of the second quarter of fiscal 2007. fiscal
quarter . We expect to commence sell during our second or third fiscal quarter
of 2007. The Companys success depends on successful sales efforts, but also on
our ability to ramp up production.

Expenses and general and administrative expenses

During the fiscal quarter ended December 31, 2006, the Company
incurred total expenses of $548,043. These expenses were related mainly to start
up costs associated with the construction and development of the Companys
manufacturing facility, and to activities associated with the maintenance of a
public listing, such as communication shareholders, legal and accounting fees,
and corporate development and promotion. Some of these expenses, as well as cash
disbursements of $1,310,014 in leasehold improvements (including capitalized
interest), and $100,866 for the acquisition of equipment are one time expenses
resulting from start up costs of equipping the Companys Shanghai manufacturing
facility. The anticipated expenditures for the Company are described elsewhere.
Readers should not assume that expenses or other cash flows in this period are
indicative of future periods as the Company is in the development stage.

Discontinued Operations

A loss of $6,613 was incurred in discontinued operations in the
quarter ended December 31, 2005, as a result of operating expenses related to
home security services. Amounts related to discontinued operations included in
the comparative financial statements presented herein have been reclassified to
conform to the current period presentation.

Net Loss

Our net loss was $541,616 for the fiscal quarter ended December
31, 2006. The net loss reflects our expenses relating to our acquisitions and
financings, the cost of additional employees to pursue our strategy, and
expenditures for research and development. These expenses have been incurred
ahead of our ability to recognize material revenues from the sales of our SolarE
panels.

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Liquidity and Capital Resources

As of December 31, 2006, we had cash and cash equivalents of
  $2,477,945 and working capital of $1,491,612. Since inception, we funded our
  operations from private sales of equity and short term borrowings. We believe
  our current strategies will provide sufficient working capital to fund our operations
  for at least the next 12 months assuming a steady ramp-up in production. Changes
  in our operating plans, an increase in our inventory, increased expenses, additional
  acquisitions, or other events, may cause us to seek additional equity or debt
  financing in the future.

For the quarter ended December 31, 2006, we used $633,536 of
  cash in operations. Net cash used by operating activities reflected $4,848 in
  prepaid expenses, $2,685 in depreciation, $49,352 in stock based compensation,
  $43,894 in due from a related party, purchase of inventory of $388,501 and an
  increase in accounts payable of $293,709. Investment activities used $1,202,819
  of cash during the period, which was primarily related to the leasehold improvements
  of our manufacturing plant associated with developing the Companys leased
  facilities in Shanghai, China and a reduction of $21,195 in deposit for equipment.

Financing activities provided $1,500,000 of cash during the
period from private placement subscription proceeds.

Our current cash requirements are significant due to the
building of silicon wafers inventory; leasehold improvements of our
manufacturing plant in Shanghai, manufacturing equipment purchases; start up and
other operational expenses. During the second and third quarter of our fiscal
year 2007, we expect to need significant cash as we begin to build a second
production line, scheduled for completion during the first quarter of fiscal
2008. Accordingly, we expect to continue to use cash to fund operations for at
least fiscal 2007 as we expand our manufacturing capacity and our product
shipments. We expect to continue to use cash to build up our inventory of
silicon wafers to hedge the current shortage in the industry.

In the past, we paid cash for our inventory purchases and we
are in the process of negotiating credit terms with our vendors. We also paid
cash for our equipment purchases. In the future, we plan to finance some of our
equipment purchases by short term bank borrowings and by establishing a working
capital line of credit.

The cost of silicon wafers, which is the primary cost of sales
for our SolarE solar modules, is currently volatile and is expected to rise due
to a current supply shortage. We are uncertain of the extent to which this will
negatively affect our working capital in the near future. A significant increase
in cost of silicon wafers that we cannot pass on to our customers could cause us
to run out of cash more quickly than our projections indicate, requiring us to
raise additional funds or curtail operations.

Recent Financings

Common stock issued for cash

In November 2006, we sold 2,500,000 units at $0.60 per unit,
for net proceeds of $1,500,000. Each unit consisted of one common share and one
common share purchase warrant entitling the holder to acquire an additional
common share at an exercise price of $1.00, expiring November 28, 2007.

