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Kenny
I have to disagree with you here.
The JV is an affiliate of ECOS under accounting and SEC rules. They will need to report the JV financials and underlying JV information (like sales revenue, costs, material agreements, etc.) in their SEC filings (either by full consolidation with minority interest or proportionate consolidation). So ECOS will need to tell their shareholders all about the JV with LRS. Whether they actually comply with the disclosure rules is a different question.
Guys let's understand something basic here.
There are five ECOS employees (Jeung Kwak, James Kwak, Mike Siegel, Kevin Marks and Joe Mure). Four of the five also work for HanscomK (exception is Siegel). Mure and Marks also works for a digital media company called JKB Solutions (which is also located at the same address as Hanscom and Ecolocap). Mure also works for a virtual web company called Chicago Ranking.
Nobody is working full time at ECOS so everything is going to take a lot longer than all of you would expect. Also since they all are working part time it is going to take a lot longer to get questions answered and emails returned.
Rumor is it was just the one on California avenue. It was still a lot of sh!t for one digester to compost.
This just in.
Financials were about to be filed and PR about to be issued when Kwak inadvertently dropped them into LRS digester.
Kenny
I don't know that ECOS has issued convertible preferred. I know a couple of other tickers that have used them now for a couple of years and have been able to deliver legal opinions that the shares were held for investment purposes.
Siegel and Kwak would never sell their preferred as those shares have the super voting rights. They would be giving up control which they will never do absent a buyout. The existing super voting preferred are not convertible into common.
Based on the transfer agent reports it looks like no new shares have been issued in a long time. What we don't know is how much of their holding Fife/Tonaquint has liquidated. Reember Fife has shares that he has held for a while so he should be able to get a legal opinion on investment intent.
As an added bonus went by ECOS at 1015am. Three cars in the parking lot a pick-up, an SUV and a compact car. Lights were on in the front of the office, but the door was locked. Nobody answered the door when I knocked though there were people in the office. I view this as evidence that they are still alive and doing something.
Don
They were open, the lights were on and the parking spaces filled when I went by the office last Thursday morning. I will go by tomorrow morning again. For those that doubt that they have vaporized (or the Kwak's don't exist) happy to post pictures.
Corn farmers use ammonia pre-plant which is 82% nitrogen and urea and UAn post plant which are 46% and 32% nitrogen.
The ECOS product does not have enough nitrogen content to act as a substitute for traditional fertilizer. The ECOS product is 1-3% nitrogen.
DS is right. The two systems are different in process and application.
Anaerobic systems are primarily used to convert waste into power (electricity). It is sealed process which creates heat from decomposition relying on the absence of oxygen.
The aerobic system is used to convert waste into a fertilizer like product and uses oxygen to decompose organic matter.
The MSU article notes that they are using it as a power source for their zoo hospital. The anaerobic digester use for power has existed for years in Europe, especially in the UK. The digester needs to be at or near an electrical need or consumer to be efficient. Anaerobic systems have caught on in the UK since they don't have natural gas as a power source and most of their energy consumption is priced on an oil linked basis (costly).
There is also a third technology which has sprung up in Europe which converts organic waste into methanol. The company which developed this process is BioMcn which is part of the Dutch company OCI.
DS
Are they using convertible preferred instead of notes to dilute? I have now seen a couple of tickers where former toxic note holders have switched to cumulative preferred convertible into common (at a discount). They are betting that if they hold onto the preferred for six months they can get around the new investment intent rules which have chilled the conversions using notes.
The flaw in that logic is that LRS will value ECOS in a merger at 5x ECOS revenue (not as a multiple of LRS value).
If you assume ECOS sells 8 machines you get revenue of just under $5m and a value of just under $25m. When you take off debt (which you need to since a 5x revenue multiple is an enterprise value not a stock value) you get a value of closer to $17m, which is closer to $0.0012 per share.
Couple of updates on Tonaquint.
1) They have sold some of their shares since they filed that 13G back in November of 2017.
2) In addition, their share cap has gone up since they can only own 9.99% of the then o/s shares which is now 14bn so they are now capped at about 1.4bn.
The real problem with Tonaquint is that it doesn't matter what they own. They can't sell their shares without a legal opinion that they were held for investment purposes. That opinion is hard to deliver because their shares came from debt conversion. That is only cured by them holding shares for about 12 months following conversion.
They can transfer the preferred shares to LRS. These shares have voting power and no value.
You would still need to issue common shares to LRS to give them the requisite merger value so you still need to issue new common shares or exchange the existing shares in a way that is like a RS.
That still leaves you with having to deal with Nevada, FINRA and the SEC before you consummate a transaction.
JH
As I said in an earlier post, the preferred shares held by the two Kwaks and Siegel have a voting block over any takeover. They have more than 95% of the vote on all corporate matters. You can't merge ECOS without their vote and you can't take over operations without their vote.
Yes SEC and Nevada filings for ECOS and an audit opinion on the financials of LRS if there is an RM. Assuming that there is a deal to be had.
