'Cash level a problem' at AstroPower
Solar-cell maker confident of future, but is looking to raise new capital

07/18/2003

By STEVEN CHURCH
Staff reporter

www.delawareonline.com
The News Journal

Glasgow-based AstroPower Inc. is running low on cash, prompting the company to tighten its budget and one of its directors to try to raise new capital, the acting chairman of the board said Thursday.

Despite the problem, however, Gilbert Steinberg said that the solar energy company has not laid off workers and expects to be able to operate indefinitely. He said the company is covering its production costs with revenue from sales.

"We're not going into bankruptcy or going out of business," Steinberg said. He would not say whether or not the company is making a profit on the sales of its solar cells, which can be used to power homes and offices, or add power to an electrical grid.

Company managers are focused on completing the long-delayed 2002 financial report, Steinberg said. Filing the report with the U.S. Securities and Exchange Commission would make it easier to raise cash for future growth and head off a move by the Nasdaq board to delist AstroPower, he said.

"Right now, cash level is a problem," Steinberg said. "Because of the legal and accounting expenses, we don't have the kind of working capital that we would like to have."

Institutional investors and small-time stockholders have been clamoring for information about the company's financial position for months. The company announced in April that Nasdaq officials were considering dropping AstroPower from the technology-heavy stock listing. According to company officials, Nasdaq has said that it will delist AstroPower if it does not file its 2002 annual report, known as a Form 10K, and its fourth-quarter earnings by an undisclosed deadline.

The company has said that when it finally does file the missing reports, it is likely to restate earnings for 2002 and possibly for 2001.

Earlier this year two shareholder lawsuits were filed in U.S. District Court in Wilmington, claiming that company founder Allen M. Barnett and Chief Financial Officer Thomas J. Stiner artificially inflated the company's value by giving out "false, misleading and incomplete information." Both men have since resigned, and neither would comment.

The company would not discuss the financial reports or the lawsuits in detail.

In May the company hired a team of forensic accountants to investigate its past accounting practices. The decision to hire the firm of Ernst & Young came at the suggestion of the company's regular accountant, KPMG International, Steinberg said.

Steinberg said that one measure often used by analysts to gauge a company's success, the number of days it takes to be paid for an order, has come down recently.

That brought a rare positive response from one of AstroPower's harshest critics, StockDiagnostics.com Inc. The research company has predicted that AstroPower will be either out of business by the end of the year, or forced to lay off most of its work force.

"That's good news for them," Stockdiagnostics Director of Research Michael Markowski said. But the company's failure to file its reports on time show that AstroPower is hiding serious financial problems, he said.

David Schoenwald, an analyst with the New Alternatives Fund, which invests in alternative-energy and socially responsible companies, said the experts in his office have been debating whether to add to or sell some of the fund's 205,000 shares of AstroPower.

"I'm hearing the same about the company that everybody else is hearing - nothing," Schoenwald said.

He would not say how much money the fund has lost by investing in AstroPower. "It would be too embarrassing."

AstroPower's smaller investors, like Bethany Beach retiree John Ellis, have been trying to figure out what to do with their shares as well. Ellis said that he is ready to sell half of his 400 shares at a loss, if the stock price goes up to $3 a share. He'll keep the rest, he said, just in case the company finds a way out of its present financial and legal problems.

"If AstroPower would tell me whether all the accusations were true and explain the problems, I might be willing to stick with them," he said.

Another small investor, Leland McKettrick of Media, Pa, said he likes the company's products so much, he is willing to hold some of the shares he recently bought as the company's stock price fell.

"It's a gamble," he said.

Steinberg said he has gotten calls from investors demanding more information from the company. But until the financial reports are turned in, he cannot give out any details of the company's fortunes, he said.

"It's a little bit frustrating for everybody."

Reach Steven Church at 324-2786 or schurch@delawareonline.com.