ZBB BS: WSJ Editorial Scoops Beat Journalists on Financial Condition of Obama-Visited Company
On Monday, President Obama visited ZBB Energy Corp, a maker of high-tech batteries in Menominee, Wisconsin. Helene Cooper at the New York Times, where a larger version of the picture at the right appeared, reported that "The company received a $1.3 million federal stimulus loan, which officials said would triple its manufacturing capacity and could lead to 80 new jobs." Note the word "could."
At least the Times mentioned the existence of ZBB's stimulus loan. In three brief reports citing Obama's visit during the past week, the Associated Press didn't even do that.
The WSJ's intrepid editorialists did everyone else's work for them and peeked behind the curtain at ZBB. It is not pretty:
Uncle Sam, Venture Capitalist
Meet the battery company that Obama visited yesterday.
President Obama kicked off a five-state campaign swing yesterday with a stop at a "clean energy" plant in Menomonee Falls, Wisconsin. As it happens, Mr. Obama couldn't have chosen a better company to demonstrate the risks that taxpayers are taking with their billions in green stimulus investment.
... Mr. Obama praised it for "pointing the country toward a brighter economic future," but we'll let readers decide if they'd write the same checks if they were investing their own money.
ZBB has been around for more than a decade, developing batteries and equipment to store energy from wind turbines and solar cells.
... last January, when the Department of Energy announced $2.3 billion in "clean energy manufacturing tax credits," ZBB was one of 183 recipients—collecting $14 million.
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.
... 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.
A visit to the company's quarterly income statements at NASDAQ.com reveals that sales during the four quarters that ended on March 31 were less than $2 million; the revenue line during the most recently reported quarter was a whopping $189,000. During that time, the company lost over $8 million. During the four years ended June 30, 2009, ZBB burned through well over $20 million.
You have to wonder how badly stimulus efforts such as these are going if a company in ZBB's condition is considered worthy of a campaign stop. How bad are the situations at the ones that didn't make the cut?
The Journal gives a partial excuse to the White House press corps for not doing its work: "It has been dragged to so many of these energy events that it has lost interest in looking at the companies it visits."
Sorry, I'm not as forgiving. Allowing yourself to get scooped by a bunch of guys sitting in New York offices demonstrates how inexcusably lazy establishment press beat reporters following the president have become. That laziness would also appear to be influenced by the likelihood that if they really did their job, they'd have to report unpleasant things about their guy in the White House and the mostly accomplishment-free results of "clean energy" efforts thus far.
You'll know that they don't even care about being scooped if, as I expect, the WSJ's editorial is the first and last you'll see of ZBB's BS in the establishment press.
Cross-posted at BizzyBlog.com.