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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-QSB/A

Amendment No. 2

(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 June 27, 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

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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, 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/A relate only to events or information as of the date on which the
statements are made. 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.

EXPLANATORY NOTE

This Quarterly Report on Form 10-QSB/A is being filed as
amendment No. 2 to the Quarterly Report on Form 10-QSB of Solar Enertech
Corporation for the fiscal quarter ended December 31, 2006, which was filed with
the Securities and Exchange Commission (the "SEC") on February 14, 2007, and
amended on April 20, 2007

In April 2007, we identified certain accounting errors related
to option agreements with employees and other share based compensation, and also
determined that we had not properly accounted for certain transactions with
related parties. Accordingly, share based compensation charges relating to the
fiscal year ended September 30, 2006 were revised in our Form 10-KSB/A. These
revisions were carried forward in the balance sheet, and accordingly, we further
revised stock based compensation expenses for the fiscal quarter ended December
31, 2006.

In our Form 10-QSB/A (referred to as Amendment No. 1), filed
April 20, 2007, we amended disclosures to footnote 4 to correct a stock-based
compensation charge in connection with an option agreement dated March 1, 2006
with a former officer and director of the Company, and the Companys president
and CEO from $49,352 as previously reported to $9,870. The effect of the changes
related to accounting for the issues described above on our statement of
operations from inception through December 31, 2006 was an increase in our net
loss attributable to common shareholders of $7,833,155. There was no net effect
on our balance sheet as of December 31, 2006.

We are filing Amendment No. 2 in response to a comment letter
received from the Securities and Exchange Commission. We have revised the
presentation in the statement of operations and have made some changes to the
disclosure in note 2 and 5. Additionally, we have made revision and added
disclosure to Item 2: Management Discussion and Analysis or Plan of Operations.
We have also revised Item 3: Controls and Procedures.

Page 2

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In all other material respects, this Amended Quarterly Report
  on Form 10-QSB/A is unchanged from the Quarterly Report on Form 10-QSB/A previously
  filed on April 20, 2007, and from the Quarterly Report on Form 10-QSB filed
  on February 14, 2007. The disclosures in this Amendment continue to speak as
  of the date of the Original Report, and do not reflect events occurring after
  the filing of the Original Report. Accordingly, this Amendment should be read
  in conjunction with our other filings made with the Securities and Exchange
  Commission subsequent to the filing of the Original Report, including any amendments
  to those filings. The filing of this Amendment shall not be deemed to be an
  admission that the Original Report, when made, included any untrue statement
  of a material fact or omitted to state a material fact necessary to make a statement
  misleading.

Please refer to the Company's Form 10-KSB and Form 10-KSB/A for
the fiscal year ended September 30, 2006 filed with the SEC since December 28,
2006.

Page 3

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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 | 8     