Critical Accounting Policies

The preparation of financial statements in conformity with
United States generally accepted accounting principles requires management of
our company to make estimates and assumptions that affect the reported amounts
of assets and liabilities, the disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting periods.

Our management routinely makes judgments and estimates about
the effects of matters that are inherently uncertain. As the number of variables
and assumptions affecting the probable future resolution of the uncertainties
increase, these judgments become even more subjective and complex. Our
significant accounting policies are discussed in Note 2 to our consolidated
financial statements for the fiscal year ended September 30, 2006 included in
this Report. We have identified the following accounting policies, described
below, as the most important to an understanding of our current financial
condition and results of operations.

Currency and foreign exchange

The Company determined its functional currency is the Renminbi
as substantially all of its operations are in China. The Companys reporting
currency is the U.S. dollars.

Transactions and balances originally denominated in U.S.
dollars are presented at their original amounts. Transactions and balances in
other currencies are converted into U.S. dollars in accordance with SFAS No. 52,
Foreign Currency Translation, and are included in determining net income
or loss.

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For foreign operations with the local currency as the
functional currency, assets and liabilities are translated from the local
currencies into U.S. dollars at the exchange rate prevailing at the balance
sheet date. Revenues and expenses are translated at weighted average exchange
rates for the period to approximate translation at the exchange rates prevailing
at the dates those elements are recognized in the financial statements.
Translation adjustments resulting from the process of translating the local
currency financial statements into U.S. dollars are included in determining
comprehensive loss.

Inventory

Inventory consists of silicon and photovoltaic cells and other
component material are valued at lower of cost (first-in, first-out) or market.
Management provides a reserve to reduce inventory to its net realizable value.
Certain factors could impact the realizable value of inventory, so management
continually evaluates the recoverability based on assumptions about customer
demand and market conditions. The evaluation may take into consideration
expected demand, new product development, the effect new products might have on
the sale of existing products, product obsolescence, and other factors. The
reserve or write-down is equal to the difference between the cost of inventory
and the estimated market value based upon assumptions about future demand and
market conditions. If actual market conditions are less favorable than those
projected by management, additional inventory reserves or write-downs may be
required. If actual market conditions are more favorable, reserves or
write-downs may be reversed.

Stock-based Compensation

The Company adopted the fair value recognition provisions of
SFAS No. 123R, Share-Based Payment. Accordingly, the Company accounts for
options granted to its directors and employees in accordance with Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, or
APB 25, and its related interpretations, and according FASB Statement No. 123
(Revised 2004), Share-Based Payments, or SFAS 123R, which requires to
recognize, as an expense, the fair value of share options and other share-based
compensation to employees.

Plan of Operations

Our future operations are dependent upon the identification and
successful completion of additional long-term or permanent equity financing, the
support of creditors and shareholders, and, ultimately, the achievement of
profitable operations. There can be no assurances that we will be successful,
which would in turn significantly affect our ability to roll out our business
plan. If not, we will likely be required to reduce operations or liquidate
assets. We will continue to evaluate our projected expenditures relative to our
available cash and to seek additional means of financing in order to satisfy our
working capital and other cash requirements.

We continue to operate with very limited administrative
support, and our current officers and directors continue to be responsible for
many duties to preserve our working capital.

Projected Expenditures Over The Next 12 Months

The following chart provides an overview of our budgeted
expenditures by major area of activity, for the next 12 months from the date of
this annual report:

|(a)    | Personnel costs
      in Shanghai, China and the United States: | $2,151,385 
|------ | --------------------------------------------------------------- | -----------
|(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:                | 12,500,000 
|(f)    | Silicon material purchase                                       | 47,000,000 
|(g)    | Professional fees
      and expenses, regulatory expenses:      | 105,000    
|(h)    | Shareholder communications:                                     | 208,000    
|(i)    | Travel,
      Miscellaneous, Unallocated                        | 64,100     
|       |                                                                 |            
|Total: |                                                                 | $64,599,845

The amounts noted above reflect our current cash resources and
assume that we will raise, through equity or other financing, approximately
$15,000,000 in the next 12 months, and finance another $10,000,000 through
borrowings. There can be no assurance that the Company will be successful in
raising these additional funds and, if the Company is unsuccessful in raising
these additional funds, its plans for expanding operations and business
activities may have to be curtailed.

