Here to make money and always win
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Vince
Monday is the due date for the Q. He needs to file his I am late Notice with the SEC. I was interjecting some sarcasm into the debate. I figure he is at least legally obligated to tell the SEC he can't meet his legally mandated obligationss.
I predict MS will surface on Monday to issue a Release.
Kind of dead here. MS silent likely brewing up his next idea.
I am kind of disappointed in MS that he has done absolutely nothing in the face of the FINRA action.
Mike if you are still awake here are some thoughts:
1) Since FINRA won't let you split your shares (which they obviously can and did do), why not go for another share increase. You could use this to flood the market with more stock, buy-out Asher (which cures your perceived or actual FINRA issue), payoff your existing toxic debt and sell some more toxic debt to a new breed of vultures. Instead of 20,000 to 1 reverse split why not a 100x increase in issued shares.
2) Find someone who is investing heavily into environmental facing technologies and see if you can get a JV or equity investment from them. For example look at Yara out of Norway who is investing a lot into environmental facing solutions and has a green platform. They are branching away from nitrogen solutions into all sorts of nice environmental solutions and services businesses and a lot of money. It is easy to figure out who to call here.
3) Merge with a Canadian penny stock company on the TSX or another US penny stock company, squeeze your existing common holder and pay off your toxic debt holders. You could merge in a way that existing ECOS shares are converted at a rate of 1 for each 20,000 and you get what you didn't get form FINRA.
These ideas would let you play the game a little more and more importantly give all of us here on the ECOS board something to talk about.
Sorry I missed what might be the latest ECOS swan dive. I was thinking that all is not lost for the MS/Kwak pump and dump game. Here is my thesis.
1) ECOS merges with a Canadian shelf corporation
2) ECOS lists on the TSX as a technology/R&D company
3) ECOS refreshes its share capital and begins the toxic debt share selling game this time in Canada.
MS don't disappoint me Egger needs a new boat for XMAS
If you read the 10-Q you will see one reference to the stock split that being that it was authorized by the Company. There are no references to FINRA or any disclosures related to the split.
Since the split is a material public event under the Securities Law you would expect to see some discussion that the Company is awaiting regulatory approval (if in fact they are seeking it).
Just another example of how MS and his advisors seem to think the Securities Laws don't really seem to apply to them.
And true to form MS didn't let down his investors. They filed there customary late filing notice with the SEC. They can't RS until this is fixed so we know we have another week or two to wait at a minimum.
http://www.sec.gov/Archives/edgar/data/1290506/000100201414000434/ecos12b25-10q06302014.htm
Today or tomorrow MS will surface to file his timely notice with the SEC that the 10-Q is going to be late.
Now that is the biggest pile he has dropped yet. He can't even lie using some semblance of facts.
FINRA is the non-governmental regulatory body over the securities industry and brokers. They don't govern companies or issuers. FINRA can't tell him to split or not. That is a responsibility of the SEC.
If he doesn't know the difference between the SEC and FINRA who can beleive one other word out of his mouth.
Don't think he has a choice this time. The blog would not comply with the SEC reporting requirement for a stock split. If he did would just be one more actionable SEC item for the old ECOS list.
He will have to issue an 8-K under the SEC rules and a press release. He has four days from completion to file. However, in some cases where it intersects with Reg FD the filing date is sooner (normally contemporaneous with the event).
I would argue that this is material market information and likely requires an 8-K as soon as it becomes effective.
Yes I think he is. By analogy if you jump from an airplane without a parachute you will eventually crash and die.
Yes I think he is. By analogy if you jump from an airplane without a parachute you will eventually crash and die.
Tonaquint is Fife, so this 13-G is for Fife and all his related companies. The 13-G rules require a filing by the 15th day of the month following the quarter so that is all for this quarter folks. Since Tonaquint is below 5% they might not file again.
Based on the volume in this stock in the past month, it will take Fife a couple of years to off load his position (split or not).
Think the time has come to put a fork in it and turn out the lights.
Guys Asher's filing says they sold all their shares. They filed as a 5% shareholder last year and are no filing to say they sold out of their position.
