Seattle Car Buyers Get Grants

Seems the actual dollar amount isn’t known but should fund the charging stations which should help the upcoming dealerships for these unproven vehicles, which can go all of 100 miles on a charge.

The grant will give each buyer of a Nissan Leaf (which will compete with vehicles manufactured by U. S. government-partially-owned companies General Motors and Chrysler Corp.) a charging station in their home free of charge (except to taxpayers, of course). Seattle will share in this $100,000,000 from the Department of Energy grant with Chattanooga, Knoxville, Nashville, San Diego, Phoenix, Tucson and several Oregon cities. Also mentioned is that Ecotality, the parent company of Electric Transportation Engineering Corporation (eTec) will establish the stations. I had never heard of the group of companies I will call “eTec”. So I Googled it, thinking $100,000,000 from the government is a lot of money and wondering just who was eTec which received that hunk of dough.

Essentially the company is a penny stock, originally a shell corporation, which many times are used by unscrupulous stock operators to take control, publicize some technology or development, tout the stock and then unload the shares. So called “pump and dump” transactions. While I am not saying this company or its investors or executives are necessarily illegal, it has had several failures of businesses and was on the brink, the very brink of bankruptcy in June 2009, having lost over $20,000,000 over the years, when the United States Department of Energy apparently awarded it $100,000,000 – or at least that award was publicized – through President Obama’s Stimulus Program.

My contention is that such award is a reckless and ignorant spending of taxpayer money on President Obama’s pet initiatives. And should shed a light on exactly what the “stimulus” is: stupid. This company started in the restaurant chemical business, moved into the fuel cell business, then, it failing, made a number of rapid “alternative energy related” acquisitions in 2007, probably to keep the price of its stock up. These failed to generate meaningful revenues and lost huge amounts of money. The details:

The company was formed on April 21, 1999 as Alchemy Enterprises in Spokane WA, as a Nevada corporation to manufacture chemical products for restaurants, similar to what EcoLab, from which company the founder John Yamata came. A total of $10,000 was invested by Yamata, as president, who got a 55% ownership, Lynn-Cole Capital got 11% for $5,000 and Harold Sciotto also 11% for $5,000. That endeavor didn’t work out so well, so in August 22, 2005, Yamata resigned and sold his stock to Sciotto who then owned 67% and started to resell biodegradable products to restaurants. The company sold stock in a Regulation D, Rule 504 offering to 30 individuals, one of which was Mr. Sciotto, for cash in the amount of $41,500. On February 16, 2006, Harold Sciotto resigned as President and the Board of Directors appointed Jonathan R. Read, who had an apparent successful former career in restaurants, hotels and real estate as its President and Board Chairman. On June 12, 2006 Caltech acquired 5,869,565 shares for the license to a power cell technology it had developed. No cash consideration was paid by Caltech. The company capitalized on the publicity it generated for the fuel cell technology and sold nearly 35,000,000 shares of stock at $.35 per share. Then the company entered into a technology agreement with two people, Howard Foote and Elliott Winfield, to develop an air magnesium power cell that was to provide continuous electrical power. One of its Securities and Exchange Commission (SEC) filings in 2006 indicated that its third business, the power cell, was essentially another failure:

“Fully Operational Prototype

The fully operational UPV electric power cell prototype system is being designed to be commercially viable for mass production as proven through a bench demonstration of the electric power cell with an output of 50-78kw. The system specification calls for producing a 50/78kw electric power cell capability in order to meet the form, fit, and function for integration into a transit bus diesel/electric chassis.”

On February 6, 2007, the closing price of the common stock on the Bulletin Board was $1.07 per share with 112,999,899 shares of common stock outstanding.. The value, then of this hugely speculative company with little revenue and massive losses, was $120,000,000. Later in 2007 the company purchased a tiny “alternative energy” organization: FuelCellStore.com for $350,000 in cash and 300,000 shares of common stock

In another SEC filing, it announced: “In connection with the preparation of our audited financial statements for the years ended December 31, 2006 and 2005, we determined that there were errors in accounting treatment and reported amounts in our previously filed financial statements.” As a result, we determined to restate our financial statements…” and further, “As of April 5, 2007 we were obligated to issue 344,999 shares per week for a maximum of 10 weeks as a penalty to the investors of the private placement for failure to register their shares by that date. But never daunted, the company raised some more money in November. $4,117,649 of Original Issue Discount 8% Secured Convertible Debentures, receiving gross proceeds of another $3,500,000 and acquired Electric Transportation Engineering Corporation (“eTec”), from Donald Karner and Kevin Morrow. eTec manufactured and sold a “fast charge” battery charging system to be used in commercial and industrial market places. Also acquired were affiliated companies Clarity Group, Edison Source, Edison Enterprises and 0810009 B.C. Unlimited Liability Company which together provided technical support and field services for all aspects of electric vehicle infrastructure.

And then another was acquired, Innergy Power Corporation and its wholly-owned subsidiary, Portable Energy De Mexico, S.A. DE C.V., which “design and manufacture standard and custom solar-power and integrated solar-battery solutions for government, industrial and consumer applications”.

All these acquisitions were made for stock with convoluted price guarantees.

The company changed its name “Ecotality, Inc.”

From the company’s financial statements: “At December 31, 2006, the Company had approximately $18,550,000 of accumulated federal net operating losses”. We incurred a net loss of $13,691,964 in 2007 and $8,067,211 in 2008”.

