DD Sticky Post: High Level Investment Assessment Solar3D (SLTD)
High Level Investment Assessment of Solar3D (SLTD)
Introduction.
Saturday morning Australian time – Ist February 2014 – I read what can only be described as a beautiful and well written press release announcing the closing of the acquisition of SUNworks. Shareholders are therefore now the proud owners of a solar installation company operating in a high growth region of a high growth market.
Towards the very bottom of the PR we read of the “big prize” that is the new 3D solar cell currently said to be in its 3rd prototype iteration. The following assessment notes are made bearing that very much in mind.
Investment Assessment
Pros:
Mr Nelson presents extremely well. Simply a guess – but seems he is genuinely passionate about bringing the 3D solar cell to market with only a small amount of capital and not much in the way of grants from the government.
There is a Korean academic (Dr Son) who checks out as a solar researcher. Verified he has published papers at a Korean university.
Patent protection that will apply from the date of being published (August 29 2013) should patents be granted . Verified on World Intellectual Property Organization (WIPO) website.
Recent market activity suggests “someone” is buying in. Of course the reason(s) for this is unknown and could be just a pumper and dumper loading up.
Claimed solar efficiency gain is significant and would be a game-changer providing manufacturing costs are low.
Low share price (and market cap) enabling investors to “get in” and make money should things go well. NB – this comment was made before the announced acquisition.
CEO Restricted Stock Grant Agreement is linked to significant performance hurdles.
Third prototype is claimed as being worked on – suggests SLTD may not be too far from production. SLTD in discussions with two organizations who can assist with commercialization.
“Effective on January 31, 2104, Solar3D, Inc., a Delaware corporation ("S3D" or the "Company"), borrowed $1,250,000 from two accredited investors ("Investors") in order to finance the Company's acquisition of Solar United Networks, Inc., a California corporation ("SUN"). The loan is evidenced by two promissory notes bearing simple interest at the rate of 10% per annum, payable in full on or before October 31, 2014 unless the maturity date is extended in the sole discretion of the Investors until January 31, 2015, and convertible into shares of the Company's common stock at a rate equal to the lesser of $0.05 per share or 50% of the lowest trade price recorded on any trade date after January 31, 2014 prior to the conversion of the promissory notes.”
Cons:
Unable to physically verify existence of laboratory where Dr Son works on the solar cell. An ihubber who lives near the company location was considering a lab visit. Other unverifiable reports of offers to demonstrate a version of the new cell.
Claimed solar cell efficiency is just in the grey area between a 'believable' improvement and 'way too good to be true'. No third party validation as yet.
Low budget operation compared to some other venture capital (VC) funded firms. Note: often no way for small investors to “get in” to VC funded firms.
Other companies that appear on moneytv.net appear – well, somewhat questionable...
Progress has been fairly slow and the company announcements are often very general in nature. A definitive roadmap consisting of milestones and time-lines is not available.
SLTD “is seeking to enter additional segments of the solar industry through acquisition.” and “Solar3D has management strength and access to capital resources that may allow us to build our solar business along multiple paths.” Again general statements and also suggests shareholders could potentially be exposed to dilution.
Overall
My general feeling is that SLTD is the “real deal” in the sense that they have a potentially game-change solar cell development. There, however, remain concerns about if and when this development can ultimately be successfully commercialized. Clearly SLTD is a high risk/high reward speculative investment though risk levels have recently reduced due to the SUNworks acquisition.
My forward working assumptions would be:
- commercialization of the solar cell is likely to be announced in 2014
- further acquisitions until then are unlikely allowing for the SUNworks acquisition to bed down and management to focus on the “big prize”
- a takeover must be considered a possibility; strong expectation that management would handle this well in the interests of shareholders.