Page 4

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

|                                                                 |   | December 31, |   |   | September 30, |  
|---------------------------------------------------------------- | - | ------------ | - | - | ------------- | -
|                                                                 |   | 2006         |   |   | 2006          |  
|                                                                 |   | (Restated)   |   |   | (Restated)    |  
|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                                       |   | 13,055,708   |   |   | 11,537,454    |  
|Other comprehensive loss                                         |   | 30,880       |   |   | (3,995        | )
|Deficit accumulated during development stage                     |   | (9,064,097   | ) |   | (8,561,963    | )
|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,  |  
|                                             |   | December 31, 2006 |   |   | December 31, 2005 |   |   | 2006                         |  
|                                             |   | (Restated)        |   |   |                   |   |   | (Restated)                   |  
|Expenses                                     |   |                   |   |   |                   |   |   |                              |  
|Selling,
      general and administrative    | $ | 406,763           |   |   | -                 |   |   | 8,912,690                    |  
|Research and development                     |   | 101,798           |   |   |                   |   |   | 101,798                      |  
|Total expenses                               |   | 508,561           |   |   | -                 |   |   | 9,014,488                    |  
|                                             |   |                   |   |   |                   |   |   |                              |  
|Other income (expense)                       |   |                   |   |   |                   |   |   |                              |  
|Interest income                              |   | 6,427             |   |   | -                 |   |   | 14,920                       |  
|                                             |   |                   |   |   |                   |   |   |                              |  
|Loss from continuing
      operations        |   | (502,134          | ) |   | -                 |   |   | (8,999,568                   | )
|                                             |   |                   |   |   |                   |   |   |                              |  
|Loss from discontinued
      operations      |   | -                 |   |   | (6,613            | ) |   | (64,529                      | )
|                                             |   |                   |   |   |                   |   |   |                              |  
|Net loss                                     | $ | (502,134          | ) | $ | (6,613            | ) | $ | (9,064,097                   | )
|                                             |   |                   |   |   |                   |   |   |                              |  
|Net loss per share - basic
      and diluted |   |                   |   |   |                   |   |   |                              |  
|                                             |   |                   |   |   |                   |   |   |                              |  
|Continuing
      operations                  | $ | (0.01             | ) | $ | -                 |   |   |                              |  
|Discontinued operations                      |   | -                 |   |   | (0.00             | ) |   |                              |  
|Net loss                                     | $ | (0.01             | ) | $ | (0.00             | ) |   |                              |  
|                                             |   |                   |   |   |                   |   |   |                              |  
|Weighted Average Shares
      Outstanding    |   | 77,176,577        |   |   | 136,400,000       |   |   |                              |  

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

Page 6

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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       |  
|                                                                     |   | (Restated)        |   |   |                   |   |   | (Restated)              |  
|Cash Flows from Operating
      Activities                           |   |                   |   |   |                   |   |   |                         |  
|Net loss                                                             | $ | (502,134          | ) | $ | (47,706           | ) | $ | (9,064,097              | )
|Adjustments to reconcile net
      loss to                           |   |                   |   |   |                   |   |   |                         |  
|net cash used in operating activities:                               |   |                   |   |   |                   |   |   |                         |  
|Depreciation                                                         |   | 2,685             |   |   | -                 |   |   | 6,619                   |  
|Stock based compensation                                             |   | 9,870             |   |   | -                 |   |   | 7,882,507               |  
|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 note payables                                          |   | -                 |   |   | -                 |   |   | 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.

Page 7

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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

Inventories consist 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.

At December 31, 2006, inventory consists of:

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


Inventory is shown net of a zero reserve for slow moving and
obsolete inventory at 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 is 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.

Warrants

In November 2006, Solar Enertech repriced all of the warrants
that were 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.

Page 8

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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 of $9,870 in relation to these options. Please
refer to note 6 for the restatement.

NOTE 5 - COMMITMENTS AND CONTINGENCIES

Capital investments

Pursuant to a joint research and development laboratory
agreement with Shanghai University, effective 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


The agreement is for shared investment in research and
development on fundamental and applied technology in the fields of
semi-conductive photovoltaic theory, materials, cells and modules. The agreement
calls for Shanghai University to provide equipment, personnel and facilities for
joint laboratories. Solar Enertech will provide funding, personnel and
facilities for conducting research and testing. Research and development
achievements from this joint research and development agreement will be
available to both parties. Solar Enertech is entitled to intellectual property
rights including copyrights and patents obtained as a result of this research.

Expenditures under his agreement will be accounted for as
research and development expenditures under Statement of Financial Accounting
Standard #2  Accounting for Research and Development Costs and expensed as
incurred.

NOTE 6  RESTATEMENT

Solar Enertech recently determined that it did not account for
two option agreements, as well as it did not account for the transfers of shares
from an officer to employees. Accordingly, Solar Enertech has amended its
consolidated financial statements to include stock-based compensation charges.

Under an agreement dated March 1, 2006, the President and CEO
has the option to purchase a total of 36,000,000 shares of common stock at
$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.

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

Page 9

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In July 2006, the President and CEO exercised his option and
acquired 10,750,000 shares of common stock from the former officer and
subsequently transferred 5,750,00 shares to several employees and one director.
The fair value of the shares transferred was estimated at $7,820,000, being
market price at time of transfer.