If you read the 13-G Asher is telling the world they have voting power over and hold 0 shares of Ecolocap. They used to own 138m shares per their previous (October, 2013 filing). What they kindly have told everyone now is they have already sold out of ECOS.
The only two other 13-G filers were Tonaquint and AES Capital.
Don't worry about Asher selling they already bailed from the ECOS ship.
There is a striking resemblance in the video to MS. I am thinking you might have seized upon the next great ECOS invention.
I have been pondering something for a long time about MS intentions. It seems to me that if he really cared about the Company and the shareholders, he would think about doing the following:
(i) take his and the Kwak's super voting shares and convert them into common. One of the real problems with this Company is no matter how poorly they run this they has the voting power to continue to perpetuate the insanity through their voting rights; and
(ii) convert his deferred salary in the Company into common stock of the Company. If he believes that there his a future in this Company, then what better way than to put his money and the rest of management's money where their mouth is. I can't tell you the number of small VC companies that do just this to align management with shareholders. If they want to be paid they deliver for the owners.
Just a couple of thoughts.
Based on the ask looks like somebody thinks the rs happened
Vince
After the RS MS will attempt to suck new unsuspecting investors into the fray as he did many of us. I want to make sure that before he has his chance that there are enough rd flags raised that the next group of souls who put money in can't say they weren't warned by the investing public.
1) Failure to meet the requirements of REG FD and the disclosure requirement of the 1933 Securities Act- Both of these rules require full and complete disclosure of all relevant facts in order to make it possible for an investor to make an informed investment decision.
Here are a couple of examples of where MS and the ECOS Management has clearly failed to meet even the spirit of these rules.
[a] CVP Major Investment- Under the disclosure rules a company like ECOS should have disclosed the details of the investment (debt versus equity, conversion terms, interest rates) when it announced the investment. To do otherwise is a clear violation of the disclosure rules and appears to be intended to deceive investors or potential investors.
Korean Chicken D-20 Contracts- A company such as ECOS with no revenue which announces a "contract" which by their PR states it will provide substantial revenues, should disclosure the material terms of the contract (every revenue contract ECOS signs is by definition material since they have no revenue). Material contracts should be attached to the registrants filings and disclosed. They have done neither.
[c] Fuel Emulsions Contract- Lest we forget this was touted not long before we went chicken farming. They announced major contracts with FEI (who was their distributor) to supply units in Chile. No disclosure of the contract terms (which at the time would have been a major contract) or the standstill. No revenue 2 years later.
[d] Salary Deferral- In his latest blog MS tells the public management is and has been deferring their salaries. Since in the current operating world of ECOS this is a material cost (if not their largest cost), it would have been incumbent on MS to have told the market. You do not see it disclosed in their Q1 10-Q or their 2013 10-K. You can find an increase from 2012 to 2013 of $90k in accrued compensation and a small increase in shareholder loans. So if it was deferred last year it is buried in the books. the Q1 10-Q also does not lead to the conclusion or disclosure that salaries are being deferred.
[e] Use of Blog- In 2013, the SEC announced rules that companies can use social media like blogs to communicate with shareholders and potential investors. However, in allowing the use of things like blogs companies are required to comply with the disclosure rules. Therefore, while MS has avoided using PR's to announce things his use of a blog has the same legal force and effect from an SEC disclosure perspective. While many on the Board have complained about the absence of PR's rest assured that his clumsy and incomplete disclosure using the blog gives him just as much legal liability.
I still stand by long standing thesis that MS is not a crook he is just the worst CEO I have ever seen in 35 years of corporate experience. He should not run a company as he has proven by his actions in running ECOS into the ground. The only solace is that with little volume in the stock, the Toxic lenders still in ECOS (such as CVP) may well have no exit. I can only hope they got personal guarantees on their loans.
Jack
Unfortunately in the US in 2014 it is still very possible to have a financial scam. As long as people have dreams and aspirations of wealth and there are people who will pray on these aspirations, scams will and do happen. In fact when the stock market is hot, the breeding ground for scams is at at its best.
