If there is one phrase that a company does not want to see in its annual report, it is “GOING CONCERN.” This hinges on a company’s ability to operate financially as a viable business. March is the month where we see many “going concern” notes from auditors, but what makes this interesting is that we are seeing this phrase applied to alternative energy companies. They are supposed to be the thing of the future.
Aventine Renewable Energy Holdings, Inc (NYSE: AVR) looks like a disgraced Samurai disemboweling himself. The ethanol producer is in default of debt covenants and has said it needs to raise additional funding to avoid bankruptcy. And its auditors raised a “going concern” doubt. We have noted this corn vs. crude argument for quite some time, and that is only getting worse as these have all become nonviable. This is a penny stock, but it is getting cut in half.
Beacon Power Corporation (NASDAQ: BCON) was supposed to be one of the fly-wheel winners in advanced battery technologies. It also recently took a hit after it raised cash. Yet the annual report yesterday said that the company will need to raise more cash to satisfy “Our continuation as a going concern.” That doesn’t mean it is there quite yet, but it does need funding from 2009 to 2011.
Environmental Power Corporation (NASDAQ: EPG) develops, owns, and operates renewable energy production facilities in the United States. Its annual report noted a going concern as well, yet the company said it is pursuing a number of financing avenues. The leash looks pretty short as it said it “hopes to obtain the financing it requires by the end of the first half of 2009.”
Verenium Corporation (NASDAQ: VRNM) is down over 10% this morning at $0.345. The cellulosic ethanol and high-performance specialty enzymes developer disclosed the going concern note.
Let’s hope that if these firms head to D.C. with their hat in hand to ask President Obama for money that they don’t fly a private jet.
JON C. OGG