ZBB Energy – poster child for “green” energy FAIL

Our dear comrade leader loves to give speeches about how the government is “investing” in “green” energy. He travels around the country to these “green” companies and proclaims that his, er our “investments” will bring more jobs and a brighter future for America. The sycophantic press collectively wets their pants at these events. According to this story (from the WSJ) it might be a good idea if someone would take a closer look at the hosts of these Potemkin events. In one such event our dear comrade chose ZBB Energy, a manufacturer of high capacity batteries for wind and solar power devices. It appears that ZBB Energy is a poster child for “green” energy FAIL.

We wonder who in government looked at ZBB’s filings with the Securities and Exchange Commission. Since going public in June of 2007, ZBB has been hemorrhaging money. The firm lost $4.9 million in fiscal 2008 and $5.5 million in fiscal 2009. In its most recent filing, in May, it said it had lost $6.9 million for the first nine months of its current fiscal year. It explained it had a “cumulative deficit” of $44.1 million and informed shareholders that it “anticipates incurring continuing losses.” It acknowledged that its ability to continue as a “going concern” was predicated on its ability to drum up additional funds.

In March the company engaged in various stock transactions—including a private placement to the company’s directors—to raise some $1.9 million. It obtained a $1.3 million loan from the federal stimulus program and borrowed $1.5 million more from Investors Bank. In June it announced a debt agreement, which would allow it to tap a further $10 million.

Meanwhile, a review by the company’s audit committee last fall discovered that ZBB’s former CEO had been wrongly compensated as both an employee and an independent contractor, and that the company had failed to withhold his proper taxes. He stepped down, and the management team was reshuffled. ZBB was also forced to restate its financial results after a separate audit committee review found the company had recognized revenue from a contract in the wrong quarter.

The company also acknowledged in its May filing that the 72,000 square foot manufacturing facility it bought in 2006 is “currently producing at less than 10% of its expected capacity.” That means it can’t currently access the $14 million in federal tax credits, which were supposed to help with equipment for a new facility. Meanwhile, private investors have soured on some energy-storage companies. ZBB’s initial public offering was priced at $6 a share in 2007, and it closed yesterday at 70 cents.

So we’re “investing” in a corporate basket case. A company that has lost a cumulative $44M and 89% of its share price in three years. A company in such dire straits that it can’t even access the $14M life preserver the taxpayers are tossing to it. Yeah, that’s f**king brilliant! How appropriate that this black hole was used as a backdrop to promote more green energy FAIL.


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