Just pointing out that tax losses and debt became less useful as of the new tax law. Fact of life. FYI one of the reasons lrs did the Gs deal.

Sorry if team trumps new rules rained on your parade

The new tax law has two new limits

NOL’s can not offset 100% of taxable income, only 90%
Interest for entities that have more than $25m in gross receipts can only deduct interest up to 30% of their ebitda.

So interest no t as effective as it was prior to 2018

VNDM needs to keep the short position below 500m shares to be safe. It means to deliver all of the shares we have 8-12 more cycles of short cover- convert- deliver shares- sell shares to get rid of fife. To avoid some nasty SEC issues VNDM and Fife should wait 3 to 5 business days between cycles.

It would now appear to be easier for Fife to exit since he now appears to be getting freely tradeable shares instead of restricted shares.

He shorted and covered yesterday. My guess is that ecos is about to issue more shares to fife and he needs to short until he sells them into market. Would expect a couple more days of this by fife

One thing that hit me in reading the q’s. It appears ecos is issuing freely traceable shares to fife. Wouldn’t surprise me. Ecos is in default under the tonaquint loan agreement so they can’t force fife to take restricted stock. They actually should have their led the market this rather than burying in a q. Makes the 14C they filed worthless.

Add this to the litany of disclosure missteps.

It will come later today when vndm and fife cover yesterday’s short with a reversing trade.

Gs got preferred stock in LRS. LRS needed equity to rebalance their balance sheet. None of the GS investment has anything to do with ecos. Wish it did but know it doesn’t

If it has been accepted then ecos failed to meet their 8k obligations and filed a misleading 10q.

Next stop for VNDM 350m

VNDM is likely fronting for the Fife short. Yesterdays events gave him another window to convert into and sell ecos shares.

Jtech real income is a loss of $300k.

I did not see the stock above .0005 in 12 months. They need to earn $1.3m just to cover salaries and other operating expense. Kwak stands behind the converts and in front of the equity holders with his debt. The payments for accrued wages come next.

I see the leverage that the convert holder has since the debt is in default to be much larger in the short term than anyone else. If the convert makes a demand for payment they can wipe everyone out or at a minimum get green mail.

You can join me in a debt take out. I can see an easy 50% return It is green mail ripe in ecos

I still think there is either an issue with the digester or they are playing securities roulette (which sends people to bad places).

I don’t think GS is in LRS to do anything with ECOS. It is something much larger. It is likely a play to buy another waste company. My guess is GS invested in preferred or senior debt of LRS with a 3 year or less investment horizon.

I don’t see a pop beyond 2 until the converts go away. I actually thought about seeing if Fife would sell some or all Of his debt to me. I think an ECOS debt play is a higher return in the next twelve to 18 months. Default debt has much more leverage right now In default they can demand lots of things in exchange for forbearance

Also a blatant violation of the securities law to do that. Prudence isn’t an exemption from the disclosure rules for good reason.

No if a material event occurs on or before the date the late q is filed it is required to be disclosed. They don’t get to wait That is why I would conclude no acceptance or rejection by LRS. The only other answer is they violated the disclosure rules which isn’t a good answer either

As an aside if you read the 2 q’s you can find other disclosure errors. Not sure who their lawyer is but they must not understand the securities laws

If it is accepted and they didn’t disclose in the q they have a material omission under Reg FD. My guess is that is not.

I believe until the converts are cleared tonaquint will keep the stock at 1.

I thinking getting current is always good but the financial results are still the same loss $200-300k per qtr and no acceptance

Just looked. Couple of observations

1) they are still losing $200-300k per quarter Ignore the income loss from derivative it is non cash

2) they have been issuing freely traded shares from r th concessions no not restricted. My guess is this one s because when you are in default your counterparty won’t take restricted stock

3) they have 6bn shares left to issues on the concerts You can’t get this from reading the 10q carefully

4) the reason they wrote off the derivative liability is that they are converting into equity. If you have a firm commitment to convert you could do remove the liability. My guess is they have an agreement to covert with tonaquint. If they do should have filed it

5) they don’t have anything formal with lrs on acceptance. Would have been required to disclose in the 10q under the disclosure rules. If they have something and filed the 10q without it they have a material disclosure violation

6) I view this as a good step in getting current but should not move the stock.

The derivative change is not impacting valuation and shouldn’t. It is voodoo accounting. The important item is the number of shares issuable to the convert holders not the derivative liability.

The derivative liability vaporizes under gaap when the shares are issued. It is one of the stupidest accounting pronouncements ever issued.

Be careful here. Over $8m of the income is from revaluing the derivative liability on the convertible debt. It is not cash income or cash flow just accounting income.

The real income for the quarter is a loss of $300k which is more or less their negative cash flow for the period.

This report should not move the stock as it is not income that generates cash flow.

I have no idea whether LRS accepted the system. No 8K yet. Not surprising that ECOS hasn't commented since ECOS has never been a pillar of meeting their public reporting obligations. The good news fellow shareholders is if they continue to fail to meet their disclosure obligations, you all have a nice derivative action against the officers and directors. I have viewed this as my ultimate insurance policy

LRS doesn't have to comment on acceptance and probably shouldn't say anything since they would be commenting on a public company other than themselves. In fact since they hold a right to acquire shares in ECOS they should never talk to anyone (other than their own lawyers and accountants) about ECOS.

yes under the SEC and accounting rules, a registrant is required to keep shares available equal to its share commitment under the warrants and the converts. The number of shares reserved will need to be adjusted each time the OS changes. If you look at their latest disclosures a best guess is that they need to reserve 8bn for the converts and 3bn for the warrants. My guess is the convert number is a little smaller, but we need updated Q's to compute this number.