Solar Enertech has corrected these errors and recorded
stock-based compensations charges as follows:

- The fair value of the options granted under the option 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 year ended September 30, 2006, Solar
  Enertech recorded compensation expense of $52,637 in relation to the grant
  these options, and $9,870 for the quarter ended December 31, 2006;
- The fair value of the shares transferred to employees was estimated at
  $7,820,000, being market price at time of transfer. These charges were
  recorded during the year ended September 30, 2006.

Summary information regarding options is as follows:

|                                         |              |           |          |            |                 | Options
      Outstanding | Options Exercisable
|---------------------------------------- | ------------ | --------- | -------- | ---------- | --------------- | ------------------------- | -------------------
|                                         |              |           |          |            |                 | Weighted                  |                    
|                                         |              |           |          |            | Number          | Average                   | Weighted           
|                                         |              |           |          |            | Outstanding as  | Remaining                 | Average            
|                                         | # of Options |           | Exercise |            | at December 31, | Contractual               | Exercise           
|                                         | Granted      | Expiry    | Price    | Exercised  | 2006            | Life
      (year)         | Price              
|                                         |              |           |          |            |                 |                           |                    
|Granted to Leo Young, March 1, 2006      | 36,000,000   | 10-Feb-10 | $ 0.0001 | 10,750,000 | 25,250,000      | 2.94                      | $ 0.0001           
|                                         |              |           |          |            |                 |                           |                    
|Granted to Frank Fang Xie, March 1, 2006 | 1,500,000    | 10-Feb-10 | $ 0.0001 | -          | 1,500,000       | 0.17                      | $ 0.0000           
|                                         |              |           |          |            |                 |                           |                    
|                                         | 37,500,000   |           |          | 10,750,000 | 26,750,000      | 3.11 years                | $ 0.0001           

Our consolidated financial statements for the period from
inception (July 7, 2004) through December 31, 2006 have been restated for the
changes described above. The impact of the adjustments relating to these
transactions on the consolidated balance sheet as of December 31, 2006 and the
statements of operations for the quarter ended December 31, 2006 and the period
from inception (July 7, 2004) through December 31, 2006 are summarized below:

|                                                   |   | As Previously |   |   |            |   |   |             |  
|-------------------------------------------------- | - | ------------- | - | - | ---------- | - | - | ----------- | -
|                                                   |   | Reported      |   |   | Adjustment |   |   | As Restated |  
|Balance Sheet                                      |   |               |   |   |            |   |   |             |  
|Additional paid in capital                         | $ | 5,222,553     |   | $ | 7,833,155  |   | $ | 13,055,708  |  
|Deficit accumulated during development
      stage |   | (1,230,942    | ) |   | (7,833,155 | ) |   | (9,064,097  | )
|                                                   |   |               |   |   |            |   |   |             |  
|Statement of Operations                            |   |               |   |   |            |   |   |             |  
|For the quarter ended December 31, 2006            |   |               |   |   |            |   |   |             |  
|Selling, general and administrative                |   | 446,245       |   |   | (39,482    | ) |   | 406,763     |  
|Net loss                                           |   | (541,616      | ) |   | 39,482     |   |   | (502,134    | )
|                                                   |   |               |   |   |            |   |   |             |  
|Weighted Average Shares Outstanding                |   | 77,176,577    |   |   | 77,176,577 |   |   | 77,176,577  |  
|Net loss per share - Continuing operations         |   | (0.01         | ) |   | 0.00       |   |   | (0.01       | )
|                                                   |   |               |   |   |            |   |   |             |  
|                                                   |   |               |   |   |            |   |   |             |  
|                                                   |   |               |   |   |            |   |   |             |  
|Statement of Operations                            |   |               |   |   |            |   |   |             |  
|From inception (July 7, 2004) through              |   |               |   |   |            |   |   |             |  
|December 31, 2006                                  |   |               |   |   |            |   |   |             |  
|Stock based compensation                           |   | 49,352        |   |   | 7,833,155  |   |   | 7,882,507   |  
|Net loss                                           |   | (1,230,942    | ) |   | (7,833,155 | ) |   | (9,064,097  | )

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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.

