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AMSC 10Q Risk Factor: History of Operating Losses; may never achieve profitablity

This was taken from the 10-k

"We have a history of operating losses, and we expect to incur losses in the future.

We have been focused on research and development activities through the fiscal year ended March 31, 2007. We have incurred net losses in each year since our inception. Our net loss was $23.6 million for the nine months ended December 31, 2007, $34.7 million for the fiscal year ended March 31, 2007, $30.9 million for the fiscal year ended March 31, 2006 and $19.7 million for the fiscal year ended March 31, 2005. Our accumulated deficit as of December 31, 2007 was $408.7 million. We expect to continue to incur operating losses until at least the end of the fiscal year ending March 31, 2009, and we cannot be certain that we will ever achieve profitability ." American Superconductor 10Q filed 02/07/2008 p. 28

A more critical glance at AMSC’s 10-K leaves more questions than answers, as every accounting red flag jumps out.

$15.5 million in “unbilled receivables”

Zero allowance for doubtful accounts

And our favorite is the recording of revenue on a cost of completion basis.

Between the unusual gross margins and issues with the warranty accrual, the 10-K deserves its own report.

American Superconductor, they have been one of those perennial money losing “dream technology” companies who promise everything and deliver nothing. Here are a few snippets from their 10-K’s of years gone by.

• 2000-“We believe that our existing capital resources, including the proceeds of our March offering, will be sufficient to fund our operations until we reach profitability and have positive cash flow”
• 2002 “We believe that our existing capital resources will be sufficient to fund our operations until the end of fiscal 2005, at which time we expect to reach corporate-wide profitability”
• 2005 - “We expect to continue to incur operating losses until at least the end of fiscal 2007”
• 2006- “We expect to continue to incur operating losses until at least the end of fiscal 2009 and there can be no assurance that we will ever achieve profitability.”

In fact, this company has delivered a string of unblemished losses stretching back 14 consecutive years – without ever turning a single profit. Not just marginal losses, either - $400 million in total … and none of this developing wind power, rather Superconductors.

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