DS
LRS lawyers won't let them merge with a delinquent company for three reasons.
1) ECOS can't deliver a legal opinion on effectiveness when they are delinquent with Nevada. They need a corporate action opinion. When you are delinquent a lawyer won't be able to deliver the opinion.
2) They need to make a series of SEC filings for a RM (including a merger filing for the requisite shareholders meeting). The SEC won't approve or allow them to go effective when they are delinquent.
3) They need to increase shares to issue the requisite shares in ECOS to LRS or reduce ECOS shares (via a reverse split or exchange) to facilitate the merger. FINRA won't approve either with a delinquent filing.
This is my opinion.
Don't worry about any type of hostile involving ECOS. The holders of the preferred shares (Siegel and the two Kwaks) have over 95% of the voting power (on all matters) so they can always reject a hostile deal.
actually that location is in Korea. The machinery does it with some tweaks to the microbes. ECOS hasn't done it. Ask ECOS they can tell you.
DS
Actually you are not correct on your interpretation of Reg FD.
You can be obligated to disclose information on an 8K if you disclose non-public information to even one person who is not an insider.
In addition the disclosure of nonpublic information need not be to a securities market professional to become disclosable. It can be a disclosure to your neighbor, a friend or a single shareholder. Most FD foot faults are actually not based on disclosures to professionals by companies.
The Korea company distribution agreement is a material agreement to ECOS and therefore is actually disclosable. It is the linchpin of heir business as a distributor of the Bio-Art system. They should have filed it back in 2016. That being said, their lack of disclosure of material agreements is not uncommon among micro small caps.
Likely not. The digester was being tweaked to handle human waste, not humans themselves. I would not characterize Kwak as human waste.
DS
Look at this article by NYU Stern School of Business in January, 2018. The average sales multiple for machinery manufacturing is actually 2.65x sales and environmental and waste services is 2.63x sales. Renewable energy is higher but that is actually companies which produce renewables (like wind farms, solar energy producers, etc.).
I think the your valuation is a little overstated, but I hope you are right.
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/psdata.html
DS
The only clarification to your point is that MS and the two Kwaks are not paying themselves their salaries. They are accruing on the books. Eventually they will convert them into shares (they did this before). Their accrued salaries are now north of $1m. That is the only place I see dilution since the MM rule change
This plays right with DS post #55830
"merger in the works with major recycling company"
Machinex is a major manufacturer of waste recycling equipment. It makes the rumor still valid. We can now talk about Machinex and their need to go public.
As my dad used to say if you repeat enough things often enough they will be deemed to be true in the public arena.
DS
That is the data from the PWC study and is influenced greatly by deal size. In the $100m and less range, the IB fee runs on average 7% of the deal (some as high as 10%). The other costs are also influenced by the size of the company and whether the non-public entity has audited financials.
I think the new rumor should be ECOS to merge with Machinex. They are in the same business, Machinex has worldwide customers and has built digester systems. Machinex could go public in the US. Just as valid a business case as LRS.
JMO
CMI
The one interesting thing about Machinex is that in addition to the AI recycling sorter (that is mentioned in the LRS article) they construct turnkey anaerobic digester systems, waste sorting equipment and waste to power systems. They are a private Canadian company with over 350 installations around the world.
Maybe we can off topic and suggest that Machines would acquire ECOS to go public.
DG
I wouldn't be surprised that Fife/Tonaquint used these last two days to get some of their money out. If that is where the volume is he should be done in another 100m shares
DS is right. He is best off not disclosing anything.
ECOS shouldn't be disclosing to AllSource their plans to build any digesters at any site unless Allsource is a party of that arrangement.
Once AllSource gets that information they are treated as an Insider under the Securities Law. They are not suppoosed to share not public information with any third party.
DS being in receipt of any non-public information should not himself trade on it or disclose it to any other party. He shouldn't even note if he holds positive or negative information from that party. The SEC could go up his a$$.
If Allsource is actually disclosing non-pubic information, they are likely putting ECOS in a position where they themselves should consider an 8K disclosure of what they have told Allsource.
This is all premised on Allsource actually disclosing factually correct information. If they are passing along inaccurate information they are in a much worse position themselves.
DS
One clarification. The 8K that refernces that information is not complete.
The actual supply agreement calls for ECOS to invoice LRS for the first system only after acceptance of the equipment and then LRS to pay.
For additional systems 40% after Purchase Order, 40% after Bill of Lading and 20% after commissioning and installation.
Two things that cause me pause with your comments are
- the rest of the publicly traded companies in Waste that LRS competes with are all NASDAQ and NYSE. If you are going to use a public shell to rolll up other private companies easier to do on with a NYSE or NASDAQ listing; and
- GS isn't in this to be an OTC stock. They make their money playing in the big leagues. That is where the real institutional money is. A lot of funds and institutions by their mandates can't invest in OTC tickers. You want to go where the money flows.
