ENTECH SOLAR, INC.

Goodwill was recorded in connection with our acquisition of ENTECH in January 2008. Goodwill consists of the excess of cost over the fair value of net assets acquired in business combinations accounted for as purchases. In addition, Other Intangible Assets, which include trademarks and technology, were recorded in connection with our acquisition of ENTECH. The assets, excluding trademarks, are being amortized on a straight line basis over 9 to 13 years. The ENTECH trademark is not being amortized.

We will perform our annual impairment test based on December 31 information each year, unless triggering events occur that would cause us to test for impairment at interim periods. While the Company does not believe that a triggering event has occurred through the period covered in this report, we note that there have been trends within the solar energy environment which could negatively impact the future pricing of our CPV product. The application of the goodwill and other intangible assets impairment testing requires significant judgments (including those which impact our pricing), such as, estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for the businesses, the periods over which cash flows will occur, and determination of our weighted average cost of capital. Changes in these estimates and assumptions could materially affect the determination of fair value and/or conclusions on goodwill and other intangible asset impairment for each reporting unit.

On September 13, 2011, Rainbow Associates, S.A. (“Rainbow”) filed a complaint in the Delaware Court of Chancery seeking a declaratory judgment that shares of Series B Convertible Preferred Stock of the Company it allegedly holds are still issued and outstanding. Rainbow also sought a mandatory injunction directing the Company to redeem the Series B Convertible Preferred Stock and to repay Rainbow, upon such redemption, an amount equal to the amount Rainbow paid to purchase such stock, along with amounts accrued on the stock. In addition, Rainbow sought damages resulting from the Company’s purported cancellation of the stock. On October 11, 2011, the Company filed a motion to dismiss Rainbow’s complaint for failure to state a claim upon which relief may be granted. While the Company believes that Rainbow’s claims are without merit, the Company is unable to predict the outcome of the litigation and does not provide any assurances in this regard.

On September 6, 2011, pursuant to a letter agreement David Gelbaum granted to the Company an irrevocable option, pursuant to which the Company, at its sole election, may issue and sell to the estate of Mr. Gelbaum, in the event of his death prior to December 31, 2011, up to $10,000,000 worth of shares of the Company’s common stock at a per share price equal to 80% of the average closing trade price of the common stock for the one year period prior to the date of his death. The option must be exercised no later than six months following the date of his death.

In September 2010, we submitted SolarVolt™ for independent certification testing. This milestone is a key step in commercializing our latest concentrating photovoltaic (“CPV”) product designed to produce electricity for large commercial, industrial, government and utility applications. On August 24, 2011, the Company received notification that the Company’s latest CPV module called SolarVolt™ had met the CPV model testing and evaluation requirements of IEC 62108 and safety requirements as outlined in the draft standard IEC 62688. This new Entech Solar product is protected by several issued and pending patents. At this time the Company does not have the capital required to build a production line for our Solarvolt^TM technology, and, we anticipate seeking to sell or license this technology.