Envision Solar Takes Steps to Avoid Liquidation

The “solar tree” maker plans to raise more money and extend the maturity dates of loans again in order to stay in business

Solar panel maker Envision Solar International Inc. has concerns about its ability to continue without the threat of liquidation, due to consistent losses and a large deficit.

In a May 14 10-Q filing with the U.S. Securities and Exchange Commission, the company said that it has doubts about its ability to continue as a going concern, or without the threat of liquidation, due to a deficit of more than $28 million and a loss of more than $1 million in the first quarter.

The San Diego-based company develops solar panels and related technology. Installed in locations such as the top decks of parking lots, Envision's "solar trees" (which are designed to look like trees) provide stations for charging electric cars.

Envision saw the impact of the macroeconomic state during 2012, it says in SEC filings, as potential customers weren't able to get the financing they needed to make large infrastructure purchases, negatively affecting business. Envision's customers include Dell Inc. (Nasdaq: DELL), which installed the solar trees at its Round Rock, Texas, headquarters, and General Motors Co.'s (NYSE: GM) Warren, Mich., facility.

"We believe these factors, combined with the overall economic conditions of the United States as it rebounds from a recession, have slowed companies from formalizing purchases," the company says in SEC filings.

The company's first quarter loss was about $1.05 million. For the fourth quarter of 2012, the company sustained a $983,123 loss.

Envision has taken some steps to improve liquidity, including raising more money. It has also extended the maturity dates on its loans. Since the beginning of the year, Envision has raised about $1.9 million through stock offerings, SEC filings show.

Envision is currently planning to raise an additional $100,000 through a private offering, and will initiate further offerings to provide additional working capital, the company says in SEC filings.

Envision director John Evey extended a 10 percent convertible promissory note, convertible into shares of common stock, to the company, which was set to mature on Dec. 31, 2011. The note's maturity was extended twice, and now the note matures Dec. 31, 2013. Envision currently owes $119,616, plus $3,067 in accrued interest on that note, SEC filings show.

On Dec. 19, 2009, the company entered into a convertible promissory note for $100,000 with its landlord, instead of paying rent for a new office space for one year. That note also accrues 10 percent interest. Envision owes $132,822 on the note, including interest. The note's maturity date has been extended several times through Dec. 31.

Envision also owes $1.3 million on two notes with Gemini Master Fund Ltd. The maturity date on those notes was also extended through Dec. 31.

If the company succeeds with plans to extend maturity dates again, and with a $100,000 capital raise, it should be able to make minimum payments on the loans, according to SEC filings.

As a whole, U.S.-based solar panel makers have struggled. Many have filed for bankruptcy protection and liquidated, partially due to increased competition from China.

Fremont, Calif.-based Solyndra LLC, a solar panel company, sought bankruptcy protection on Sept. 6, 2011, saying in court papers that there was an oversupply of solar panels in the market due to the growing capacity of foreign manufacturers, which reduced pricing.

SpectraWatt, which manufactured multicrystalline silicon wafers for solar panels, filed on Aug. 19, 2011. The company said in court papers it was under stress because of manufacturers in China and other places.

Evergreen Solar, which also made multicrystalline silicon wafers for use in solar panels, filed for bankruptcy on Aug. 15, 2011. The company had started manufacturing products in a Wuhan, China, facility to try to reduce costs after facing increasing competition from Chinese manufacturers.

In March, one Chinese solar panel maker, Wuxi Suntech Power Holdings Co. Ltd., a subsidiary of Suntech Power Holdings Co. Ltd. (NYSE: STP), was placed into administration for restructuring purposes.

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