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Following its loan guarantee from the U.S. Department of Energy, solar module maker Solyndra has been facing a battery of audits. Sounds like simple due diligence, but now auditors have called attention to the Fremont, Calif. company’s avalanche of debt and regular losses — findings that could actually dash its hopes for a $300 million public sale.

Solyndra has become the solar company to watch ever since it nabbed that $535 million loan guarantee from the Energy Department. Filing for an IPO in late December was just the next step to claim its title as one of the most promising players to watch, up there with First Solar and SunPower, both of which have gone public.

But if PricewaterhouseCoopers, the company’s audit firm, has anything to say about it, Solyndra may have to backtrack. It just added an addendum to the S-1 pointing out massive losses and negative cash flow since the company’s founding, as well as mounting debt that could bury operations within a year. The audit evaluated finances between inception and Jan. 2, 2010.

The company has not publicly acknowledged these findings, remaining in a quiet period until the public offering sinks or swims. But this isn’t necessarily a fatal blow for Solyndra. This type of “concern notice” isn’t rare for startups — a lot of successful IPOs have had them included in S-1 filings. And beyond that, A123Systems achieved a blockbuster IPO even though it’s never broken out of the red.

To put the company’s burn rate in context, it has raised $970 million in venture capital in addition to the loan from the DOE (although only $25 million of that financing has actually been released so far). And now, just five years after its founding, it appears to already be running out of cash. That logically raises eyebrows.

If this new information derails the Solyndra IPO, the implications may extend beyond the company and its investors (a flock that includes U.S. Venture Partners, CMEA, Redpoint Ventures, RockPort Capital Partners and Argonaut Ventures). The cleantech sector hadn’t seen an IPO in a whole year before advanced battery company A123Systems broke the seal last September. Several green companies filed in the wake of that win, including Solyndra, biofuel maker Codexis and Tesla Motors. If Solyndra falls on its face, each of these other companies could draw more scrutiny or be forced to withdraw.

All recipients of loan guarantees from the Department of Energy are subject to regular audits to make sure taxpayer money isn’t being squandered.

Solyndra was a clear choice for DOE financing. With its unique cylindrical solar module technology, it could take solar innovation one step further. On top of that, the new plant it’s building in Fremont would employ hundreds, helping to fuel the green economy. It will be interesting to see if a Solyndra crash would cast doubt on the DOE’s whole stimulus program.

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