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2. Ability to Continue as a Going Concern
 12 Months Ended
Dec. 31, 2012
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
2. Ability to Continue as a Going Concern

2. Ability to Continue as a Going Concern

 

The accompanying financial statements have been prepared on the going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has experienced losses and negative cash flow and currently has a working capital deficit. These factors raise substantial doubt about its ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent on several factors, including the ability to raise a significant amount of capital for operating expenses, capital purchases, current liabilities and debt service.  The Company has been reliant on their senior secured lender to provide additional funding requirements when cash flows do not support operating expenses and the payment requirements on the Company’s debt.  Although the current agreements in place with this lender do not require any payments or covenant requirements through May 2013, the continuation of the Company depends on management being able to maintain this relationship with the lender or find other financing options to provide cash as the Company expands its technologies.  Management’s plans to continue to operate the Company include:

 

●   Working with the Company’s senior lender, Third Eye Capital, to restructure or provide additional financing as well as explore other financing arrangements including working with Advanced BioEnergy LP to attract investors for the remaining $35 million of notes available under the program, or through the issuance of additional debt or equity.
●   Restarting the Keyes ethanol plant and using milo, a less expensive feedstock than corn, for a portion of the raw material inputs.

 

●   Restructuring the State Bank of India note payable to allow for additional working capital to take advantage of the improved biodiesel margins from reductions in the diesel subsidies from the Indian government and higher volumes of international shipments.
●  Continuing to receive support from major shareholders and members of the board of directors in providing cash financing.

 

 

The Company has produced negative gross profit during 2012, has less than one month of operating cash as of April 2013, has incurred cumulative losses since inception and has negative working capital (current assets less current liabilities) of $50,989,754. The Company has raised approximately $31.8 million to date through the sale of preferred stock and approximately $80 million through debt facilities. The Company will have to raise significantly more capital and debt to complete its business plan and continue as a going concern. The Company has one biodiesel production facility in operation that began selling biodiesel into the domestic Indian market in November 2008 and one ethanol production facility currently at idle. Although the biodiesel plant provides some cash flow to the Company it will likely be insufficient to allow for the completion of our business plan in fiscal 2013 until we are able to restart the facility in Keyes, California and attain cash from operations. The Company plans on beginning grinding milo and or corn depending on availability and attractiveness of margins toward the later part of April 2013.

 

Management believes that it will be able to raise additional capital through equity offerings and debt financings. Should the Company not be able to raise enough capital it may be forced to sell all or a portion of its existing biodiesel facility or other assets at a discount to market value and may incur additional impairment related to these assets to generate cash to continue the Company’s business plan or possibly discontinue operations. Until such additional capital is raised, the Company is dependent on financing from related parties such as Third Eye Capital and Laird Cagan. The Company has also arranged extended terms with its trade creditors. The Company’s goal is to raise additional funds needed to construct and operate next generation ethanol and biodiesel facilities through stock offerings and debt financings. There can be no assurance that additional financing will be available on terms satisfactory to the Company. The accompanying financial statements do not include any adjustments to the classification or carrying values of our assets or liabilities that may result should the Company be unable to continue as a going concern.