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DayStar Technologies Inc. Reports Operating Results (10-Q)

August 10, 2009 | About:
10qk

DayStar Technologies Inc. (DSTI) filed Quarterly Report for the period ended 2009-06-30.

DayStar Technologies Inc. has developed a thin-film copper-indium- gallium-selenide solar cell known as a CIGS solar cell for the direct conversion of sunlight into electricity. The company is developing a high- volume manufacturing process that it believes could result in solar electricity power production at commercially viable rates. DayStar Technologies Inc. has a market cap of $26.12 million; its shares were traded at around $0.78 with and P/S ratio of 435.36.

Highlight of Business Operations:

Selling, general and administrative expenses. Selling, general and administrative expenses were $1,095,949 for the three months ended June 30, 2009 compared to $2,053,000 for the three months ended June 30, 2008, a decrease of $957,051 or 47%. The decrease in selling, general and administrative expenses was primarily due to a decrease of $557,554 in share-based compensation. This decrease in share-based compensation resulted from a workforce reduction and the resignation of an executive officer during the second quarter of 2009. We also experienced a reduction in consulting and professional fees during the second quarter of 2009 as compared with the same period in 2008.

Loss (gain) on derivative liabilities. The gain on derivative liabilities was $13,428 for the three months ended June 30, 2009 compared to a loss on derivative liabilities of $802,907 for the three months ended June 30, 2008. The warrants issued in 2006 in conjunction with a convertible note are considered derivative liabilities and are therefore required to be adjusted to fair value each quarter. A decrease in our stock price during the period results in a decrease in the warrant liability and a gain on derivative liabilities. Conversely, an increase in our stock price during the period would result in an increase in the warrant liability and a loss on derivative liabilities. During the three months ended June 30, 2009, our common stock price decreased which caused a decrease in the fair value of the warrant liability. This resulted in a gain on derivative liabilities of $13,428. Our stock price increased during the three months ended June 30, 2008, which resulted in a loss on derivative liabilities of $802,907.

Research and development expenses. Research and development expenses were $9,166,094 for the six months ended June 30, 2009 compared to $6,855,436 for the six months ended June 30, 2008, an increase of $2,310,658 or 34%. These expenses increased primarily due to development efforts for our monolithically integrated CIGS-on-glass modules and the related manufacturing processes. We hired several individuals during 2008 required for such development efforts and we are currently in the process of constructing our initial manufacturing line in order to commercialize our products. As such, we experienced an increase in personnel-related costs during the six months ended June 30, 2009 as compared with the same period in 2008, as well as an overall increase in operational expenses for facilities, materials and supplies. However, during the second quarter of 2009, we implemented a reduction in workforce, which reduced research and development costs during the latter half of the second quarter. During the first half of 2009 the increase in personnel-related costs included an increase in share-based compensation of $212,169.

Selling, general and administrative expenses. Selling, general and administrative expenses were $2,840,115 for the six months ended June 30, 2009 compared to $4,790,286 for the six months ended June 30, 2008, a decrease of $1,950,171 or 41%. The decrease in selling, general and administrative expenses was primarily due to a decrease of approximately $1,115,008 in share-based compensation for selling, general and administrative personnel. This decrease in share-based compensation related to a workforce reduction, including the resignation of an executive officer during the second quarter of 2009. We also experienced a reduction in consulting and professional fees during the first half of 2009 as compared with the same period in 2008.

Loss (gain) on derivative liabilities. Loss on derivative liabilities was $100,642 for the six months ended June 30, 2009 compared to a gain on derivative liabilities of $988,118 for the six months ended June 30, 2008. The warrants issued in conjunction with the Note are considered derivative liabilities and are therefore required to be adjusted to fair value each quarter. A decrease in our stock price during the period results in a decrease in the warrant liability and a gain on derivative liabilities. Conversely, an increase in our stock price during the period would result in an increase in the warrant liability and a loss on derivative liabilities. During the six months ended June 30, 2009, our common stock price increased which caused an increase in the fair value of the warrant liability. This resulted in a loss on derivative liabilities of $100,642. Our stock price decreased during the six months ended June 30, 2008, which resulted in a gain on derivative liabilities of $988,118.

Since our inception, we have incurred net losses, including net losses of $26.3 million and $36.1 million for the years ended December 31, 2008 and 2007, respectively, and $14.3 million for the first half of 2009, and have incurred negative cash flows from operations. As a result of ongoing losses, we had an accumulated deficit of approximately $111.3 million as of June 30, 2009. We expect to continue to incur significant losses as we enter commercialization and expand our manufacturing capacity and may never achieve or maintain profitability. We expect to continue to make significant capital expenditures and anticipate that our expenses will increase to the extent we continue to develop our manufacturing technologies, build manufacturing lines, establish our sales and distribution network, implement internal systems and infrastructure and hire additional personnel.

Read the The complete Report

Rating: 3.5/5 (2 votes)

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