Perfectenergy Intl (PINK:PFGY)

Item 5.02  Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

(b)

Departure of Chief Financial Officer

 

 

Effective April 1, 2012, Xiaolin (Edward) Zhuang, resigned as the registrant’s Chief Financial Officer and Secretary. Mr. Zhuang will serve as a consultant to the registrant from April 1, 2012 through June 30, 2012.

PERFECTENERGY INTERNATIONAL LTD. AND SUBSIDIARIES

The decrease in revenue is attributable to a slow-down in production due to adverse weather conditions in Europe and decreased demand in the market conditions during February 2011 that did not occur during the same months in 2010. Another significant factor was the reduction is average sales prices in Europe, which is our dominant geographic market, of our PV modules from €1.28 per watt to €1.16 watt to stay competitive in response to reductions in sales prices by our competitors.

As of January 31, 2011, we had cash and cash equivalents of $1.0 million as compared to $2.4 million at October 31, 2010. We will require a significant amount of cash to fund expansion of our operations. Despite a reduction in revenues in the current quarter, management projects growth of our business in future periods. Reduced revenue and profitability, which under present facts and circumstances management believes are temporary, have led us to revise our plans for capital spending and expansion to defer certain steps until we achieve greater profitability or obtain access to capital on terms attractive to us.

In October 2007, we entered into an Investment Agreement with Shanghai Zizhu Science Park Development Co., Ltd. (“Science Park”), under which we planned to construct a new solar cell production facility on certain land in the Shanghai Zizhu Science-Based Industrial District of Shanghai, China, allowing us to expand our lamination lines and our cell production lines to 200MW of total new production capacity. As required by the Investment Agreement, on February 28, 2008, we formed Perfectenergy Solar-Tech under PRC laws as a wholly owned subsidiary of Perfectenergy BVI. Perfectenergy BVI was required to contribute $20 million to the registered capital of Perfectenergy Solar-Tech, of which $4 million has been contributed with the remaining $16 million to have been contributed by February 28, 2010. Perfectenergy Solar-Tech obtained the land use rights from Science Park, for which Perfectenergy Solar-Tech was to pay the local PRC land bureau approximately $2.71 million. We paid $0.28 million of the $2.71 million during the fiscal year ended October 31, 2008 and made no additional payments since then. Due to supplementary land use restrictions, we submitted an application to the local PRC land bureau to cancel the project and requested a refund of our advanced payment of $0.28 million for the land. In early December 2009, we received a refund of the entire advanced payment from the local PRC land bureau. On June 2, 2010, we obtained approval from the local authority for a reduction in Perfectenergy Solar-Tech’s required registered capital from $20 million to $4 million, and our capital commitment will be adjusted accordingly based on the approval. In September 2010, we completed all necessary procedures for the capital reduction in Perfectenergy Solar-Tech. With such restructuring, we have no major capital commitments and a more flexible organizational structure for future operations.

CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS
FOR THE YEARS ENDED OCTOBER 31, 2010 AND 2009
		2010				2009
REVENUES		$	74,601,090			$	31,454,956
COST OF REVENUES			67,234,057				30,346,831
GROSS PROFIT			7,367,033				1,108,125
OPERATING EXPENSES:
Selling, general and administrative			9,126,080				7,274,047
Research and development			509,181				409,148
Total operating expenses			9,635,261				7,683,195
LOSS FROM OPERATIONS			(2,268,228	)			(6,575,070	)
OTHER INCOME (EXPENSE):
Interest income (expense)  and other bank charges			(6,541	)			5,826
Non-operating income (expense)			56,457				(152,414	)
Change in fair value of derivative instruments			29,564				700,125
Total other income (expense)			79,480				553,537
LOSS BEFORE PROVISION FOR INCOME TAXES			(2,188,748	)			(6,021,533	)
PROVISION (BENEFIT) FOR INCOME TAXES			539,350				(337,198	)
NET LOSS			(2,728,098	)			(5,684,335	)
OTHER COMPREHENSIVE LOSS:
Foreign currency translation adjustments			164,540				225,774
COMPREHENSIVE LOSS		$	(2,563,558	)		$	(5,458,561	)
LOSS PER SHARE:
Basic		$	(0.09	)		$	(0.19	)
Diluted		$	(0.09	)		$	(0.19	)
WEIGHTED AVERAGE NUMBER OF SHARES:
Basic			29,626,916				29,626,916
Diluted			29,626,916				29,626,916

GeoTeam® Note: The fourth quarter was $0.02 in the 2010 and 2009 fourth quarter.

In October 2007, we entered into an Investment Agreement with Shanghai Zizhu Science Park Development Co., Ltd. (“Science Park”), under which we planned to construct a new solar cell production facility on certain land in the Shanghai Zizhu Science-Based Industrial District of Shanghai, China, allowing us to expand our lamination lines and our cell production lines to 200MW of total new production capacity. As required by the Investment Agreement, on February 28, 2008, we formed Perfectenergy Solar-Tech under PRC laws as a wholly owned subsidiary of Perfectenergy BVI. Perfectenergy BVI was required to contribute $20 million to the registered capital of Perfectenergy Solar-Tech, of which $4 million has been contributed with the remaining $16 million to have been contributed by February 28, 2010. Perfectenergy Solar-Tech obtained the land use rights from Science Park, for which Perfectenergy Solar-Tech was to pay the local PRC land bureau approximately $2.71 million. We paid $0.28 million of the $2.71 million during the fiscal year ended October 31, 2008 and made no additional payments since then. Due to supplementary land use restrictions, we submitted an application to the local PRC land bureau to cancel the project and requested a refund of our advanced payment of $0.28 million for the land. In early December 2009, we received a refund of the entire advanced payment from the local PRC land bureau. On June 2, 2010, we obtained initial approval from the local authority for a reduction in Perfectenergy Solar-Tech’s required registered capital from $20 million to $4 million, and our capital commitment will be adjusted accordingly based on the approval. Remaining procedures are underway and are expected to be completed within the next few months. With such restructuring, we will have no capital commitment and more flexible organizational structure for future operations.

Recently effected a 4-for-1 reverse stock split of the issued and outstanding shares of the Company's common stock. This reduced the number of shares of the Company's common stock outstanding from approximately 118 million to approximately 30 million.

Source: PR Newswire (March 7, 2008 )