Uncle Sam is investing in the battery business. It’s part of Unk’s pursuit of green energy and green jobs–and he’s plunked a lot of the taxpayer’s green dollars down on various companies. 


The Wall Street Journal has a piece on one of “our” battery companies, ZBB Energy. Is it a good investment? Would you put your own money into ZBB? (Actually, you are putting your own money into the company-government money comes from us-you just aren’t getting to evaluate the investment.)



The administration put $14 million in ZBB (remember when that sounded like real money?). Here are some salient features of the company’s profile, things a wise investor might want to consider before plunking down the $$$:  



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.


If ZBB were not a green company, would the administration be railing against its CEO compensation? Read the whole article-there’s even more bad news about the company in which you just invested. The Journal concludes:



Perhaps ZBB Energy will eventually prove to be the Google of the battery business, but then again Google didn’t need taxpayer help. The Obama Administration would argue that these subsidies for private commercial companies are worth it if only one company pays off. But for the company that does, the financial rewards will be private. For those that fail, the losers will be taxpayers.