Other than as detailed above, we do not anticipate making any
major purchases of capital assets in the next 6 months, or conducting

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any large-scale research and development. Any development of
research and development functions would be dependent upon securing additional
equity or other financing to add to our working capital. The Company has hired
two persons for research and development and product development research but
that is the extent of its planned research and development activities. Under US
GAAP, these activities may possibly not be classified as research and
development but may be classified as expenses given that the costs are
associated with paying salaries to the two individuals.

We believe we have sufficient cash resources to satisfy our
needs over the next twelve months. Our ability to satisfy cash requirements
thereafter will determine whether we achieve our business objectives, including
but not limited to completion of our manufacturing facilities and production
lines. Should we require additional cash in the future, there can be no
assurance that we will be successful in raising additional debt or equity
financing on terms acceptable to our company, if at all.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, as defined
in Item 303(c)(2) of Regulation S-B.

ITEM 3.      CONTROLS AND
PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures.

Solar Enertech Corp. maintains disclosure controls and
procedures that are designed to ensure that information required to be disclosed
in its Exchange Act reports is recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and forms, and that such
information is accumulated and communicated to its management, including its
Chief Executive Officer, to allow timely decisions regarding required disclosure
based closely on the definition of "disclosure controls and procedures" in Rule
13a-15(e). In designing and evaluating the disclosure controls and procedures,
management recognized that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving the
desired control objectives, and management necessarily was required to apply its
judgment in evaluating the cost-benefit relationship of possible controls and
procedures.

At the end of the period covered by this Quarterly Report, we
carried out an evaluation, under the supervision and with the participation of
our management, including its Chief Executive Officer, of the effectiveness of
the design and operation of our disclosure controls and procedures. Based upon
the foregoing, our Chief Executive Officer concluded that, as of December 31,
2006, our disclosure controls and procedures were not effective to ensure that
the information required to be disclosed in the Company's Exchange Act reports
was recorded, processed, summarized and reported on a timely basis.

In connection with the completion of its interim review of the
financial statements of Solar Enertech Corp. for the three months ended December
31, 2006, Malone & Bailey, PC identified deficiencies in our internal
controls related to the accounting for plant construction in process, debt and
related party transactions. The adjustments to these accounts and the footnote
disclosure deficiencies were detected in the review process and have been
appropriately recorded and disclosed in this Form 10-QSB. We are in the process
of improving our internal controls by providing training and support to our
accounting staff, referring to the expertise of a consultant in the treatment of
new transactions, assisting in the development and implementation of accounting
policies and procedures, and by implementing an internal review process.
Additional effort is needed to fully remedy these deficiencies and we are
continuing our efforts to improve and strengthen our control processes and
procedures. Our management and directors will continue to work with our auditors
and other outside advisors to ensure that our controls and procedures are
adequate and effective.

(b) Changes in Internal Control Over Financial Reporting.

Our management, with the participation of the Chief Executive
Officer, has concluded there were no significant changes in our internal
controls over financial reporting that occurred during our last fiscal quarter
that has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.

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PART II  OTHER INFORMATION

ITEM 1.      LEGAL PROCEEDINGS

None

ITEM 2.      CHANGES IN SECURITIES
AND USE OF PROCEEDS

During the year ended September 30, 2006 and the quarter ended
December 31, 2006, we issued the following securities without registration under
the Securities Act, in addition to those unregistered issuances not previously
disclosed on Form 10-QSB or Form 8-K.

On February 24, 2006, 3 previous directors returned 1,447,727
(pre-forward stock split) common shares for no consideration. On February 27,
2006, Solar Enertech forward split its issued common shares on the basis of
forty-four new shares for one old share. The number of shares referred to in
these consolidated financial statements has been restated to give retroactive
effect on the forward stock split.

On March 1, 2006, Solar Enertech increased its authorized
capital stock from 75,000,000 to 200,000,000 common shares.

During the period from May 2006 to September 30, 2006, Solar
Enertech sold 3,607,000 units at $1.00 per unit, for net proceeds of $3,607,000.
Each unit consisted of one common share and one common share purchase warrant
entitling the holder to acquire an additional common share at an exercise price
of $1.60, expiring on various dates ranging from April 30, 2007 to September 20,
2007.

