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for those that have been around ECOS for years (like me) we used to attribute the gaps in new cycles to the fact that MS was down at the Boca Ciega retirement community for a shuffleboard tournament. Could be that this management system is still being deployed by the new team. I would check the Boca Ciega website for their shuffleboard schedule. We are in the beginning of busy season for shuffleboarders.
Kevin
The SEC requires a public registrant issue an 8-K when it takes corporate action to repurchase its securities and then follow that up with actual purchase information on 10-Q's and 10-K's.
If a company goes into the market and buys back stock without filing an 8-K, its officers and directors (they are the same in the case of ECOS) would be subject to civil fines and the Company would be subject to a corporate level fine. They also can be subject to discourgment of any profit the Company makes. The SEC views such an action to be akin to insider trading.
The *-K rules extends to affiliates of the Company so you can't use a 5% shareholder, another shell company or a relative to do this. I know a nice person who was debarred from serving as an officer, director or adviser to a public company for doing something quite similar to this.
Adam
I still think this may be someone like Fife flipping shares between two of his affiliates.
Sell them from one Fife entity to another on Wednesday. Then cover the short over the next few days by reversing the trades. All can be done by block trade and effectively off the exchange.
The other thing that makes me think something like this is going on is that nobody has filed a 13G for an ownership percentage over 5%. Would need to file if the same affiliated group of companies is moving shares within the group.
Kevin
Can't be either
1) If the Company buys back stock it needs to take a corporate action to authorize the buyback and then file an *-K announcing the buyback. Since neither happened it can't be a buy back.
2) Not the LRS warrant either. When LRS exercises the warrant the shares come from the Company's authorized but unissued shares and not the market.
I still think this may be an mm flipping shares between mm's for the same shareholder. Shareholder buys and sells shares between two of its affiliates. later they will reverse the trade by selling the shares back.
Maybe because the trading in the otc isn’t always governed by market news. This stock seems to be being played by mm’s and in my opinion some nice toxic debt holders.
I will reiterate a theory I have posited before.
The toxic debt holders have conversion ratios built off of discounts off the current trading price (40-60% of the current price). If they keep the stock low they get more shares (albeit restricted) on conversion/settlement. Keeping the stock in the .0001 and .0002 range means they win if this stock later takes a run if even to .0005.
It doesn't take much money to keep it depressed. Why you could even flip blocks to yourself and keep the price where you want.
While FINRA is the regulator of OTC stock splits their authority to regulate actually is delegated from the SEC. The SEC Authority comes under 10B-17 (the anti fraud provisions).
As part of its grant of authority FINRA in 2010 adopted Rule 6490 which governs corporate actions regarding stock splits. FINRA has the authority to block a stock split (and a number of other corporate actions of an OTC entity) if it believes not all corporate actions required to carry out the split have been properly taken or there is potential for fraud. The grant of discretion is broad and difficult to find abusive, when exercised.
FINRA's authority under 6490 has been upheld by Federal Courts.Rule 6490 authorizes FINRA to not process a request if it determines that the request is deficient, and not processing the request is necessary to protect investors and maintain orderly markets. FINRA may decline to process documentation if it has actual knowledge that persons related to the corporate action to be taken may be involved in a potential for securities fraud. FINRA need not prove fraud only have a reasonable good faith belief that it might occur and require proof that the corporate action will not result in fraud. Federal Courts have determined that Rule 6490 is valid as is the grant of authority from the SEC to FINRA.
There is no express 1 year rule under 6490. FINRA would need to determine under its broad authority to regulate the OTC that an increase in A/S followed by an R/S are intended to defraud or not properly carried out.
I would argue they don't need to exercise the ECOS warrants as they can control the technology at the JV level. Why throw cash after warrants when you can get what you want for less cash outlay under the JV agreement
Merger Fans LRS doesn't need to merge with ECOS or buy ECOS to get control of the technology for the digester. LRS can get control of the technology and the jv by just exercising its rights under the jv agreement
(i) LRS currently has 5% of the Bio-Art JV from the initial formation (per Exhibit to the JV Agreement);
(ii) LRS gets another 5% for each digester they buy up to 8 for no additional purchase price. If they buy 8 machines they own 45% of the JV (Section 5.7(a) of the JV Agreement);
(iii) Once LRS gets to 45%, they have the option to acquire an addition 6% from the JV (not ECOS) for cash (FMV price) (Section 5.7 (b)
After they exercise their rights as set forth above they control the Board and management of the JV and the digester technology and rights.
Once LRS bought the first digester they controlled the Chicago area and a 180 mile radius around it for digester sales.
As icing on the cake if anyone else tries to buy ECOS, LRS can buy the ECOS JV interest for fmv. A buyer of ECOS only gets ECOS without the digester rights.
I think the real LRS play it to take control of the technology under 5.7 and leave ECOS with 49% of the JV which means no merger.
