As the worst VC firm in history (*cough*US Government*cough*) sees its portfolio dwindle again, one of the dwindlers may be preparing to raise some private money.
ECOtality, Inc. is a “green” energy company and, as such, is an esteemed recipient of federal government stimulus money. They make electric charging stations.
ECOtality released an interesting Form 8-K yesterday describing a dire state of affairs. It is exploring its options, including bankruptcy, because:
- they have low sales that cannot support its operations;
- they cannot release new products on time;
- they cannot raise new money. The $8.1 million they raised in June was not nearly enough; and
- their employment-related problems from a Department of Labor investigation are costing them a lot of money they don’t have.
This was too much even for the Department of Energy, which is “suspending” payments since ECOtality notified them that they cannot do what the government is paying them to do. However, the DOE is investigating whether they should continue paying ECOtality to do what ECOtality said it could not do.
In addition, a striking parallel to their financial position, some of their products are melting.
Did ECOtality release this information as a sign of being a good corporate citizen?
On July 1, ECOtality filed a Form S-3 to register up to $50 million of securities. This information was not included in the Form S-3, and ECOtality would need to disclose it before it could sell any securities. This leads us to believe that some hardy souls may be considering investing where even the Department of Energy fears to tread. ECOtality has already forecast the alternative.
On Friday, ECTY closed at $1.46/share and is trading below $0.23/share as of this writing. We wish all involved the best of luck.