Second our legal system does not address all scams and in fact only a very few. Our SEC does not have the resources to prosecute every unscrupulous company. It can only over time deny them access to public listing and this takes time. Unfortunately, it is as easy to form a penny stock company and sell shares as it is to get a driver's license (maybe easier). As long as you pay the listing fee you can list almost anything. The SEC does not have the resources to inspect every claim or ensure that every disclosure meets their rules. Every day the SEC is announcing an enforcement action against some person or entity. For every one they address a couple more spring to life.
As to ECOS, their technologies are not that unique. They are in fact a recitation of many technologies which are known in the marketplace.
- Using Algae to produce fuel is a project that the oil companies have looked at for years and decided they are not commercially economical. I first saw this idea in Norway over 20 years ago.
- Biodiesel applications are numerous. I remember back in the 1990's looking at a company that was going to create auto and truck fuel from tires common waste.
-Even D-20 is not proprietary. The Chinese have been studying emulsified fuels for decades. There are some whitepapers that were written over 10 years ago that talk to different approaches to fuel emulsification. It has greater application as a NOOX inhibitor than a fuel replacement. That being said the trucking industry in Europe and North America have decided that urea after-treatment is more cost effective to reduce NOX.
I, like others, have followed the saga of ECOS. My thesis is that this is a company with the attention span of a gnat and with absolutely terrible leadership. It moves form idea to idea never taking any one idea to the finish line. It has now taken to financing itself with Toxic Debt Financiers. These are the payday loan companies of corporate finance. If you pay them 50%+ returns they will lend you money for 3-6 month terms. You rely on selling and issuing more shares to pay them off. That has gotten ECOS to where it is today. The days are behind this company when legitimate investors should and would invest.
If management really cared about the shareholders it would immediately convert their deferred salaries and loans into shares of the company. This would align their interests with shareholders. With the financial overhang of salaries payable and shareholder loans, this is a company nobody should ever think of investing a nickel into.
Sorry for the long response. Do your DD and don't make the same mistake that others have done by trusting this management team.
He deferred the spell checker together with his salary and his common sense
The 3/31 financial statements are prepared under US GAAP. Under US GAAP the Company incurred a legal obligation to pay $167k to its employees and recorded a payable for this obligation. So while they are deferred it is a priority obligation of the Company (in a bankruptcy sense) standing before other creditors and the shareholders.
If MS and the rest of the gang actually cared about anything other than themselves, they would defer their salaries for shares of the company's common stock. This is a common practice among true development stage companies (putting the management at the same trough to drink from as the shareholders).
Here is an interesting thing to look at about what MS is doing. They have an obligation to pay themselves $167k which after all of the dilution will still be an obligation to pay them $167k. In other words, the guys that ran this company into the ground actually get paid full value while the shareholders slowly but surely get diluted away. Better than actually earning an honest living.
Here is my take. This is a company with no true proprietary products which is run by a person who has some vision but completely lacks the focus and discipline to actually run a company.
Here are some things to take into account
1) D-20 is not that unique. Others (in the US and overseas) actually make diesel emulsified fuels today. I have actually seen diesel emulsified fuel being made at two major college labs more than three years ago. It is not an answer to fuel consumption it is an additive pure and simple and this is really an additive company, not a technology or energy company.
2) This company compeltely lacks focus. Read its website. MS has talked about algaue, biomass, lithium, d-20 to esterhol (and many others). All of these are ideas that are in the public domain (Exxon was working on creating fuel from algae years ago and lithium as a fuel source goes back over 25 years). Over the past few years MS has touted them all. When you have little or no money to exploit an idea you focus on one and try and do it well. This is the proverbial through a lot of s_ _ t at a wall and hope and pray something sticks.
3) MS is a truly poor manager/leader (and poor may be giving too much credit). He jumps from one idea to another (in the four years since I first met him he has had at least six different great ideas) and has not anticipated the market in front of him (think orifices not bird flu).
4) Every good crisis manager will tell you is that when times are tough you communicate even more. You let your shareholders and the market know more about what you are doing and why. You don't just go silent and drop the periodic proxy into the hopper.
