TXCO Resources (TXCO) Reports a Large Q4 Loss; 10-K Contains 'Going Concern'

March 16, 2009 5:38 PM EDT

TXCO Resources Inc. (Nasdaq: TXCO) reports a Q4 loss of $0.51 per share, vs. consensus for an $0.08 loss. Revenues for the three months were $21.0 million vs. $26.35 million consensus.

The financial statements reported in TXCO's Form 10-K for the 2008 fiscal year contain a "going concern" qualification in the opinion of the Company's independent auditors, Akin, Doherty, Klein & Feuge P.C. The auditors have included in their opinion an explanatory paragraph indicating that TXCO's working capital deficiency, non-compliance with its current ratio debt covenant under its bank credit facilities, and violation of a provision in its certificates of designations for its Series D and Series E preferred stock giving the holders of the preferred stock the right to demand redemption of such stock, raise substantial doubt about TXCO's ability to continue as a going concern.

As a result, TXCO has recently experienced substantial difficulties in meeting short-term cash needs, particularly its vendor commitments. TXCO reported $49.7 million in trade payables at year-end 2008, of which approximately $4.1 million are currently 60 days or more past due. TXCO's failure to reach accommodations with these vendors could result in the filing of liens or the withdrawal of trade credit, and could limit its ability to conduct operations on Company properties. [SM]

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