Smith Electric Vehicles has purchased a small Colorado firm as part of its effort to become a publicly traded company.
The Kansas City electric truck company, according to a regulatory filing, paid $340,000 for a majority stake in American Business Services Inc. The consulting company, located in Castle Rock, had only one employee and no revenue last year. But its stock is traded on the Over The Counter Bulletin Board, or OTCBB.
Smith Electric officials did not respond to a request for comment.
However, the purchase opens the way to merging Smith Electric’s business with the Colorado company to take advantage of the stock listing. The strategy could help Smith Electric raise money and potentially provide a shortcut to getting listed on the Nasdaq or New York Stock Exchange.
“This (the acquisition) is the first step in the process of Smith becoming a publicly listed company” on the OTCBB, according to a statement by the Tanfield Group, which owns a stake in Smith Electric.
Smith Electric has struggled since at least 2012, when it failed to complete an initial stock offering. Late last year, the firm suspended truck production at its assembly plant near Kansas City International Airport because of a shortage of cash. At the time, it had 125 employees.
It has also left hanging well-publicized plans for two more assembly plants.
That was a big change from when it enjoyed the national spotlight as a promising green energy company.
“You’re setting a model for what we need to be across this country,” President Barack Obama said when he visited the plant in 2010.
After suspending production, Smith Electric initially said it would restart in June. A spokeswoman for the U.S. Department of Energy, which awarded Smith Electric a $32 million grant, of which $3 million remains, said this week the company has not told the federal agency when it plans to resume production.
The company also fell behind in lease payments to Kansas City for truck assembly space and offices near KCI. Aviation Department officials Wednesday would say only that Smith Electric is making current payments, with all past-due amounts to be paid by the fall and “lease renewal won’t be determined until mid to late September.”
The acquisition of American Business Services comes about three months after the announcement that Sinopoly Battery would invest $42 million in Smith Electric. The investment was to come in three stages, with a majority of it to be made by buying common stock.
In an earlier message to its shareholders, Tanfield Group said Smith Electric would purchase a company with its stock on the OTCBB, then do what is known as a reverse merger to offer the acquired company’s stock to raise the funds. The approach is generally cheaper and quicker than an initial public offering.
The exchange has no listing requirements and its stocks are usually considered riskier, making it difficult to attract investors. But OTCBB companies have to file financial reports with the Securities and Exchange Commission.