Tracking Return on Investment in the “Green Economy”

MacIver News Service | January 16, 2012

ZBB Energy, a Menomonee Falls based green energy company, is in a race to bring new green technologies to market as it finds itself in the center of the debate over whether government financial assistance can launch and sustain a green economy here in the United States.

President Obama visited ZBB Energy back in August of 2010 to promote the green economy and why the federal government should step in to get this sector of the economy off the ground.

“At this plant you’re doing more than making high-tech batteries.  You’re pointing the country towards a brighter economic future,” Obama said.

During his visit, President Obama vowed to create 800,000 green energy jobs by 2012.

ZBB Energy makes batteries specifically designed to store electricity from renewable sources. At least, that’s the plan.  ZBB Energy is in the middle of a major overhaul and currently does not have any products on the market. It plans to launch a new line within weeks.

“The product we’re developing will be the only storage device like it in the world,” Will Hogoboom, CFO, told MacIver News. “We’ve already closed orders for the new product even though it’s not in production.”

Investors and the stock market have not always appeared to share in the President’s optimism.  ZBB Energy stock ended the year at 71 cents a share. The day of Obama’s visit, the stock closed at $.70. Some believe investors are generally weary of green energy companies, especially startups, because these companies have high risk: they incur high overhead and generate low revenue while they attempt to develop new technologies that may or may not be profitable.

That’s where federal and state governments step in, providing those companies with massive tax breaks and loans. Many companies state in their SEC filings they could not survive without this preferred treatment. However, as we’ve seen, government favoritism is not a guarantee of success.

Solyndra, a solar panel manufacturer in California, received a $535 million loan guarantee from the Department of Energy in 2009. Two years later the company was out of business.

ZBB Energy has received significantly less help from the federal government than Solyndra. In June, the IRS awarded it a $14.7 million Clean Energy Tax Credit.  In 2009 it received a $1.3 million stimulus loan.

The stock market has been a consistent challenge for ZBB Energy. In December 2010, AMEX notified ZBB its shareholders’ equity was below the minimum $4 million required to continue being listed. This December, the company announced its shareholders equity was at $4.1 million and it was back in compliance.

However, ZBB’s stock still trends downward. It closed at $5.80 on June 18, 2007, three days after the company executed a 1:17 reverse split. Since then, it’s been downhill. On December 20, 2011 it closed at 74 cents a share and has not broken $1/share since September.

Courtesy of

ZBB’s market trouble is reflected in its SEC reports. Its Q3 revenue was at $1.637 million. ZBB’s payroll alone was $60,000 more than that. The total operating loss was $1.696 million.

The company hopes to turn all this around with the release of a new line of batteries, which are in the final stage of testing.

“Once we start actually producing and shipping, it will mean the world to us,” Hogoboom said.

The company has also added a number of new employees. At the time of its overhaul two years ago, ZBB employed 25 people. Today it employs about 60 people and has 7 open positions.

Over the past few months, while developing its new product, the company has also been forging new partnerships. In fact ZBB is opening a new factory in China in the next few weeks.

On December 15th, ZBB announced a new joint venture partnership with an unnamed “global technology company,” to help in product development. That partner is investing $800,000 in the project, and bought $700,000 of ZBB stock.

Company insiders appear to be confident. Hogoboom bought 14,000 shares on December 13. Buoyed by the government investment in the firm, investors purchased 1,307,860 shares over the last six months, all at market value.

To achieve President Obama’s goal to create 800,000 green energy jobs by 2012, the federal government has invested heavily in companies like ZBB. Yet, there is presently no official way to verify the success of such job creation efforts since the Labor Department does not track green jobs. The Bureau of Labor Statistics is in the process of conducting a survey to find out exactly how many green jobs there are in the country and hopes to have that complete by the middle of this year.

Meanwhile, announced expansion projects, a new product line, and large stock purchases have not been enough to give non governmental investors in the market confidence in this green energy “startup.” ZBB’s stock opened at 78 cents a share on December 15, 2011 and closed at 81 cents a share on Jan. 13, 2012.