KiOR: The Inside True Story of a Company Gone Wrong. Part 4, the Year of Living Disingenuously

“Don’t Sell Shares”

In August 2012, O’Connor and Stamires were notified by Samir Kaul not to sell KiOR shares. The rationale? Despite the healthy IPO in 2011, KIOR would soon running out of funds to keep operating, and was in the process of talking to different potential investors. According to Dennis Stamires, Kaul warned that sales of shares, especially by O’Connor and Stamires as co-founders of BIOeCON, would raise strong negative warning signals to the stock market and to the potential investors, adversely affecting KiOR’s future funding negotiations.

Stamires did not sell shares, and O’Connor suspended selling activity until October 31st.

Smith, the Hero of Columbus, loses confidence

Earlier in the year, Vice President of Engineering and Construction Ed Smith has been commended by management for his work in bringing in the construction of the demo unit and the first commercial plant at Columbus on time and under budget. Praise also had been offered by O’Connor.

But the State of Mississippi alleges that, by no later than October 7th, Smith had lost confidence in KiOR, as well. The proximate cause? A series of runs conducted in its Pasadena, Texas pilot plant, according to Mississippi, which based its allegation on an email Smith penned to KiOR employee Arnold Korenek.

The Stealth Team Reports

The Stealth team within KiOR, working nights, weekends and vacations, had not given up. On October 25th, Dennis Stamires delivered to Cannon a detailed Technical Report entitled: “Proposal for Commercial Use of an Efficient, Cost-effective Integrated Process for the Conversion of Biomass to Liquid Fuels.”

It was the alternative technology which the Stealth Team had been pursuing and which a consensus of technical team members said KiOR needed to close the gap between public projections and actual results.

Cannon thanked Stamires for the Proposal and told him that he will study it and would come back to him.

The report did not directly credit Dydak and Zhang, who were afraid of retribution from Hacskaylo and Loescher. However, Stamires was able to indicate to Cannon only that the Report also represented the work of others, but with names withheld.

In many ways it was a sign of KiOR’s progress from a collaborative group of technologists to a group on fearful employees working in silos.

In the report, Stamires stated the fact that KiOR’s yield gains were essentially stalled at not much more than half of the yields communicated to shareholders. And that only the Pilot Plant was showing even these results, and all of this involved a cost of “several dollars per gallon.”