Actually the proposal is to establish a waste disposal site, including equipment. I read the bid proposal documents today and it includes organics (like food waste) as well as trees, shrubs,etc. My guess is that ECOS would need to partner with someone to own and operate site and just provide equipment.
The bid requires a $10k bid bond and a $1m bond (in favor of the county and the municipalities) from the lucky entity that owns and operates the site
Dutch
Whoever runs their twitter account obviously has very limited knowledge of the securities disclosure rules. Liking and posting on twitter was determined by the SEC a number of years ago to be covered disclosure by a public company. Social media accounts of a company are covered by the same rules as regular information dissemination by a public company. Liking a post which infers the market is being manipulated/suppressed by MM's and big news is coming likely runs afoul of those rules as it could be viewed as promotion of the Company's equity.
Things are not as bad as you think.
$10.4m of the liabilities are the convertible notes and the derivative liability associated with the conversion of the notes into equity. When the notes are converted, the liabilities will go down by $10.4m, the company will recognize book income equal to the reversal of the derivative liability ad retained earnings will increase by $10.4m.
$3.5m of the remaining debt owed by the Company is owed to a Company controlled by the Kwak's and the other ECOS officers (a fair amount for accrued and unpaid salaries and shareholder advances).
There is about $1.2m which is really owed to 3rd parties.
Not pretty but not quite as bleak as the picture you painted in your message.
Convertible notes payable
1,040,838
Notes payable - related parties
2,335,959
Derivative liabilities
9,394,852
Accrued expenses and sundry current liabilities - related parties
1,178,411
Accrued expenses and sundry current liabilities
1,113,887
TOTAL CURRENT LIABILITIES
15,238,947
Everybody calm down. Whenever they issue their 10K's and 10-Q's they should disclose what they issued shares for whether debt repayment or operating expenses. My personal guess is that they issued shares to pay operating expenses and to pay for the system they installed at LRS. My best guess is that system including installation costs is about $600k. They likely needed to pay for the equipment at or around the time it was imported. That would translate into about 50% or more of the share issuance.
My guess is that liking this likely violates the disclosure rules. Retweeting and Tweeting by a public company is the equivalent under the securities law to a statement made by the company. Liking is an act of endorsing the item in the original tweet. My hope is somebody advising ecos told them the like puts them in a position where they either needed to unlike or issue a or regarding the item in the tweet
Adam unfortunately you are wrong. Insider trading requires an overt act of trading or attempting to trade while possessing non public information
What u may be thinking about is disclosure of non public information by a public market participant which is covered by other portions of the Securities law. Since lrs is publicity company and likely not an affiliate of Ecos a disclosure by them that they don’t intend to merge wouldn’t violate the discslosure rules.
Take this from someone who has practiced Securities law for over 35 years for public entities.
Ecos on the other hand disclosing their plans to build machines without filing a pr or 8-k comes dangerously close to stepping on the disclosure rules. In pinky land the disclosure rules would appear to be an after thought
That is very different than promoting ecos stock.
DS I would hope you are wrong. If LRS was involved in the promotion of ECOS stock they would be an affiliate under the SEC rules and be be subject to disclosure and reporting requirements. I don't think their lawyers would allow tem to fall into this murky area.
I think it is safer to say that LRS is promoting their business of waste conversion and their use of ECOS equipment.
Adam
Be careful here. The 14C says they plan to issue restricted shares on debt conversion. That is the Company's plan.
Fife's note agreement does not say he gets restricted shares on conversion, it says he gets common shares of the Company.
The issue is that they can't issue that many unrestricted shares
They need Fife to agree which I am fairly confident they can do for some more juice and some registration rights. JMO
Monica Dunn of the Foundation announced in March 216 27 priorities for their initiative. Two were anaerobic digestion and composting
DS the Foundation just started a US imitative to reduce and repurpose food waste from restaurants and gross very stores. They are starting with NYC and San Francisco. One of their aims is to reduce what goes into landfills. They are focused at technology and education.
Of course there are other options like a grant from the Rockefeller Foundation Yield Waste Initatve. They are looking to invest in innovative technologies and practices on food waste and recycling. This would appear to be right up their alley.
DS I am 150% confident that LRS did not exercise the option and the 13G only disclosed the existence of the warrants and the potential voting power. My opinion is based on 35 years in f being a lawyer and having filed a few hundred 13G forms.
