A small company offering a promising new technology needs financing to jump-start the drive toward financial success. Should it seek venture-capital funds? Make an initial public offering?

Balqon Corp. (pronounced bal-con), which makes electric-powered trucks used to unload freight containers from ships, didn’t like either of those typical options. The company’s founder had previous experience with ceding control of a new venture to VC investors that soured him on the idea. And the cost of doing an IPO, which can amount to several million dollars in auditing and attorneys’ fees, was more than the small, young firm could handle.

The company did, though, go public last October. The less-common path used was a reverse merger, which involved purchasing an existing shell company that was already public, merging Balqon into the shell, and changing the combined company’s name to Balqon. That process cost about half a million dollars, Bob Miranda, Balqon’s finance chief, told CFO.com yesterday at the CFO Rising West conference in Las Vegas.

Since then, $3.2 million has been lined up from private accredited investors, while company management has retained control of more than 70% of the 25 million outstanding shares. A total of about 6 million shares have been registered for public trading on the OTC Bulletin Board.

Almost a third of the private investment — $1 million — consists essentially of loans to the company in exchange for future rights to convert the loans into stock. Thirty-four investors purchased unsecured subordinated notes convertible into an aggregate of 1 million shares of common stock at a conversion price of $1 per share. At press time, Balqon shares were trading at $1.95.

“Going public by working with private investors has allowed management to control the strategic direction of the company,” said Miranda. “We’re making use of that freedom in how we’re developing our business and our product lines.”

Balqon, with a market capitalization just under $50 million — including the management equity — has only recently begun to take in more than a trickle of revenue. Its top-line for the first half of 2008 was about $2.3 million, up from just $202,000 for the same period last year. The company is not yet profitable, losing $1.4 million in the first half, though that was down from a $5.3 million deficit in 2008.

Almost all of the revenue is coming from a contract to provide 25 electric-powered freight trucks to the Port of Los Angeles. So far 10 have been delivered, with price tags of about $200,000 each. That’s significantly more than comparably sized diesel-powered trucks cost, but Miranda said straight price comparisons miss a key point; that is, electric vehicles are powered by batteries that are continually recharged at a relatively low cost, while diesel trucks must be replenished with expensive fuel. Consider that since the useful life of diesel freight trucks runs about five years, by buying an electric truck the owner effectively is getting at least five years’ worth of fuel in the deal, contended Miranda.

The trucks bought by the Port of Los Angeles are being used as demonstration vehicles: shippers and truck lines doing business at the port can rent one of the trucks to test out its capabilities before deciding whether to make a purchase. All 10 of the trucks at the port are currently being used by potential customers. “Having these trucks operating and demonstrating that they work well, are fuel-efficient, and reduce emissions gives us the opportunity to convince fleet operators that they are a viable alternative to diesel trucks,” added Miranda.

The trucks, which are not certified by the Department of Transportation for use on public roads, are for moving freight containers around the yard. “They’re really forklifts on steroids,” said Miranda.

Reducing carbon emissions is a significant goal for the port, where Miranda estimated that there are currently about 26,000 trucks in use, including 4,000 diesel trucks that unload containers from ships. The 25 Balqon trucks are obviously a mere drop in that ocean of vehicles, but the vast size of the potential market is evident. Miranda said the company is in talks with other ports as well.

A second product line currently being developed consists of trucks designed to comply with DoT requirements for road use. They will be targeted for transporting goods from freight yards to rail yards located up to a few miles away. Balqon has a contract to deliver five of the DoT-qualified trucks to the Port of Los Angeles.

Developing electric-powered trucks for long-range use is not yet feasible because of the lack of charging stations. But Balqon is identifying other potential opportunities for its trucks to operate within a small geographical area, such as hauling refuse under contracts with municipalities. In fact, the company recently struck a partnership with Autocar, a truck manufacturer, to collaborate on building electric-powered trucks for applications such as refuse hauling, refueling, and construction.

Currently, Balqon is operating with only about 10 employees. It does not actually build the trucks, but rather assembles them from parts — including chassis without engines — purchased from various manufacturers. The crew then installs the electric motor and battery as well as technology created by the company’s founder, Balwinder Samra, for managing the flow of the electricity from the battery to the engine.

Miranda, a contract CFO who heads up his own firm, Miranda & Associates, began working with Balqon two years ago. He currently spends about half of his time on the account, and more during busy times like when regulatory filings are due. Coming up soon is the company’s first Sarbanes-Oxley Section 404 audit, which follows the two years of historical audited financials that are required for a company to go public.

Creating those historical reports was a challenge, Miranda said, because records had been kept “somewhat casually.” He had plenty of experience to perform the task, though. He started his career with KPMG, then went out on his own and built a practice over the next 15 years that eventually merged with Deloitte & Touche. After working at Deloitte for several years, he moved to the independent accounting and finance firm Jefferson Wells, where he managed some “very complex” Sarbanes-Oxley projects.

Now he’s hoping that his work with Balqon will lead to signing up new clients in the green-technology field. “It’s a great business to be in now,” he said.