AMERICAN SOLAR KING (84)

When Brian Pardo talks about building American Solar King Corp. -- a Waco, Tex., manufacturer, distributor, and retailer of home and industrial solar-energy systems -- he doesn't reminisce. He tells battle stories. Today, American Solar King is an industry leader, ending fiscal 1984 with 500 employees and $30.7 million in revenues, a broad-based and vertically integrated corporation with industrial facilities across the country and a residential sales program tied to Sears, Roebuck & Co. But to hear Pardo tell it, getting there meant living through the Perils of Pauline.

An amateur astronomer and small-time home contractor, Pardo founded Solar King Inc. with a partner late in 1973. The pair built solar baseboard heating and hot-water systems from Pardo's Reno, Nev., garage, then sold them door to door. "I don't quite see how my wife and I made it," he admits now; there was never enough revenue even to pay himself a salary. His first break came in 1976, when he was awarded a federal grant to study the feasibility of a solar generator, in conjunction with Baylor University, and moved the business to Texas. The generator would eventually be judged too inefficient for commercial use. But as the energy crisis heated up, Pardo was able to find some deep-pocket investors for solar energy in the heart of oil country. He raised $250,000 in 1976 and another $750,000 in 1977.

By 1980, when he raised $1.5 million by taking the company public, American Solar King had begun to emerge as one of the leading manufacturers of solar equipment, marketing its wares through a national network of 600 dealers. Then the recession hit. Nine out of 10 prospective sales fell through, Pardo remembers, and he was forced to write off $1 million in bad debt as dealer after dealer -- "overly enthusiastic but painfully inexperienced" -- went under. "When the energy crisis passed, they couldn't sustain their market," Pardo says. But the kept going. Bypassing the dealers, he refocused his marketing efforts to include industrial clients, and guaranteed prospective users energy savings of at least 20%. To expand his industrial capacity and acquire the newest technologies, he spent $2.3 million to buy Daystar Corp., Exxon Corp.'s solar division.

"Exxon's good at oil but not interested in solar," Pardo says. "They thought they had a dog there, that it would die. Exxon thought they sold us a millstone that would drag us right down; I believe that's what they hoped it would do." To make matters worse, the oil giant initially refused to transfer its proprietary technology even after the deal was signed. "We literally got to the steps of the courthouse before Exxon released its technology."

The next crisis came after a 1983 article in Barron's stirred up controversy over whether a company could record an entire sale for systems sold on a part-cash and part-notes-receivable basis. A few months later, The Wall Street Journal's "Heard on the Street" column brought the issue up again, focusing specifically on American Solar King's accounting practices. Pardo's company had claimed $30 million in sales for 1983. But once its accountants decided to disallow the notes, reported revenues fell to $11 million. "It was the greatest trauma of my career," Pardo recalls. The company's stock dropped from $26 a share to $6.

Sales, however, remained strong, and things began looking up -- until Exxon, Pardo's old nemesis, came back into the picture. Pardo had purchased Daystar partly with American Solar King stock. When Exxon started dumping its holdings for a multimillion-dollar profit, the price of American Solar King's stock plummeted again, cutting $150 million from the company's market value. Rumors began to fly: Pardo had been killed in a plane crash; he had gotten divorced; he had had a heart attack. "It was a classic case of organized network shorting," Pardo claims."I knew there was some central intelligence operating, but their idea is to devastate you so badly you don't survive to look into the problem. It's war with the energy companies and the Texas banks. They shoot, hit, knock you to your knees. You get back up again; they shoot some more."

Pardo fought back. He worked to discover a trail of paper that led back to an investment company -- tied, he charges, to oil and banking interests -- and hired Richard "Racehorse" Haynes, the Texas lawyer, to help him take his battle to court. Meantime, he began to concentrate on rebuilding his consumer market. Total sales rebounded to $31 million, despite the cash-only accounting method, and Pardo has just introduced a solar air conditioner that he says is capturing $120,000 in sales each week.

All the adversity, he insists, has only made him more determined. "What it does is make you think you really must be on the right track, which makes you more tenacious. After each battle you emerge stronger and smarter. The more they come at you, the less vulnerable you become. We might fail, but we won't get beat."