Hoku Scientific falters


POSTED: Friday, June 12, 2009

Hoku Scientific Inc. warned yesterday it might not be able to raise enough funds to complete construction of its Pocatello, Idaho, polysilicon plant or continue “;as a going concern”; for the next 12 months, due to challenges it is facing in the credit and equity markets.

        Fourth-quarter loss
        Year-earlier loss
        $2.1 million

The Honolulu-based company, which went public in August 2005 as a developer of fuel-cell technology, said it is still on track to meet its contractual demands to its customers this year, if it gets needed financing. However, it said it might need to acquire polysilicon on the spot market for resale to its customers to meet its initial contractual delivery obligations.

Polysilicon is the raw material used to make solar panels.

Hoku also said it will defer some of its planned capital expenditures by delaying the construction of its trichlorosilane (TCS) production facility and postponing again the arrival of additional reactors.

Despite those delays, Hoku said it will ensure it has enough production capacity to fulfill current contractual obligations by purchasing TCS from a third-party supplier to support the company's reactor testing and initial production.

“;We will also time the delivery of our remaining reactors to match customer prepayment receipts as closely as possible, while still supporting our planned production ramp-up schedule,”; said Dustin Shindo, chairman, president and chief executive of Hoku. “;Cash flow permitting, we expect this revised approach will allow us to meet all delivery obligations to our current customers.”;

Shindo said Hoku is carefully managing its cash position and has modified payment terms in purchase orders with more than 20 of its vendors to structure payment plans for amounts past due and for those to be invoiced in the future.

Hoku finished its fiscal quarter and year ended March 31 with $17.4 million in cash and cash equivalents compared with $29.8 million a year ago.

The company updated its financial situation in conjunction with the release yesterday of its financial results in which the company narrowed its fourth-quarter loss to $904,000, or 4 cents a share, from a year-earlier loss of $2.1 million, or 12 cents a share. Revenue plunged 82 percent to $112,000 from $621,000.

For the year, Hoku had a narrower loss of $3 million, or 15 cents a share, versus $4.3 million, or 26 cents a share. Revenue, all of which came from the company's photovoltaic system installation subsidiary, increased 53.5 percent to $5 million from $3.2 million.

Hoku said that besides the difficult lending environment, downward pressure on both the photovoltaic industry and the spot market price of polysilicon has affected demand for contract-based polysilicon sales.

The company said in addition to $243 million in customer commitments, it has contributed $41 million of its available cash. Still, the company said it is short $106 million to fully fund its estimated $390 million construction budget for the polysilicon plant.

Meanwhile, Hoku's solar subsidiary, which markets, sells and installs turnkey photovoltaic systems, has seen more than 400 percent growth in aggregate installed PV capacity during the 13-month period from April 2008 through April 2009, Hoku said.