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

• ferumoxytol should be approved later in the year;
• he thinks a secondary has put pressure on it, although that gives it more cash to stabilize the stock;
• has its own strong sales force;
• was given an untimely and unwarranted analyst downgrade;
• will perform better than existing drugs on the market;
• a competing biotech drug received negative FDA comments on safety, yet that isn’t AMAG’s issue; and he thinks this can expand the market from $400 million annually to much higher.

We recently covered a speculative portable dialysis device maker (in prototype and development stage) on our "10 Stocks Under $10" called Xcorporeal, Inc. (AMEX: XCR) which has risen in the last two weeks since being included.  We have also reviewed some of the lower-tier dialysis names for this as well.

We would note that this AMAG traded at $56.00 after an upgrade just in early February and shares closed under $40.00 Friday.

Jon C. Ogg
March 28, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

This one has been under review for our "10 Stocks Under $10" weekly letter, although we have not yet added it to the list because of its performance and lack of history.  Xcorporeal first came to us after it’s Wearable Artificial Kidney (WAK) prototype device was featured in the December 15, 2007 journal issue of The Lancet, an influential medical journal.

It is entering a space dominated by public companies such as DaVita Inc. (NYSE: DVA), Dialysis Corp. of America (NASDAQ: DCAI), Fresenius Medical Care AG & Co. KGaA (NYSE: FMS), and Nxstage Medical, Inc. (NASDAQ: NXTM). Of the public dialysis companies, this is also the most risky stock of the ones we have reviewed in the dialysis companies.

It has a $55 million market cap and had about $20 million in liquidityas of September, 2007.  With a $1.2 million estimated monthly cash burnrate on last look, it is obvious the company may have to do asecurities offering again.  It is still in the prototype stage aswell.  It has identified what it believes as a  multi-Billion dollaropportunity, although from an analytical point the company could onlyexpect to get a fraction of that down.  This came public via a reversemerger in August, 2007, so it has limited history as a public companythat so far has been an rewarding history after having raised over$29 million from two prior private placements.  It moved to the AMEX onDecember 7, 2007, so it has an even more limited history as a listedcompany.

The Lancet noted, "WAK’s clearance rate, if sustained and usedcontinuously, could be more effective than conventional three timesweekly or daily hemodialysis treatment. This proof of concept studyalso provides preliminary indications on the safety features of the WAKand permitted the patient to be ambulatory during treatment……TheWAK is a battery-powered, wearable dialysis machine that will allowusers to have their blood cleansed round the clock instead of beingtethered to conventional dialysis machines, intermittently, for manyhours."

The company also makes portable machines for in-home use and forhospital use, and its first FDA 510(k) filing is not currently expecteduntil late in 2008 for hospital device and home dialysis device 510(k)is not currently expected until late 2009.  The FDA decisions can notcurrently be considered as a given or an assured event despitepreliminary positive study results.

DaVita Inc. (NYSE: DVA) is a large player in the field with a near $5Billion market cap, and it is trading close to its 52-week lows.  Theother small cap play is Dialysis Corp. of America (NASDAQ: DCAI) has amere $71 million market cap and it too trades close to its 52-weeklow.  Fresenius Medical Care AG & Co. KGaA (NYSE: FMS) is a kidneydialysis company that provides dialysis treatment at its own dialysisclinics, as well as produces and supplies a range of machines anddisposables.  It was the one that acquired Renal Care Group. GAMBRO isthe one that used to be public and is now private, was delisted fromStockholm.  Nxstage Medical, Inc. (NASDAQ: NXTM) has a portablehemodialysis system for the treatment of end-stage renal disease andacute kidney failure in the United States; it has fallen by two-thirdsover the last year and its market cap is $165 million.

Lastly, its management team and board members has an impressive rosterof medical and financial professionals with public company and fundraising experience, so it doesn’t look like a group of managers tryingout their first public foray.  After reviewing the company, we haveclassified this as one of the all or none opportunities with along-term horizon before a pay-off can be expected.  It is solely forpure risk-based capital that would have an expected return that eithersees exponential gains or one that implodes.  We’ll be watching thisone closely for some time to come.

Jon C. Ogg
March 14, 2008