The amount of convertible notes as of 9/30/17 was $896,666. There have been some conversions in the last qtr of 2017 and early 2018 (before the rules changed). This number is likely lower now.
Their total current liabilities were $8.7m which included $1.8m of derivative liabilities on the converts. The derivative liability doesn't exist if you can't convert, so assume total liabilities are $6.9m
Of the total liabilities $4.6m is owed to related parties like HanscomK, notes owed to the other shareholders and payables for accrued salaries. These could be converted into equity without running afoul of the change in MM rules.
I don't think you will see any more dilution. The change in the MM rules have resulted in the convertible noteholders being stuck with their notes. They can't covert into shares as they can't get the "shares held for investment" legal opinion requested by the MM's now.
The $500k or so of converts will just continue to sit on the balance sheet accruing default interest and being in technical default. I don't think any ECOS shareholders should be worried about dilution from here on.
LRS can move up that food chain by buying more waste companies. They already have a few hundred million of revenue. But even at a 50% growth rate, it takes LRS a long time to become WM.
ECOS on the other hand can't become WM and I don't see them as the vehicle to get LRS there.
Think about what you just said.
ECOS current equity cap is $1.4m and market cap of almost $6m at $0.0001
At
- $.010 the equity cap would be $140m
- at .10 the equity cap would be $1.4bn
Ten machines doesn't get you that valuation. 10 machines is $6.8m in revenue. ECOS can't trade at 20x revenue (at $0.010) or 200x revenue (at $0.10). Valuation multiples aren't anywhere near that
it will go back to bid if they issue financials (and stay current), announce the completion of LRS California Ave (and book sales revenue from that project) and announce other firm orders with short term delivery dates.
but if you are competing with the other waste players (like WM and Advanced) you will want to be listed in the NASDAQ or NYSE. That is where the real institutional money is. LRS won't want to be public on the OTC. If LRS goes public, GS (who is in LRS) will advise them to go public on one
of those exchanges.
Just so we are clear that is my opinion.
You make assumptions and state things that I didn't say.
I never said this is a scam. It's just a nice little company trying to make and sell a product. They have tried to do this on a number of occasions. I hope this time this product works.
I bought this stock 8 years ago when I looked at the battery technology. It looked promising on the surface, but in the end didn't do anything special. I bought this as a flyer with cash I could afford to lose (which is how you should invest in stock like this). I am not going to sell since this is as it is just like the money buried at the bottom of the sock drawer. Out of sight out of mind.
I don't think LRS will merge with ECOS to go public. If LRS wants to go public they will want to be NASDAQ or NYSE listed. You would need to reduce the share count and pop the share price to do it. To go from $0.0001 to $1 for NASDAQ listing takes a pretty large RS built into the RM. They need to pop the share price well over $1 to bring in institutional money. They can achieve what they want by doing an IPO and a road show using their own corp and not have an baggage from the ECOS shell.
You are entitled to your opinion on one's credibility (and trust that I feel the same about you and your predictions on this stock).
By the way I am not short and have never been short ECOS. I have always viewed this as a flyer and bought this over 8 years ago after meeting MS. I am holding this as a lottery ticket.
We will see 12 months from now when LRS and ECOS have not merged. There are many better ways for LRS to go public than with this shell.
No not one and the same as Kenny and clearly not married to him. I have someone else who likes to spend my money (and is doing a very nice job at it).
Also before you ask I am not MS and am not married to MS. That is a role left to the lovely Becky Siegel (who actually is quite lovely and pleasant). I am also not Dylan Siegel as my jump roping skills have faded since childhood.
Now now Kenny there is nothing wrong with the Audacity of Hope. Aspirations and dreams are what made this country great.
ECOS shareholders should hope and dream that ECOS becomes something.
By the way if you think MS hasn't been doing anything the last couple of years since he was deposed as CEO of ECOS see article below. Apparently he was offended by his address (on Ridge Road in Lake Forest) being in the public domain. One interesting thing is you will see resemblance between his house and the driveway which Dylan was jump roping.
Intelius hit with class action alleging their personal info reports violate Illinois publicity rights law
https://cookcountyrecord.com/stories/511034563-intelius-hit-with-class-action-alleging-their-personal-info-reports-violate-illinois-publicity-rights-law
DS
I think Kenny is referring back to the past product launches of ECOS which were all touted as game changers and became nothing more than a whimper.
- There was the infamous Lithium battery technology which was not unique and didn't work.
- There was the diesel fuel additive (M Fuel) which proved to be a big nothing after rolling out a test unit in South America (with a $27m potential sale to Chile) and doing pressers that indicated that foreign governments (like the Ukraine) were interested in purchasing. The test unit sits in Chile and no sales after 7 years
- And of course there was the Korean chicken poop bird flu saga which went on for a year and a half only to become a non-product.
The only thing to make me pause as to Kenny's 18 month comment is that LRS is the first real company that ECOS has ever entered into a contract with. All of the rest of these contracts were follies with marginal entities at the best.