ECOtality May Be Considering Public Offering As Share Price, Prospects, Products Melt Down

 

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?

Doubt it.

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.

”I’m melting. HAHAHAHAHA.”

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6 Responses to ECOtality May Be Considering Public Offering As Share Price, Prospects, Products Melt Down

  1. JMan says:

    So you think this is all a ploy to get the stock down low & then some interested parties are going to invest when price is low?

  2. db says:

    It looks less like a “ploy” and more like a desperate search for capital to head off a fire sale or bankruptcy. If they raise it, maybe they can back in the good graces of the DOE, which doesn’t appear difficult to do. It will throw money at anything that uses electricity, as opposed to generates electricity. If they do raise the money, I’m looking forward to seeing the terms.

  3. EVfan says:

    Interesting that they disclosed so many big problems at once. It would not surprise me if they find an investor. After all, EV may eventually catch on more broadly but the challenge is ECOtality needs to survive until then. ChargePoint might be a good investor. It might not be good for the US if China invests and owns ECOtality’s charging stations and patents but could be good for shareholders.

    • db says:

      That’s what leads me to believe there may be deal on the way. The info dump will allow them to sell securities, which may provide them with time to figure out how to save this thing or if that is even possible. Based on a cursory review of their financials, it doesn’t matter who owns it, without government assistance, there’s not much of a business there. The vast majority of their revenue is “service revenue,” which is based on government contracts. This isn’t a business, it is a receptacle for tax dollars funneled through the government. Their last 10-Q states that “We anticipate the majority of our revenue in 2013 will be derived from the DOE Contract based on deliveries of chargers and the reporting of in-kind costs relating to cost share of EV Project participants,” and we know what the DOE thinks of this.

      • EVfan says:

        I think it’s terrible that they didn’t update investors on the products that were melting as they happened. The investors deserve to know what quality of products they are/were investing in.

        • db says:

          That is the least of their problems. It is probably a small issue that the techs can deal with. Their major problem is an overwhelming reliance on government funding that is suspended and may be going away in addition to an admitted inability to perform the tasks for which the government was paying them.

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