Now let me tell you a story of what great leaders with ideas and passion do. Back in 2003 I had a colleague/client who had an idea for some great technology and vision, but disenchanted shareholders and creditors. We decided to try something novel. Management agreed to forego its salary (in exchange for stock in the company)for as long as it took to get the product to market and have operating cash flow be positive for 3 consecutive quarters. By doing this management aligned their interests with their shareholders. It took less than a year to get the product to market and 18 months to achieve 3 quarters of positive cash flow. Last year the Company was sold for over $600m to another technology company and management made back 20X their forgone salary. I related this story to MS awhile back as an idea to allign himself with his shareholders. It was like he didn't hear me.
If MS, Kwak and Egger wants to show the ECOS stakeholders they care maybe forego your salary for six months to a year, maybe actually issue a periodic progress presser and maybe just maybe focus.
I do find this whole thing to be a combination of depressing and disgusting.
After the split, the Big 3 (Siegel, Kwak and Egger) will own combined less than $10,000 in ECOS common stock, control over 98% of the voting rights and each get paid $100k per year. For example after the split Siegel will about 12,300 common shares worth about $2,600.
Kwak lives in a 5,800 sq foot home in the Northwestern Suburbs of Chicago and Siegel lives in a nice home on the tony Northshore of Chicago and of course Egger bought a nice boat courtesy of the shareholders.
This company is a classic misalignment of interests. The Big 3 have no investment in this Company other than to get paid their salaries through issuing toxic debt. If they really were interested in creating shareholder value they would exchange their salaries for shares of ECOS which might create an incentive for them to create some shareholder value.
MS really didn't have 2.5bn shares left in the kitty.
If you take the $794k of convertible debt and converted it at the market at $.0001 and then factored in the discount of 50% he was out of shares and then some. Effectively to eliminate or convert the toxic debt takes between $1.3m and $1.5m in shares
The toxic debt holders still get their conversion deal so they will still convert into the same cash value so the RS is a non-event to them.
If you took the outstanding convertible debt and converted it into shares at 50-60% of the market price, you would find out that MS had no shares to issue. Since he already used that cash (except $200) you start the game over. Print more shares, issues more convertible toxic debt and get more cash.
Someone might ask why a toxic debt financer would give him cash think of it this way. You give MS $100, he agrees to pay you 810% interest and when you convert you get shares worth almost $200 (taking into account the discount). If you look at CVP for example, it would appear all MS asks is that the toxic debt provider not convert their shares for 60 days. Not a bad period to wait t get a 108% return.
Vince you are looking at it from the wrong perspective. Put yourself in MS shoes for a minute.
ECOS is his job. It pays him $120k a year so he can live in his Northfield, Illinois home and put his kids through Chicago Northshore schools. That all takes money.
ECOS needs to issue shares to pay him money to support himself. If you stop the share issuance machine he would be out of work, he might not be able to live on the Northshore and other terrible malladies might befall him.
Putting yourself in his shoes, of course you would do an RS.
The preferred voting power is intact. The preferred holders still hold 100,000 votes per share. The preferred are designed not for economic value, but to leave voting power in the hands of MS and Kwak. In fact after the RS the preferred have even a greater percentage of the voting power.
I remember a conversation I had with MS a few months ago where he said when I asked about an RS, you would never RS if you don't have revenue since the stock price will decline back to its pre-RS level. I guess he changed his perspective when he ran out of comon to sell.
Doon't worry about the toxic debt holders, their conversion ratios all adjust as a result of the RS so they still get the well above market returns they always got.
Try this article. Panasonic is actually investing into the Tesla battery manufacturing operation. Tesla is looking for investors for their giga plants, not technology. Technology they already have.
http://online.wsj.com/news/articles/SB10001424052702303749904579575602287335832?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702303749904579575602287335832.html
Tesla was manufacturing the Toyota batteries. Toyota is moving away from lithium ion to other power sources.
Another company based in California Simbol is looking at the Tesla battery plants as well.
FYI my note was a bit of satire. Consistency like you get from ECOS is at best a joke.
One thing I look for when I invest in a company is the consistency of their management. It is a sign of good corporate process and order.
MS adopts this approach in running ECOS. Every SEC filing date he consistently informs his shareholders and the SEC that he will be late in meeting his filing obligations.