SEC filings: August 14, 2008 (for the period: June 30, 2008) described the second business the company had failed at: “Hydrality™ is our initial technology and is a complex reactor system that stores and delivers hydrogen on-demand using magnesium compounds and water. When used in conjunction with existing fuel cell technology, Hydrality emits only pure water and produces no harmful emissions. An electric power cell or fuel cell is an electrochemical device that combines hydrogen and oxygen to produce electric power without combustion. The EPC/Hydrality technology, which was initially developed in conjunction with NASA’s Jet Propulsion Laboratory (JPL) and subsequently advanced by Arizona State University, Green Mountain Engineering and Airboss Aerospace, Inc. continues to have strong promise for a variety of commercial applications. While we initially sought to design and license a cost efficient Hydrality system for use in motorized vehicles and industrial equipment, we have identified several additional and promising applications for Hydrality that include stationary applications for remote power, back-up power systems, and large scale industrial and utility use. “

There were 124,732,861 shares of common stock issued and outstanding at June 30, 2008.

In further SEC filings the company indicated that on August 29, 2008 it signed an Amendment to the Debenture agreement to defer principal and interest payments for the period May 1 through December 31, 2008 to look for financing. Then filed the following:

Form 10-K

Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Fiscal Year Ended December 31, 2008

We operate with a commercial “electro-centric” strategy, targeting only products and companies involved in the creation, storage, and/or delivery of clean or renewable electric power. This strategy has resulted in the development and acquisition of various operating companies.. While focused on electric transportation infrastructure, we have developed a diversified technology portfolio that is linked through the ability to deliver comprehensive electro-centric energy alternatives and solutions. By establishing a technologically diverse multi-product base we are able to mitigate the uncertainty of clean technology demands and regulatory changes. Our current primary focus is to facilitate and execute the development and implementation of electric vehicle charging infrastructure in anticipation of mass commercialization of plug-in hybrid electric vehicles (PHEV) and battery electric vehicles (BEV) in the 2010 to 2012 timeframe.

To allow the additional time necessary for us to achieve our working capital targets in the current economic environment, we have requested our debenture holders further extend a waiver of debt service requirements. Therefore, in exchange for signing an Amendment to Debentures and Warrants, Agreement and Waiver which defers interest payments due for the first quarter 2009 until May 1, 2009 and payment of monthly principal redemptions until May 1, 2009, we agreed to the following:

We have incurred losses since our inception and may be unable to generate sufficient net sales in the future to sustain profitability.

We had an accumulated deficit of $(36,337,624) at December 31, 2008 and we may incur losses in the future. In addition, we expect our operating expenses to increase as we expand our operations. Our ability to reach profitability depends on a number of factors, including the growth rate of the renewable energy industry, the continued market acceptance electric transportation systems, solar products and battery products, and the competitiveness of our technology and engineering services. If we are unable to generate sufficient net sales to sustain profitability and positive cash flows, we could be unable to satisfy our commitments and may have to discontinue operations.

As of December 31, 2008, we had 129,422,861 shares of common stock …there may be an additional 122 million shares outstanding if all warrants are exercised and the debentures are redeemed.

On December 31, 2008 the closing bid price on the OTC Bulletin Board for our common stock was $0.03 per share. For year ended December 31, 2007 it wrote down Innergy $2,494,565, MinitCharger $1,280,066 and Ecotality Stores $326,782. The impairment expense was booked in accordance with SFAS No. 144 as there was a lack of proven future cash flows to support the goodwill initially estimated at the time of purchase.

We have reached the point that we are unable to finance our operations and meet our debt obligations without an infusion of capital. This may preclude our ability continue operations.

As of December 31, 2008, we had $327,332 of cash on hand and held certificates of deposit in the amount of $28,044.

On May 20, 2009 the company’s share price was $0.105.

By July 2, the company was hanging on with money fronted by its major investors and hoping for an infusion from President Obama’s Stimulus Program. If at least $20,000,000 didn’t come before October 9, 2009, Mr. Karner would get back his company, The Clarity Group, Inc.

Another July 2009 SEC filing: “The Company’s cash flow and ability to raise new capital are, to a large extent, dependent on its ability to attract and retain funding from the U.S. Department of Energy (DOE) and other government sources. Government funding of projects related to renewable energy, energy, and transportation is subject to cuts or cancellation without notice, and the future of such revenue streams is uncertain and out of the Company’s control. As a result, the Company’s future cash flow, capital requirements, capital availability and ability to raise new capital also depend on factors outside of its control.

If the Company’s financial position does not improve and it is unable to meet its obligations under the May 15 Amendment, it will be necessary for the Company to seek to restructure those obligations. If no such restructuring can be negotiated between the Company and its lenders, the filing of a voluntary or involuntary bankruptcy petition could result.”

However on July 2, 2009 it issued $2,500,000 in 8% Secured Convertible Debentures due October 1, 2010. The debentures have an exercise price or $0.06 per share of Ecotality common stock. Shenzhen Goch Investment Ltd (a Chinese company) was issued $2,000,000 and $500,000 came from former investors. The company signed a letter of intent with the Chinese company for manufacturing and distributing Battery Charging Systems and Electric Vehicle Infrastructure Services and Systems, and the EVMicroClimate program in China.

From a recent Pacific Gas & Electric investor news release: “PGE to Participate in Largest Electric Vehicle Project in U.S. History. eTec announced today the receipt of $99.8 million in federal funds to test and analyze electric vehicle usage and charging infrastructure.

This nearly-bankrupt company, which has lost at least $20,000,000 in unsuccessful business endeavors and is on the edge of bankruptcy has been awarded $100,000,000 from the Obama administration. Stay tuned for how it all turns out.

Written by Superamerican (Theodore M. Wight, Seattle)
Superamerican@att.net
http://www.periodictablet.com