They wouldn't. They would normally exercise the warrants and acquire the shares when the market price exceeds the warrant strike price.

No they are set percentages of the stock. Each warrant is a right to buy 5 1/3% of the then outstanding shares. Each time the O/S goes up the number of shares to LRS goes up.

The MM's need to stay to support the convert holders. They can't get out until they get their shares (in freely trading form) and flip out. They are with this stock well into 2018.

DS

If LRS hires a banker with two brain cells they will tell LRS that ECOS is worth 1 to 1.5 times 2017 revenue which leads you to a number of $1m (the current trading price). All of the other stuff is on the come you would never pay full value for.

If I were advising LRS I would offer to acquire 100% of the ECOS shares for $1m plus an earnout payable over 5 years (payable in cash or shares, though likely cash) based on the profitability of the digester post acquisition. The earnout would have a min-max formula with the min set at $500k and the max at $4.5 to $5m.

I really don't think LRS should or would want the public ECOS shell. Just my opinion.

I would never advise a client to pay $10m for a client with one sale in the bag unless the sale price is all on the come in the form of an earnout.

If you bought them today you might pay them a little over $1m (for the value of their 2017 revenue) and the rest in an earnout.

Though it is a nuance you can't count the warrant shares as value to lRS in a merger. They already have that value in ECOS.

The reason for the increase to 25bn (or 15bn shares) was 9.6bn for the issuance of hares under the convert and (ii) about 3bn to LRS for their warrants (which equal 15% of the shares when they are exercised. That is 12.6bn of the 15bn increase. It doesn't leave you available shares to do an RM.

here is the problem as I see it. LRS is worth at least 5x ECOS (at its current market cap). If they bought all the debt and converted to equity they would own less than 50%. You can't count their warrants since this is a value they already have a right to.

You have to issue shares to cover the shortfall.

One other point they really can't buy the debt without making a formal tender offer under the securities laws. It is a right to acquire voting securities of a registrant made by an insider. The tender would need to disclose any and all of their plans for ECOS.

I would hope not. They have been down that rabbit hole before and they tend not to work well in penny land. Your stock price tends to fall back down falling the RS so it really doesn't help the shareholders.

I just can't see a way to a reverse merger based on their current capital structure. To do an RM in their current capital structure they would need to increase their AS to over 150bn (or more) to account for the market value of LRS.

One thing everybody needs to keep in mind is that at $0.0001 this company is already valued at $1.1m. That is high for a company that has never reported any revenue or profit. Distribution companies trade at 1 to 1.5 times trailing sales in the normal marketplace.

Kevin

They don't have enough available shares to do an RM without doing a reverse split first.

As I noted in an earlier post (this week in response to DS) they really only have 1-3bn shares available to issue above those committed to the convertibles and the LRS warrants. That is not enough to do an RM with LRS.

I think it is quiet as they have little to tell the world. Though there 8K is about to be late. If they miss the date I will add it to my list of disclosure issues. That is a shareholders ultimate insurance policy against officers of the company.

Just wanted to note one thing for the record. The free shares are actually about 1-4billion (or less). Based on ecos financials and disclosures it is likely that 6-8bn of the shares are needed to satisfy the converts (could be 2bn more based on 2016 disclosure). They need to reserve another 2.5bn to 4bn for the LRS warrants. SEC rules require them to have shares available that they haven’t issued to satisfy these obligations. If they fail to have adequate shares available they have an 8k event and a likely default under the contracts which gave rights to these shares (convert and warrant agreements)

Fife if he does this “right” will always keep his shares owned below 10%. He can do this by converting and selling over and then ver. Four flips-and he is out. Fife doesn’t want the shares he wants cash. He will convert and then hope someone else buys what he is selling. The other thing he did sent want is to declare a default on his debt and take possession. He doesn’t want the company or the business just cash

He does. That is why you convert less than 9.99% at a time By the way compliance with affiliate rules not exactly something that is complied with by many in penny land.

The 9.99% is a limit to avoid being an affiliate. The way Fife gets around it is to convert and sell always staying blood w 9.99%. This limit makes the conversion process take longer. The limit doesn’t reduce what ECOS owes Fife. He still gets the economic value of their note from principal plus interest. Fife either gets out with cash from ECOS or by conversion and sale. I won’t be having a fundraiser for Fife He always gets his money before others

My best guess is to clear Fife they have to issue another 6bn to 8bn shares. That is premised on $500k in debt os, the current stock price and a 40% discount from the market price. Just a guess since we don't have any current financials

Unless the short on these trades is Fife. I still think he shorts and covers using two Fife entities. Then he is the bid and ask

if VNDM and/or CSTI are working for the convert holders they will not let go of 1 until they convert and sell.

In Iowa it is case by case (and many times component by component) as to whether an item qualifies or not for the exemption. The only real way to know is to present the idea and project to the Department of Revenue. They tend to interpret the Statute literally and narrowly.

My gut says that since this produces a commercially salable product and handles waste treatment, the entire Bio Art would not be tax exempt.

DTC is a clearinghouse used by public companies to facilitate clearing/trading of stock. Rather than keep detailed books of their holders companies use DTC for this purpose. DTC uses a book entry system to track trades and settles each night with MM and trading firms.

The issuer doesn't need to worry about issuing shares and acting as its own transfer agent. DTC does this for them.

I have used DTC over the years and they do a good job. They tend to want to handle large to midsize public companies.