Submitted by makemeupkc on Mon, 2013-08-19 06:40
ECOtality is a San Francisco, California-based company which manufactures and sells charging systems for electric vehicles pursuant to an agreement with the U.S. Department of Energy (“DOE”). Following quarter after quarter of reporting “record” sales and claiming the Company was successfully diversifying its business model away from the heavily-subsidized sales business through the DOE, the Company’s stock price spiraled, allowing it to stave off a delisting by the NASDAQ and to conduct an $8.2 million private placement to raise capital. Then, on August 12, 2013, the Company disclosed that the DOE had suspended all payments to the Company, had ordered the Company to cease incurring new costs under its prior arrangement with DOE, and had ordered it to notify all of ECOtality’s vendors of the DOE’s action. The Company also disclosed that it was unable to correct design and manufacturing defects in its charging systems, likely requiring a recall of all connector plugs on the 12,000 charging stations it had installed to date; that the Company was unable to meet its 2H 2013 release date for a new industrial charging device it had promised to release in the 2H 2013; and that as a result, it had hired a restructuring adviser to evaluate options including filing a bankruptcy.