Gevo Might Not Achieve Profitability

STREATOR, Ill. (DTN) -- In its annual statement filed Tuesday, April 15, with the Securities and Exchange Commission, Gevo Inc., based in Englewood, Colo., said it has a history of net losses and "we may not achieve or maintain profitability."

"We have incurred net losses since our inception," the filing said, including a $48.2 million loss last year and an accumulated deficit of $262.2 million since 2011.

The company is developing a process to produce isobutanol from biological feedstocks, primarily corn.

"We expect to incur losses and negative cash flow from operating activities for the foreseeable future," Gevo continued.

Gevo said it is in the development stage, and to date its revenues from the sale of isobutanol and related products have been "limited."

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"Additionally, we have generated limited revenue from the sale of products such as ATJ fuel produced from isobutanol that has been used for engine qualification and flight demonstration by the U.S. Air Force and other branches of the U.S. military," Gevo said.

"If our existing grants and cooperative agreements are canceled prior to the expected end dates or we are unable to obtain new grants and cooperative agreements or our ATJ supply contracts are cancelled or we are unable to produce suitable ATJ material, our revenues could be adversely affected," Gevo continued.

Gevo said it has spent funds on litigation with Butamax which the company said "may continue to be significant."

In addition, the cost of preparing, filing, prosecuting, maintaining and enforcing patent, trademark and other intellectual property rights and defending against claims by others "that we may be violating their intellectual property rights, including the current litigation with Butamax, will be significant," Gevo said.

Gevo said the failure to obtain capital when needed could force the company to delay, limit, reduce or terminate its development and commercialization efforts to produce isobutanol fuel from biological resources.

The company also said continued development would require more spending in the foreseeable future.

"Since our inception, significant portions of our resources have been dedicated to research and development, as well as demonstrating the effectiveness of our technology, including through the Retrofit of the Agri-Energy Facility," Gevo said.

"We believe that we will continue to expend substantial resources for the foreseeable future on further developing our technologies, developing future markets for our isobutanol and accessing and Retrofitting facilities necessary for the production of isobutanol on a commercial scale."

To date, it has been funding its operations through equity offerings, issuances of debt, borrowing under its debt financing arrangements and revenues earned from the sale of ethanol.

"Based on our current plans and expectations, we will require additional funding to achieve our goals," Gevo said.

Gevo is a renewable chemicals and next-generation biofuels company. Its business model converts existing ethanol plants into bio-refineries to make isobutanol.

(BM/AG)

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