Anthracite Capital Inc. (NYSE: AHR) disclosed that its auditor has raised substantial doubt about its ability to continue as a going concern.  It did at least note that it has obtained waivers from its lenders to avoid a credit covenant default action.

Basin Water Inc. (NASDAQ: BWTR) said that its auditor raised substantial doubt about its ability to operate as a going concern.  There was even a note that bankruptcy is likely.  More and more evidence that water is not as easy of an investment as you would guess.

Comstock Homebuilding Companies, Inc. (NASDAQ: CHCI) disclosed that an unqualified opinion from its audit firm of  PricewaterhouseCoopers indicated its belief that declining market conditions create substantial doubt that the company would continue operating throughout 2009 as a going concern.  It also has until October to regain compliance of the old $1.00 bid rule, although NASDAQ is not keeping this requirement active as it used to.

deCODE genetics Inc. (NASDAQ: DCGN) still looks down and out.  The Iceland-based genetics company looks inverted and its annual report includes the doubt of being able to operate as a going concern.  Its troubles go above and beyond the issues of Iceland.

Globalstar Inc. (NASDAQ: GSAT) said that its auditor expressed substantial doubt about its ability to continue as a going concern.  It noted that it is pursuing options such as issuing debt and equity to obtain funding, and it is possible that last week’s developments might make this note irrelevant.  Unfortunately, it posted a quarterly net loss of $27.9 million after revenue fell to $18.4 million.

Maui Land & Pineapple Co. (NYSE: MLP) said that there is uncertainty about its ability to continue as a going concern.  This is after its borrowings are $100 million and $70 million of its credit matures next year.  A failure to satisfy debt covenants might make the outstanding borrowings due upon demand.

OXiGENE, Inc. (NASDAQ: OXGN) said this week that its annual report for 2008 contains a going concern qualification from its independent registered public accounting firm, Ernst & Young LLP.  It also noted this represents no change or amendment to its financial statement.

TM Entertainment and Media Inc. (AMEX: TMI) has a substantial doubt note from its auditor about its ability to continue as going concern as its liabilities exceed cash available.  This acquisition company faces a mandatory
liquidation if it does not have a business combination within 24 months of its initial public offering (so NOV-2009 is cut-off month).

Xcorporeal, Inc. (AMEX: XCR) also recently received the doubt to continue operations as a going concern note from its auditors.  This is after it laid off much of its staff to save capital.  The high hopes of a portable or wearable kidney dialysis system might be farther and farther away from reality.

Obviously the largest one this week in “going concern” notes was in a unit of DryShips, although that did not create any immediate liquidity issues.

We will not know for another month or so whether or not the 2009 “annual report season” for all of the 2008 annual reports was a true record for “going concern” notes.  But it sure feels like it will be.  As a reminder, receiving a “going concern” is not the end of a company.  Many companies operate with these notes year after year.  But the one thing to always consider is that it is far from any great endorsement regarding a company’s finances.

Jon C. Ogg
April 1, 2009