ECOtality Heading For Bankruptcy As DoE Shuts Off The Tap
ECOtality, best known for its Blink network of commercial charging stations, as well as residential chargers, today filed a 8-K with the SEC that basically says ongoing operations are all over and they will look to sell the company or just go bankrupt.
“…the Company has experienced certain material adverse developments that in the aggregate significantly impact its ability to meet its ongoing obligations and to fund anticipated operating losses.”
Needless to say, shareholders were none too happy. The stock, which closed Friday at $1.46, was suspended today, then fell 80% to close at 30 cents. (Real-time quote can be found here)
What are those adverse developments ECOtality mentioned that threatened the company? According to the filing:
- They aren’t selling enough EVSEs (Electric Vehicle Service Equipment), at least not enough to “support the Company’s operations in the second half of 2013”
- ECOtality’s Minit Charger industrial line, which was scheduled to launch later this year, failed so miserably in testing that the company said it will now “not be introduced in 2013”
- No one will lend them anymore money – “…the Company learned on August 8, 2013 that financing that was being pursued from an existing investor would not be forthcoming. The Company continues its efforts to obtain additional capital but there can be no assurances that such financing will occur on reasonable terms, or at all…”
But the real reason the company has seen its last days are contained the final reason stated. The government is out.
“The Company has been notified by the U.S. Department of Energy (“DOE”) that the DOE is suspending payments to the Company in connection with the EV Project…the DOE sent a letter to the Company stating that it is suspending all payments under the EV Project while it investigates the situation and determines whether the award should continue. This suspension has had a significant impact on receivables that were anticipated to be collected from the DOE, in addition to remaining amounts anticipated to be invoiced and collected under the EV Project.”
Also, sometime late Thursday, August 8th , a letter from the DoE also notified ECOtality that:
“… (ECOtality) is not authorized to incur any new cost or obligation under the award and that the DOE would not reimburse the Company for such costs during the suspension. Further, the DOE instructed the Company to provide notices to its vendors and subcontractors of the suspension.
Since going public in 2005 the company has never recorded a profit. As of their most recently filing on March 31, ECOtality had capital obligations of $71,000 and long-term debt of $188,000 as of March 31. During the first quarter of 2013, the company reported a loss of $588,000 on revenue $15.9 million worth of revenue.
The DoE cut ECOtality off on Friday, and the company effectively went bankrupt on Monday.