Couple that with the fact that he consistently dilutes his shareholders and consistently fails to deliver on the business. What else could you ask for.
Here is your ECOS history book for the coming 3 months. I know Psychic Mary (who also counsels MS) told me so.
1) Prior to 5/31 ECOS files (albeit late) its Q1 10-Q. The report says nothing of substance about the little chicakens in Korea.
2) Prior to 6/30 MS issues a new blog saying chicken prospects look good and the spigot is about to go on. The blog tells us two new new things (i) Esterhol testing has gone well and we are rolling it out to select municipalities in the midwest; and (ii) in order to meet the demand for lithium batteries (quoting Tesla's announcement) the company is expanding its lithium battery business. After all these businesses are all complimentary as the Company is really an additives company.
3) Prior to 6/30 ECOS files a new proxy increasing the A/S from 10bn to 15bn. The proxy will note that the company intends to use this money for continued expansion of D-20, Esterhol and Lithium.
4) Prior to 6/30 ECOS issues more convertible debt which by its terms is convertible no sooner than 30 days into issuance at a conversion rate of 50% of the stock price. The Company raises $300k using this technique and has enough money to run itslf into Q4 and telling its tale.
And you say how do I know this.... Why did the chicken cross the road? To get some more ECOS shares.
I did the H5N1 strain hit North Korea not South Korea. There are about ten different strain of bird flu in Asia now. The H5N8 which is in South Korea is not as likely to cross species or be as severe.
MS cant even lie well in his blog. The current avaian flu outbreak is H5N8. The more dangerous H5N1 flu outbreak was in 2008.
The 2014 flu is a very different strain of flu (not anywhere near as bad in Korea as the 2008 outbreak). Only one cross species case of the flu has been reported where it moved to a dog over a month ago. The reported cases peaked more than 6 weeks ago and have been coming down quickly.
The flu has migrated north to Korea and Japan (whih isthe normal pattern with avian flu).
If youare looking for a way to guage the impact of the avian flu in Korea you should check out the Yum Brands conference call for Q1. It is on April 23rd. The word on the Street is that the 2014 outbreak in China and Korea did not impact KFC Asia anywhere near a much as the 2008 and 2013 outbreaks. Their restaurants saw some slowdown but are back selling chicken in full force.
I know CVP and D-20 were disclosed in an 8-K and PR. That ios the root of the problem. Once you deem an item worthy of an 8-K it is deemed to be material to the registrant (ECOS) and ECOS is required to include it in periodic SEC filings for the relevant reporting period. Under the SEC rules ECOS should have reported the CVP transaction and its details in the 10-K. Also since they have told the market though the blog of the importance of D-20 there should hav ebeen much more disclosure about D-20 and their current project (Korea).
Their disclosures and their 10-K are clearly written by someone who has no idea what the SEC disclosure rules are. I know this is a development stae company but that is no excuse for ignorance of your responsibilities.
CVP is Tonaquint so it is sort of there. If it is a significant investment as the earlier PR says, you would expect disclosure of the terms of the investment under the SEC disclosure rules.
The absence of D-20 and Korea is amazing. If it is so important and real it would seem to merit disclosure under the SEC rules.
Honestly this is a pretty bad attempt at attempting to comply with the SEC disclosure rules. Knowing that it comes from the same people tht run ECOS on a day to day basis only makes it easier t rationalize.
Here is some information I extracted from the 10-K to help everyone guage where ECOS is
Total O/S Share Count at 3/31/14 6.5bn
Item 12- Share O/S at12/31/13 2.6bn
NOTE 16 – SUBSEQUENT EVENTS
During the first quarter of 2014, the following convertible debt owners converted loans plus accrued interests into common shares of the Company
Loans Interests Common shares
Converted Converted Issued
197k 13k 3.9bn
It would appears when you read the debt disclosures together with the equity disclosures that AES and AGS have converted all of their debt and received shares. Asher on the other hand appears to have 9$0k in convertible debt remaining.
This leads me to think that MS runway is not very long. He may only have $100k in capacity for share issuance at best.