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. The amendment
increasing 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.

The Companys goal is to maximize its value through
manufacturing and distributing of PV Cells in China and California. The
Company's current focus is to establish a 42,000-square-foot manufacturing a
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.

Page 11

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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.

ExpensesSelling, general &
      administrative, andresearch & development expenses
    $
    (508,561
    )Interest income
    
    6,427Net loss
    $
    (502,134
    )


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. 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 $508,561. 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 (net of capitalized
interest), and $100,298 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 $502,134 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, $9,870 in stock based compensation,
$43,894 in due from a related party, purchase of inventory of $388,501 and an
increase in accounts payable and accrued liabilities of $283,590. 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
$218,433 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.

Page 13

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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.

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.

On January 1, 2006, Solar Enertech began recording compensation
expense associated with stock options and other forms of equity compensation in
accordance with Statement of Financial Accounting Standards No. 123R,Share-Based Payment, as interpreted by SEC Staff Accounting Bulletin No.
107. Prior to January 1, 2006, Solar Enertech had accounted for stock options
according to the provisions of Accounting Principles Board Opinion No. 25,Accounting for Stock Issued to Employees, and related interpretations, and
therefore no related compensation expense was recorded for awards granted with
no intrinsic value. Solar Enertech adopted the modified prospective transition
method provided for under SFAS No. 123R, and, consequently, have not
retroactively adjusted results from prior periods. Under this transition method,
compensation cost associated with stock options recognized in the first quarter
of fiscal 2006 includes the quarterly amortization related to the remaining
unvested portion of all stock option awards granted prior to January 1, 2006,
based on the grant date fair value estimated in accordance with the original
provisions of SFAS No. 123.

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: | $2,151,000
|--- | --------------------------------------------------------------- | ----------
|(b) | Production development / factory
      leasing costs:           | 371,000   
|(c) | Administration,
      sales and marketing office:               | 1,150,000 
|(d) | General and administrative
      expenses:                      | 1,050,000 
|(e) | PV production and
      manufacturing equipment:                | 10,554,000
|(f) | Silicon material purchase                                       | 47,000,000
|(g) | Professional fees
      and expenses, regulatory expenses:      | 105,000   
|(h) | Shareholder communications:                                     | 208,000   
|(i) | Other capital
      expenditures                                | 700,000   
|(j) | Research & development                                          | 1,246,000 

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|(j)    | Travel, miscellaneous and unallocated | 64,000     
|------ | ------------------------------------- | -----------
|       |                                       |            
|Total: |                                       | $64,599,000

The amounts noted above reflect our current cash resources and
assume that we will raise, through equity or other financing, approximately
$17,000,000 in the next 12 months, and finance another $12,000,000 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 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.

We carried out an evaluation, under the supervision and with
the participation of our management, including our President and acting Chief
Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures pursuant to Exchange Act Rule 13a-14 as of
the end of period covered by this report. Based upon the foregoing, our
President and our acting Chief Financial Officer concluded that our disclosure
controls and procedures are not effective.

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.

Except as discussed above, our management, with the
participation of our Chief Executive Officer and our Chief Financial Officer,
has concluded there were no changes in our internal controls over financial
reporting that occurred during our first fiscal quarter of 2007 that has
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.

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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 Small Business Issuer has duly caused this report
  to be signed on its behalf by the undersigned, thereunto duly authorized, on
  this 3rd day of July , 2007.

|                   | **SOLAR ENERTECH CORP.**
|------------------ | ------------------------
|                   |                         
|                   |                         
|Date: July 3, 2007 | By:                     
|                   |                         
|                   |                         
|                   |                         
|Date: July 3, 2007 | By:                     
|                   |                         
|                   |                         
|                   |                         
|Date: July 3, 2007 | By:                     
|                   |                         
|                   |                         
|                   |                         
|Date: July 3, 2007 | By:                     
|                   |                         
|                   |                         

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