Investor Michael Berry and other parties filed a federal securities class action lawsuit against Kior in U.S. District Court in Texas. The plaintiffs allege the Texas-based biofuels company violated securities laws as it made false and misleading statements to investors about the true financial nature of the company. The lawsuit claims Kior did not tell the truth about its true prospects to produce biofuel on a commercial scale. The plaintiffs represent a class of investors who purchased Kior stock between August 14, 2012 and August 7, 2013.
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| credit: MIT Tech. Review |
The company operates a plant in Columbus and plans to open a larger one in Natchez. The legislature approved $75 million in interest-free loans to Kior in a 2010 special session. The plants are supposed to convert woodchips into crude oil and gasoline. The project was supposed to create 1000 direct and indirect jobs in Mississippi as well as constructing up to five plants.
The complaint states the company "provided guidance" of 300,000 to 500,000 gallons for the second quarter yet only shipped 75,000 gallons in the same quarter. Mr. Berry alleges the company promised the "guidance" after it announced a $31.3 million loss for the first quarter in 2013.
Kior's financial condition only grew worse in the second quarter. The company stated in an August 8 press release announcing the second quarter results:
the second quarter 2013 net loss was $38.5 million, or $0.36 per share, compared to a net loss of $31.3 million, or $0.30 per share, for the first quarter of 2013. Net loss for the second quarter of 2012 totaled $23.0 million, or $0.22 per share.
During the second quarter of 2013, total revenues were $239 thousand, all of which related to production from our initial scale commercial production facility in Columbus, Mississippi. Total revenues for the first quarter of 2013 were $71 thousand, compared to none in the second quarter of 2012. Press release.
Indeed, the company stated on August 9 it needed additional capital to continue as a "going concern":
Until recently, we have focused our efforts on research and development and the construction of our Columbus facility. As a result, we have generated $265.4 million of operating losses and an accumulated deficit of $296.6 million from our inception through June 30, 2013. We expect to continue to incur operating losses through at least 2015 as we continue into the commercialization stage of our business. We must raise capital in one or more external equity and/or debt financings by the end of September 2013 to fund the cash requirements of our ongoing operations. The lack of any committed sources of financing other than the remaining availability under our Loan and Security Agreement with 1538731 Alberta Ltd. as agent and lender, 1538716 Alberta Ltd. as lender, who we refer to collectively as the Alberta Lenders, and KFT Trust, Vinod Khosla, Trustee, as lender, who we refer to as Khosla, raises substantial doubt about our ability to continue as a going concern.
The new results hammered the stock price as it fell from $4.76 to $2.62 per share. The stock price is now $1.75 per share. The market cap is $186 million. The share price stood at $7.00 in January. However, the company issued a press release announcing an increase in production last week:
In July and August, the Columbus facility produced 172,398 gallons of fuel, bringing the 2013 production total from the facility to 357,532 gallons through August 31, 2013. The ratio between gasoline, diesel and fuel oil produced during the most recent two months equaled to approximately 83% gasoline and diesel, with the remaining production as fuel oil. Production from Columbus during July and August exceeded total second quarter production by nearly 40,000 gallons.
As of August 31, 2013, Columbus has shipped 199,071 gallons of fuel since the beginning of 2013, about half of which (99,175 gallons) were shipped in July and August. The Company expects to continue shipping fuel produced in July and August during the month of September.
Will the company go out of business? Is the increase in production the step in the right direction that will save the company? What will happen to Mississippi's $75 million? Stay tuned.
History time:
Bill: Second special session in 2010. Author of bill: Percy Watson.
Nays in House: Clark, Evans (91st), Horne, Huddleston (30th), Robinson, Scott
Nays in Senate: Harden
10 comments:
Hire Ashley Edwards to turn this Democrat mess around! Too bad he already has his next big new thing.
The Future's So Bright I Gotta Wear Shades
Captain Renault: I'm shocked, shocked to find that gambling is going on in here!
Democrat?
Haley is a closet democrat.
This had con game written all overall it.
Can you believe Ashley Edward's next gig. No experience needed justneed to have worked for Dr. Feel or Haleys vomit and you get that $150,000 position. Read the Sunherald article about it for a good laugh. Wonder if Josh made the deal for him like Miller at the DMR? Sad statewe find ourselves in because of these guys.
This had con game written all overall it.
The downtown Jackson con game on a state level. Both with big time RINO cheerleaders plus their RINO offspring and familial RINO offshoots.
Of course KIOR and the rest of these type "investments" are democrat schemes.
What real Republican would claim this group of neer-do-wells and lobbying swells? Real Republicans and Democrats would have enough self respect to be creeping around and trying to do these grifts on the down low. Not these guys. Talk about shameless and entitled.
Is this KIOR more like Kemper Kleen Koal (greenwashed with the ratepayer's bux) or like trying to paddle Up Twin Creeks without a stinking paddle?
Ashley might be one of Phildo's favorites. If he gets the 150K Port job after telling the truth, then it's for sure. It probably could be like a free reacharound for Haley. (That Ashley is one of his boys too, look how long he's been parked on the taxpayer's dime waiting to find his next big thang.) Looks like Ashley's been eating on someones tab. What do the executive pilots allow for him when doing the CG calculations?
IF a business plan is solid and sure to create jobs, there should be NO need for start up costs from the government. Investors will line up at the urging of their financial advisors.
Allowing some short term tax breaks until the operation is in the black and improving infrastructure is fine, but the legislature continues, despite one failure after another to turn taxpayers into unwilling investors who have no hope of return on that investment.
The only jobs created are construction jobs for a very short term and do not offset costs to the taxpayer.
We should never vote for anyone who has been so stupid as to fall for these schemes again.
The questions we should ask everyone running for office are " What math courses have you had and what were your grades?" " Have you ever taken a course in accounting or finance or economics and did you pass ?"
Our elected officials appear to be walking suckers.
Lets see....Haley's Coal plant, Haley's Bio-Fuel plant. When it all goes to shit, can we pardon Haley and buy him a car to leave the state?
This may be a bad investment by the state and an utter failure. I can't really say yet. It is blattenly obvious, though that this lawsuit is just attorney trolls looking to cash in on a stock that happened to drop.
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