Couple of Quick updates
1) The avian flu in South Korea is abating significantly. The government appears to have it in check. The more severe outbreaks are now in North Korea and China. Most of the farm level quarantines in the South have been lifted and many farms are actually back in production. If this is like 2011 (which was a more severe outbreak), the chicken farmers should be back to normal by mid May.
2) Did some quick math on ECOS, is capital structure and its cash situation. It would appear if the O/S are really 7bn as of 4/2 they may only have another 0.5-1.5bn (likely closer to 1bn) shares that are not spoken for. Some of the unissued shares are already pledged for existing convertible debt. If I am right they have in the best case only about $60-180k in firepower left in terms of equity issuance. 1.5bn shares times the share price(.00001/.00002) times 50-60% (which is the conversion benefit given to convertible note holders).
Leads me to a couple of conclusions
1) They likely need to produce revenue in May-June to avoid running out of cash.
2) It is not out of the question that MS may actually increase the A/S to survive. Another 5bn shares could get them up to $300-500k to survive. This would buy him another 6-8 months to tell his story.
MS if you are listening, might actually lend you $100k to survive if you could just be a little more transparent about the company.
In the spirit of sharing I called some of my contacts in Korea to learn some more about the current bird flu outbreak. Having spent over 20 years in the ag space and a fair amount of that time in Asia, I thought I would see if I could get some on the ground info.
The bird flu outbreak is not limited to chickens, but has also impacted ducks and migratory birds. It does not appear to have crossed over into other species including humans. The government seems not b concerned about human cross over at this point.
1) The first reported case of bird flu in Anseong (where ECOS was testing equipment) was in the 3rd week of January (around the 24th of January). The government placed some restrictions on the impacted farm in that area as of that date and culling of flocks and sterilization of the farm and nearby farms began.
2) In the the first couple of weeks of February a couple of additional cases were reported in Anseong with the by the 25th there being about five farms which had reported the bird flu or similar symptoms. Additional culling of flocks and sterilization was conducted in response to this event.
3) In March a couple of additional cases were reported in Anseong and the government further restricted movements within and without the province. Culling and sterilization were continued.
4) In order to control the spread of the virus the government has been culling flocks at impacted farms and those within 500-1,000 yards from the impacted farms.
5) The strain which has impacted Korea is H5N8 which while dangerous to avian populations has not in the past posed a threat to humans.
6) There are three other strains of avian flu which have impacted Southeast Asia this year primarily China and Vietnam. One of the strains which impacted China has crossed over to humans.
7) The government beleives that it is on the backside of the flu outbreak and cases have begun to drop in the last two to three weeks. However, travel restrictions to farms in impacted areas will likely continue until the end of April.
8) This is really not that unusual an event in Korea. They have had outbreaks of some form or another almost every year. In 2011 they had a fairly large outbreak (bigger and more dangerous than the current outbreak) which began in December and continued through March. In 2012 they had a mild outbreak in March which was of very limited duration.
9) Korea tends to have outbreaks of avian flu in the February/March timframe almost every year due to the migration patterns of certain birds. The virus tends to be spread by migratory birds who land on the peninsula in this time frame. It generally follows a month or so after similar outbreaks in China.
10) Three impacts have been seen in the markplace.
Chicken and duck consumption have declined by over 75% since the beginning of the outbreak (some figures have it higher). This happens in Korea every time there is an outbreak of this type. The impact in 2011 lasted for about 9 months before demand reached pre-flu levels. Koreans have a long standing pattern of switching to beef and fish for some period following an outbreak. This has already been seen in beef prices in Korea.
It is expected that chicken and duck production will not pick up until late May early June. This has been a consistent pattern after each outbreak.
Chicken and duck exports tend to decline in the 12 months following a more severe outbreak and imports of chicken tend to increase to fill the market.
If you read the last 10-Q the company allows convertible notes to be converted during the year after issuance into shares of ecos. The conversion is at 50-60% of market. The CVP and fife notes have never been filed by ecos or been the subject of a proper 8-k filing. My guess is they have been converted. Since the stock has been trading between .0001 and .0003 any conversion is in the money. It just seems to me as we get close to the 6 month anniversary of the CVP transaction don't be surprised if CVP is already cashed out.