What a difference a year makes. Last August, Daystar Tech was looking at having a functioning production line in place during the third quarter of 2009. There were two buyers that had been arranged to purchase nearly all of the firm's output into 2011. The company was still basically an incubator but at the same time they had a good plan, and exluding any major problems, was set to become a major player in CIGS solar panel manufacturing.
But here we are a year later. The financial bubble that burst caused a few substantial problems for Daystar. The ability for any firm to get a loan after the crisis became difficult. For those of you who have followed DSTI for awhile, remember the bridge loan for $5 million that was cobbled together in 2007? Lending money to companies that do business in the now glutted solar photovoltaic market just came to an end. Also, along with the economic downturn came the drop in oil prices. One of the big drivers for solar panel production throughout 2007 and the first part of 2008 was the high price of fossil fuel energy. With the decrease in demand for fossil fuel came the decrease in the need for alternative energies, particularly pv panels.
Now Daystar is talking about the immediate need for capital to complete their manufacturing set-up, so that they can begin selling commercially. As of 8/15, DSTI is trading at $.61 per share. The company is looking for a strategic partner, a significant lender or a major investor. With the market for photovoltaics still in a glut, is an investor going to pour more money into a company that is going to start selling? That's the main problem. There are already a lot of thin film solar manufacturers out there. Maybe their CIGS technology isn't quite as effecient or their manufacturing costs are higher, but in the end they do have customers. They do have income. They have built and shipped product.
If DSTI were in a position where they had already delivered X amount of product, and a customer had installed and used that product, then maybe fresh dollars would be found. In this case, the firm is still not sold or delivered product. If the effeciencies of the Daystar panels provided a massive difference in dollars for a user, then maybe a lender would come through. But neither of these situations exist.
Instead, Daystar is a company with less than $2 million in capital, and they are looking for additional outside dollars. But they haven't proven they can sell and deliver working product. And the market is bursting with production of solar panels, many of which are now going into inventory. The technology in the solar photovoltaic market keeps changing. Thin film companies are furiously building product and situations keep changing. First Solar keeps dominating the US market. Europe is falling off badly (Q-Cells with layoffs) and may not have a recovery at all this year. China is coming on very strong (Suntech will probably be the biggest manufactuer by 2010) with no sign of easing.
With all this noise and change, will there be enough time or interest for Daystar to get some extra capital? It doesn't seem likely. The stock is currently below a dollar. There could be a white knight investor and the stock could rally with big percentage gains. Or the company could file for bankruptcy since it is almost out of money, which is more probable. Either way, it's a big gamble to invest in this stock.
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