When evaluating investing opportunities in disruptive technologies, it is equally as important to identify what one should not invest in as it is to identify what one should invest in. In a past article, we discussed the potential dangers of investing in over-the-counter (OTC) stocks and throughout the past year have pointed out many examples of OTC companies attaching themselves to the latest disruptive technology with big promises and little in the way of progress. One OTC company that has generated a great deal of attention lately is Solar3D.
Originally formed in January 2002 as MachineTalker, the Company started out pursuing the development of a new wireless process control technology. In mid-2010, the Company was renamed to Solar3D (OTCMKTS:SLTD) and then shifted engineering and research focus towards developing highly efficient solar cells. Solar3D claims that their patent-pending 3D solar cell technology can produce 200% of the power output of conventional solar cells by simply capturing the 30% of light that 2D cells don’t capture:
A working prototype was planned for 2011, and the following statement was made in July of 2011 by the CEO of Solar3D, James Nelson, concerning the company’s progress in developing the prototype:
“We are still ahead of schedule and making progress faster than anticipated,” continued Nelson. “By optimizing the prototype design in the early stages, we save time and money as we move into the production phase of our plan next year.
While this implied a production phase in 2012, it never happened. In September 2012, an article by Cleantechnica quotes the CEO as making the following statement regarding the company’s timeline to commercialization::
Our next major step will be to produce a manufacturing prototype, which is required to undertake a pilot production run in early 2013. The pilot run will prove the 3D Cell’s performance characteristics in a production environment and lead us to a manufacturing partner and entry into the marketplace by the end of 2013.
Entry into the marketplace in 2013 never happened either. Fast forward to a press release last week on Solar3D’s third generation prototype:
We are pleased to have completed our next prototype. We are very encouraged by our lab results and have concluded that it is time to prepare to take the next step toward commercialization by working with a manufacturer partner.
Just to put the size of this development effort we’re talking about into an economic perspective, over the past three years Solar3D has spent just $400 thousand on R&D. For the year ending December 31 2013, Solar3D had around $10,000 in cash, $47,000 in total assets and 4 total staff.
In February of this year, Solar3D announced the acquisition of a private solar company called SUNworks which is a profitable solar systems provider based in California. The acquisition took place in the amount of $2,794,500, which was stated to be the fair value of SUNworks. Q2 2014 revenues for SUNworks were a respectable $7.4 million which resulted in a net income of $223 thousand for the same period.
While this acquisition makes Solar3D more interesting, it does not provide much promise for expediting the development of this “revolutionary” solar cell technology. No mention is made of any synergies that may result from the acquisition, nor any intellectual capital or intellectual property that was obtained through the acquisition. The only benefit towards developing this technology may just be the $1.4 million in cash that now sits on the books.
Investors in Solar3D (OTCMKTS:SLTD) are now invested in a solar installation business that was acquired for $2.7 million 6 months ago and that now has a market cap of over $40 million. As for the promise of a revolutionary solar cell, there seems to be lots of mixed messages sent over the past three years about development progress being made. With no issued patents and only $400 thousand spent in R&D over the past three years, it’s hard to see just what tangible progress has been by Solar3D (OTCMKTS:SLTD) to revolutionize the solar industry aside from many promising press releases.
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