ECOtality racks up third acquisition of the year

Scottsdale, Ariz.-based ECOtality (OTC: ETLY) has had a busy year. The renewable energy company said today it snapped up Phoenix neighbor Electric Transportation Engineering, or eTec, for $6.25 million in cash and stock.

ETec, which makes fast, smart charging systems for electric vehicles, is ECOtality's third acquisition of 2007, and ECOtality president and CEO Jonathan Read expects to squeeze in one more acquisition before the year is up.

"My business strategy, and the company's business strategy, is really to become the first electro-centric, green rollup company. To add a series of tightly meshed companies that are accreted to each other in terms of technology and obviously earnings positive," he told the Cleantech Group

As opposed to what Read calls "overgrown science projects," he said ECOtality looks for mid-life companies that it can move, through synergies, into becoming profitable companies in the green sector.

Take a look at one of eTec's charging systems here >>  

ETec's SuperCharge system is already used in 12 airports in North America for ground crew vehicles, but Shai Agassi's recent announcement of the Project Better Place electric charging startup could spell competition for ECOtality 's new unit (see Electric car charging startup raises $200M).

But Read said Agassi may be biting off more than he can chew with his plan to replace vehicle batteries at the proposed charging stations.

"Getting all the auto manufacturers to agree on one battery type, which has to be taken out of the vehicle and replaced every time you want to recharge in Agassi's model, is sort of like herding cats," said Read.

Last month, ECOtality closed its purchase of Innergy Power, a San Diego, Calif.-based maker of solar panels and rechargeable lead batteries, for $3 million in cash and stock. In June, the company bought the Fuel Cell Store, a fuel cell manufacturer and online retailer headquartered in Boulder, Colo., for $300,000 plus stock.

ECOtality started out in 1999 as a hydrogen fuel cell developer, and continues to work on its Hydrality system, which uses magnesium and water, with NASA's Jet Propulsion Laboratory.

"Our Hydrality is a hydrogen on demand system. It would then go through a fuel cell to produce the electricity, thus our acquisition of Fuel Cell Store," said Read.

Once the electricity is produced, Read said it then goes through a load leveling device, which is a series of batteries, and then goes to an electric motor.

"So in essence, with our acquisition of battery systems and fuel cell company, along with our hydrogen, we're actually having our fingers in all parts of the overall hydrogen system."

ETec also has some hydrogen related operations. It developed a hydrogen internal combustion engine truck with Roush Industries and Powertech Labs. The Chevrolet Silverado/GMC Sierra pickup trucks are modified to operate the GM Vortec 6.0 liter V8 gasoline engine on 100 percent hydrogen fuel.

But while advances have been made in hydrogen technology, having a few fingers in the electric vehicle market is helpful to ECOtality's bottom line.

"We see that the immediate future is going to be electric vehicles and plug-in hybrid vehicles, prior to the widespread acceptance of hydrogen," said Read.

ECOtality said all three of its acquisitions had combined trailing 12 month revenues of $9.39 million as of Sept. 30. The company said it raised $3.5 million of capital from institutional investors to complete the eTec acquisition and for its strategic growth plan.

Read said they won't need to raise any more cash for the next acquisition, which should be about the same size as today's agreement. The eTec deal was approximately half in cash and half in stock.

As for the future of hydrogen, ECOtality is looking at a broad range of applications for its technology.

"It's being used in conjunction with coal gasification, where hydrogen is both a byproduct and a necessary product, and tanked storage of hydrogen is inefficient," said Read. "So the hydrogen on demand system adds a step that eliminates the CO2."

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