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By Robert Rapier on May 15, 2007 with no responses

Xethanol’s March toward Bankruptcy

In the continuing saga of Xethanol (XNL) – the poster child for overhyped cellulosic ethanol claims – they took one more step toward bankruptcy this week with their earnings release:

Xethanol Announces First Quarter 2007 Financial Results

I will bet this is one they would have rather skipped. Xethanol managed to more than double their loss of a year ago:

For the first quarter of 2007, the company reported a net loss of $5.5 million, or ($0.19) per share, as compared to a $2.2 million net loss, or ($0.15) per share, for the prior year. The increase in the net loss was primarily the result of an increase in general and administration expenses as well as $2.4 million in non-cash charges.

Too bad that increased loss wasn’t due to increased R&D. That might have created something of value. Administration expenses do not.

How much did they have to sell to lose $5.5 million?

The company reported net sales of $2.4 million for the first quarter of 2007 compared to $2.5 million in net sales for the comparable period in 2006.

Ending on a positive note, they still have enough cash on hand to continue losing money for a few more quarters (although they may have trouble securing any more debt):

As of March 31, 2007, the company had cash and equivalents of $20.8 million and $443,000 of long-term debt.

It’s amazing to me that investors still think this is a company worth $40 million, its current market cap. Of course a year ago that market cap was 10 times that. Well, I tried to warn people. First with this:

Ethanol Investing: Counterpoint

And then with a series of stories on Xethanol stretching back almost a year:

Archived Xethanol Stories

I don’t think this will be the last time you read of a cellulosic ethanol pretender going bankrupt, though.