Friday, December 17, 2010

Let the Sun Shine In

Smilers never lose
And frowners never win
So let the sun shin in
Face it with a grin
Open up your heart and let the sun shine in.

Age of Aquarius
The Fifth Dimension, 1969



Investors have not opened their hearts or pocket books for Entech Solar, Inc. (ENSL: OTC/BB) despite its products that do indeed let the sun shine in, that is into commercial and industrial buildings through innovative tubular skylights. Shares of Entech are currently priced below a dime.

Entech has also developed a concentrating solar module marketed under the brand name SolarVolt that converts the energy from sunlight into electricity. The SolarVolt relies on a unique optical design that concentrates the sun’s rays toward an array of photovoltaic cells. Because the solar input is concentrated the module requires 95% less silicon than conventional photovoltaic cells. Accordingly, the SolarVolt’s cost/performance case is compelling.

Unfortunately, Entech has yet to gain much traction in the marketplace. Sales totaled $173,000 in the first nine months of 2010. Consequently, the Company reported a net loss of $14.4 million in the period, largely on selling, general and administrative expenses. Operations are using approximately $2.56 million in cash per quarter. The Company had $1.7 million on the balance sheet at the end of September 2010, not enough to sustain operations through the end of the year.

It should not be a surprise that earlier this week CEO and Chairman of the Board David Gelbaum invested another $1.0 million in the company. Gelbaum was given another 15.0 million shares for his generosity, bringing his ownership in the Entech to 46.9%.

Gelbaum founded the company with Mark O’Neill, who is the current chief technical officer, and Robert Walters, who is VP of Marketing. Gelbaum’s background is in quantitative modeling of derivatives, so we will give him a pass on the weak performance in market penetration. However, both O’Neill and Walters boast extensive experience in engineering and technical sales.

The Entech Tubular Skylight was introduced in January 2010, and contributed only nominally to 2010 sales. Management still apparently holds out hope for improved sales volumes in the final quarter of the year.

Concentrating solar technology is a seductive resolution to the high cost of solar photovoltaic power generation. Earlier this year the Company elected to focus on the electricity-only model, leaving the thermal application to a time when market conditions are more receptive. The SolarVolt was submitted for independent certification testing in September 2010, and the company has targeted mid-2011 for introducing a fully certified product to the marketplace.

The stock may be a penny stock plaything for day traders today. However, we suggest investors put ENSL on their watch lists for news on the Company’s efforts to get certification of the SolarVolt concentrating solar module.


Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein. ENSL is included in Crystal Equity Research’s Earth, Wind and Fire Index in the Solar Concentrating group.

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