In November 2006, Solar Enertech repriced all 3,607,000
warrants that were outstanding at September 30, 2006, from $1.60 to $1.00 per
warrant for the remainder of the warrants terms.

In November 2006, Solar Enertech sold 2,500,000 units at $0.60
per unit, for net proceeds of $1,500,000. Each unit consisted of one common
share and one common share purchase warrant entitling the holder to acquire an
additional common share at an exercise price of $1.00, expiring November 28,
2007.

As a result of the issuance of the 2,500,000 warrants in
November 2006, the Company presently has 6,107,000 warrants outstanding which
are convertible into 6,107,000 shares of common stock if all outstanding
warrants were exercised.

The securities sold in the fiscal year ended September 30, 2006
and during the fiscal quarter ended December 31, 2006 were all issued to non-US
resident persons as that term is defined in Regulation S under exemptions from
registration available under Regulation S. Persons purchasing securities under
Regulation S are prohibited from resale of the securities to any US person
unless the securities are registered or another exemption from registration,
such as Rule 144, is available to them. Under Rule 144, generally,
non-affiliates purchasing securities of a company are prohibited from resale of
those securities to a US person for a period of at least one year. Additional
restrictions on the volume of any sales may apply depending on the circumstances
and total shareholdings of individual shareholders.

ITEM 3.      DEFAULTS UPON SENIOR
SECURITIES

None

ITEM 4.      SUBMISSION OF MATTERS
TO A VOTE OF SECURITY HOLDERS

None

ITEM 5.      OTHER INFORMATION

None

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ITEM 6.      EXHIBITS AND REPORTS
ON FORM 8-K

(a) Pursuant to Rule 601 of Regulation SB, the following
exhibits are included herein or incorporated by reference.

|3.1  | Articles of Incorporation, Incorporated
        by reference to our SB2 Registration Statement Amendment 7 filed on May
        5, 2005, SEC File Number 333-120926.                     
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                          
|3.2  | By-laws, Incorporated by reference
        to our SB2 Registration Statement Amendment 7 filed on May 5, 2005, SEC
        File Number 333-120926.                                       
|     |                                                                                                                                                                                          
|3.4  | Article of Merger filed with the Secretary
        of State of Nevada, incorporated by reference from Exhibit 3.1 to the
        Form 8-K filed April 10, 2006.                          
|     |                                                                                                                                                                                          
|4.1  | Summary of Lease Agreement between
        the Company and Shanghai Jin Qiao Technology Park Ltd., incorporated by
        reference from Exhibit 4.1 to the Form 8-K filed May 12, 2006.
|     |                                                                                                                                                                                          
|10.1 | Management agreement with Leo Young,
        incorporated by reference from Exhibit 10.1 to our Form 8-K filed March
        10, 2006.                                                   
|     |                                                                                                                                                                                          
|10.2 | Agency Agreement between the Company
        and its Shanghai Agent dated July 18, 2006., incorporated by reference
        from Exhibit 10.1 to our Form 8-K/A filed December 18, 2006. 
|     |                                                                                                                                                                                          
|16.1 | Letter from former principal accountants,
        Morgan & Company, incorporated by reference from Exhibit 16.1 to our
        Form 8-K filed December 9, 2006.                          
|     |                                                                                                                                                                                          
|31.1 | Section 302 Certification
         Chief Executive Officer                                                                                                                              
|     |                                                                                                                                                                                          
|31.2 | Section 302 Certification
         Chief Financial Officer                                                                                                                              
|     |                                                                                                                                                                                          
|32.1 | Certification Pursuant to
        18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002  Chief Executive Officer.                        
|     |                                                                                                                                                                                          
|32.2 | Certification Pursuant to
        18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002  Chief Financial Officer.                        

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, on this
14th day of February, 2007

|                        | **SOLAR ENERTECH CORP.**
|----------------------- | ------------------------
|                        |                         
|                        |                         
|Date: February 14, 2007 |                         
|                        | By:                     
|                        |                         
|                        |                         
|                        |                         
|Date: February 14, 2007 |                         
|                        | By:                     
|                        |                         
|                        |                         
|                        |                         
|Date: February 14, 2007 | By:                     
|                        |                         
|                        |                         

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