Why KiOR Inc (KIOR) Is Tanking on Tuesday

Tickers in this article: KIOR

NEW YORK (TheStreet) -- Biodiesel fuel developer KiOR Inc  is tanking on Tuesday after noting its continued operations are under considerable strain.

In premarket trading, shares had tumbled 37.4% to 67 cents a share.

In its 10-K filing with the SEC after the bell Monday, the Pasadena, Texas-based company said, "We have substantial doubts about our ability to continue as a going concern. To continue as a going concern, we must secure additional capital to provide us with additional liquidity."

KiOR said it had received an investment commitment letter from venture capitalist Vinod Khosla earlier in the week, offering a cash amount of up to $25 million in capital.

In initial discussions, the commitment has been suggested as a number of monthly borrowings of around $5 million, awarded on the achievement of certain performance milestones. Negotiations are still taking place.

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"Other than the commitment, we have no other near-term sources of financing," the company said. "If we are unsuccessful in finalizing definitive documentation with Mr. Khosla on or before April 1, 2014, we will not have adequate liquidity to fund our operations and meet our obligations (including our debt payment obligations) and we do not expect other sources of financing to be available to us."

KiOR said should the agreement not be finalized before that deadline, the company will likely default on existing debt and be forced to file for bankruptcy.

"If we successfully achieve our performance milestones that allow us to receive the full Commitment in the near term, we expect to be able to fund our operations and meet our obligations until August 31, 2014, but will need to raise additional funds to continue our operations beyond that date," the company added.

The renewable fuel company recorded revenue of $1.83 million over fiscal 2013. Analysts surveyed by Thomson Reuters had forecast $2.62 million in sales.

Net losses of $3.25 a share was more than double analysts' estimates of $1.46 a share.

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