Dr. John Tuttle, Chairman and CEO of DayStar Technologies, Inc. (Nasdaq: DSTI), a development stage thin-film solar company, released the following operational update detailing DayStar’s progress over the past several months.
In a letter to fellow shareholders, Dr. Tuttle stated: “I am eager to share with you our progress since my last corporate update in April. Energy markets worldwide are in a heightened state of awareness as the realities of fuel supply and energy dependence erode the stability of our livelihoods. Concurrently, interest in clean energy, and specifically photovoltaics, is at an all time high. However, the industry is challenged with delivering product in response to this demand.
“The traditional Silicon solar cell and module sector is experiencing a serious pinch in the supply of raw Si feedstock. Cell manufacturers, like DayStar Technologies, that do not depend on Si feedstock see a significant window of opportunity to meet the escalating demand for product, and experience growth and expand our market share in the process. The challenge then becomes one of technology readiness, capital investment and infrastructure expansion in a timely manner. This will be the theme of my correspondence today as I summarize both the successes we have realized and the challenges we face moving forward.
“Since my last communication of this nature, we have made great progress towards establishing our first product-based revenue opportunities and have announced two new exciting customer relationships. Specifically, on June 9, 2005, we reported signing a purchase agreement with Blitzstrom, GmbH, a PV system integrator of Megawatt-scale PV power plants and a distributor of photovoltaic systems and components in Germany and the EU. This agreement, which could yield over $60 million in revenues to DayStar through 2008, calls for delivery of up to 30 Megawatts of our proprietary TerraFoil(TM). On July 11, 2005, we also announced the signing of a purchase agreement with China-based Micro Energy Group providing for delivery of up to 500 kilowatts of our proprietary TerraFoil-sp(TM) solar cells. Micro Energy Group plans to integrate our solar cells into consumer electronic products and small-area flat-plate modules. We have begun shipping engineering samples to these customers from our Gen-I/Gen-II production lines, which will continue while we further refine the product to meet our stringent internal standards and customer requirements. We now only require a similar order for our LightFoil(TM) product to complete our near-term sales mission.
“Throughout the remainder of this year, and into next, we will be steadily expanding our Gen-II production capacity until we reach a level of 2.0-2.5 Megawatts per year. With this production capability, we feel we can effectively work through the necessary issues associated with material handling, automation, and product quality and reliability in each of our three product areas. Revenues stemming from this capacity will depend on the final product mix with prices ranging from commodity levels for TerraFoil(TM) to premium levels with LightFoil(TM). Should the demand for LightFoil(TM) exceed the capacity in our Gen-II line, we are prepared to increase production by a factor of four or more with targeted investments in certain elements of our production infrastructure.
“Our technology readiness level in Gen-II is rapidly approaching ‘production status,’ and we are pleased with our progress in this challenging endeavor. I often have to remind folks that we are engaged in a production/commercialization effort that involves unique elements — hence, there may be times when barriers arise that we didn’t expect. Likewise, the corollary also occurs, and we have enjoyed several surprise advancements that I originally anticipated would take longer. The dynamic nature of this process is very encouraging and is a result of our dedicated and highly skilled staff.
“Concurrently, DayStar is continuing to add resources and make steady progress towards technology readiness for our Gen-III fully-continuous manufacturing platform. We are in the midst of a detailed design and planning process that will culminate in our Gen-III roadmap, from which we can better estimate our capital needs and the resulting cash-flow. We anticipate it will take approximately 18-24 months to achieve production capacity in the range of 25-100 MW/yr. Following successful implementation of early Gen-III manufacturing infrastructure, we can then move into the replication stage where we would be able to expand production through additional plants and joint ventures worldwide if warranted by market demand.
“The full exploitation of our Gen-II production infrastructure and the implementation of our Gen-III (and Gen-IV for that matter) will require dedicated capital resources. To that end, I am pleased to report that our call-for exercise/redemption of our A-Warrant was 99.3% successful, resulting in $14.5 million of new capital into the Company. An additional $600,000 of capital also came in as a consequence of other warrant exercises. Of the total monies, roughly $10 million will go towards continued execution of our Gen-II production line, including cell handling, automation, testing and packaging. Again, much of the experience gained in this effort will further simplify transitioning to a fully automated production methodology in the future.
“The remainder of the monies referenced above will be used to fund operations and to develop and implement our Gen-III production methodology. We fully expect that additional capital will be required for this implementation and that this information will flow from our planning process. However, we are looking at the opportunity cost associated with accelerating this effort so that we may substantially increase our production capabilities to address today’s prevailing market opportunity.
“With this growth comes a need for additional infrastructure. The Company presently benefits from the dedicated efforts of 26 unique and talented individuals — and that number is growing. Consequently, we have secured approximately 4,500 square feet of office space in addition to our existing 18,000 square foot facility, and are looking for additional manufacturing space in the area.
“All in all, we continue to move forward in both a methodical and aggressive manner to achieve our production and revenue goals for 2005/2006 and beyond while ensuring value to our shareholders. I look forward to providing additional news in the near future as developments warrant. From all of us at DayStar, we thank you for your continued support,” concluded Tuttle.
About DayStar Technologies, Inc.
DayStar Technologies, Inc. is an emerging leader in low cost, high efficiency Photovoltaic Foil(TM) that converts sunlight into energy. The Company’s patented and proprietary products include silicon-free CIGS solar cells, which are deposited on flexible metal foils using production processes adapted from commodity computer component manufacturing. DayStar believes the unique combination of its CIGS solar cell design coupled with proprietary manufacturing processes on flexible metal substrates could substantially lower costs and remove deployment barriers currently limiting large adoption of solar energy.
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