That filing doesn’t mean they own the shares. Under the Securities Act they are reflecting their potential ownership interest if the option was exercised. fife filed similar forms when he entered into the convertible note deals
DS I am very confident LRS has exercised any of their shares. They would have needed to file an updated SEC report disclosing they were a 5% holder. Nothing filed and they have very competent counsel so I think the difference can be traced to something else
Yes billions. A Dr Evil type typo
Kevin the LRS option shares are part of the reason for the increase in AS. They will increase OS as Ecos issues them to satisfy the exercise by LRS and are not previously issued shares. If everything in the 14C happens here is the way the OS will look
Current OS. 8.7m
Debt Conversion. 9.6m
LRS options 3.0m
Total New OS. 21.3m
Kevin. I am very certain that none of the LRS options have been exercised. Ecos would have had to have made an SEC filing for the issuance. Since none has been made safe to assume options not exercised
DS in addition Ecos is outsourcing the manufacture of the system the install and the testing. The issue is more about manufacturing and install bandwidth of their contractors. The only issue for Ecos is having the cash flow to finance the cost and of acquiring the component parts of the system. If they have firm orders they may be able to finance the unit cost
Can’t do the AS until the financials are up date. FINRA will not approve before then. Gating item is the refilling of 10K for 2016 and the 2017 10q’s. They may need to update 14C if derivative liability changes materially.
As I said in an earlier post they may have a few more derivatives to book then the LRS stock option derivative. It would seem the right of LRS to increase its stock ownership in the jv is a derivative under gaap that they need to account for.
Finally they need Fife to take restricted shares instead of freely tradeable shares. His agreement talks about payment of the loan plus accrued interest or payment in shares issued as a discount to market.
I think the increase in AS is now a 2nd half of October event.
Just went on field trip to new office. The space is a condo office warehouse space.
They don’t have as much space as the diagram shows. They have about 8 offices (10x12) and a small storage space. It appears that most of the offices are empty That isn’t surprising since they just announced office
The front and back are actually separate units with a common loading dock to be used by all tenants in the building There are 12-15 tenants in the building
Still a big improvement over the single desk in Barrington
Kevin in California fertilizer registration requires you pay a fee and file a form. There is no pre certification for the product California does not require lab testing like other states. just providethe identity of the manufacturer or distributor.
If they are going to market with certain nitrogen, phosphate and potash content they would need to rovers de proof of that when they sell.
Not that excited about California as they are not going to ship from Chicago to California. Freight costs would Kill them
Pistol the language is required disclosure from an SEC registrant the the market that their financial statements can no longer be relied upon due to an error. The derivative ve issue that they are restating for is not that uncommon an error. They made a similar mistake on the derivatives for the convertible debt
They may have some other derivatives in the jv that they should consider. The rights given the LRS to acquire additional jv equity is likely a derivative under gaap and likely generates additional expense. Since these rights were granted in 2016 they should be reflected in the amended10K.
The other issue they need to consider is whether the jv needs to be proportionately consolidated with ecos under gaap. Looks like they missed that in their 10K
I know MS used to read this board so maybe he will take note
No they will control the jv.
DS. Couple of clarificaations
The Kwak's and Siegel control voting power thru preferred. The 16% held by LRS thru warrants haas no real vote my power. Best way to see this is to read 14C where Kwak's and Siegel approved increase in shares based on their preferred holding.
All of the profit on the first 8 machines is contributed into the jv and not held by ecos. Ecos. Spiral account in jv increased for its profit contribution. This means cash flow is also in jv. Ecos gets a share of compost income when distributed by jv
Kenny was talking about the ECOS space in Barrington. They literally had one desk in the HanscomK office They now have something a little more respectable. I would be happy to take another field trip to measure the space if it would end this discussion
I realize that but the valuation of ecos will be driven in part by their share of profits whether contributed into bio art or retained. Ecos at some point will be valued based on their profitability and operating cash flows e just like most other stocks. The contribution into the job is viewed as a financing activity
Guys the one thing that I think holds the stock back is the the number of o/s. After conversion to f fife debt the o/s climbs to about 17.5bn. There another 3m shares reserved for the options granted to LRS.
If you assume this stock trades at a penny you are talking about a market cap of $170m. Not realistic Until they generate a lot more sales, profits and cash flow. Even at $0.001 you are talking about a market cap of $17m.
I hope I have am wrong as I have 6+ years in this stock
I think we are stuck in this range until after the debt conversion is done. The market is not going to move until Fife's debt is. Inverted to shares. He has an interest in keeping the share price down until after he converts. I think ecos is a 3
I also think that until we get visibility on how much ecos made on the first machine there is no catalyst. My best guess is they made between $50k-$100k on that machine.
They have not been the best at complying with SEC disclosure rules. This is just another foot fault in their securities compliance
Boys boys you are both sort of right
Ecos is the US distributor for the digester in the USA
Under the LRS deal Ecos can't put another digester within 180 miles of LRS without first Offering to lrs
This gives LRS control of Chicago, most of Wisconsin , western Michalowski fan and Indiana from Indianapolis north.
If Ecos wants to place more machines in Chicago (outstanding of an LRS facility) it will need to give LRS some Juice in that deal
A good way to think about this is that Ecos gave away some of its Midwest rights in the LRS deal.