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Actually just reached MS on 1-800 74663739 (or 1-800 Phone Sex for those who don't have letters on their phone dial). He must have a new job.
I would feel good if Handley is not telling Kwak not to tell the market anything. At lease that would get Handley off the hook. I agree his lawyers are good.
I don't think Kwak on the other hand is in a good place from securities law perspective. Failing to file financials and failing to disclose the state of their business (like is the digester is operating and in use) to the market rests squarely on his shoulders.
T
If your are suggesting that Kwak and LRS are intentionally withholding or deferring to release information from shareholders (and the market) to keep the share price down you are suggesting that they are conspiring to commit securities fraud (it is the classic definition). I can't believe LRS lawyers would allow their client to do that.
I truly hope for all involved that is not the case here.
ECOS was required to take the output and remove it from the LRS site and sell it. If you read the agreement it was not exclusive to ECOS. If they can't take the output LRS likely can enter into other agreements to sell the output. After all they own the output and the digester.
My fear is that LRS and Terreplenish have their own deal on the output which doesn't include ECOS.
T
As of last week there was only digester at California so I think the product feeding Terreplenish is the ECOS digester..
My assumption is that Terreplenish is taking the output of the digester and packaging and selling under their own label. The person who would know this for sure is Cathy Scratch at Terreplenish.
DG
I am betting they transferred you to their communication department which handles their press inquiries.
Don
This looks like the ECOS digester. Could the answer be that Terreplensih is now taking the output from the ECOS digester and selling it under their label under their own deal with LRS. Kind of sounds that way.
The quiet period rules are defined by SEC rules. You don't actually file for a quiet period (it is dictated by either SEC reporting periods or the company having certain types of material information which they have not publicly disclosed).
That being said they have been in a year long quiet period. I am worried that someone put ambien in their coffee
Yes Fife did front another $50k in 2017, but the bulk of his $500k + in notes date back to earlier and fonder days.
The Fife money is long gone since their 9/30/17 10Q shows $9k in cash.
I think the LRS announcement is nuanced. they bought a Korean manufactured machine. The way to read what they said was they bought a Korean manufactured machine not who they bought it from.
Fife money spent long ago. Most gone by 2016.
Thanks. I do wish the outcome was different.
I don't think ECOS is necessarily dead in the water. Just trading with a very leaky life vest.
I don't think Choice North went anywhere. They announced that deal a year ago and no more news.
I doubt that LRS has ordered any more machines yet. If LRS had ordered more machines I think LRS would have announced something. They seem to use the existing machine on their twitter feed a fair amount.
Also ECOS doesn't have the capital to build more machines. Under the LRS agreement, ECOS finances the first 8 machines until they are accepted by LRS. Need cash for that which is something ECOS doesn't have.
I think the digester has or will be paid for (more likely has by now). The question is whether ECOS made nay money on the digester. Here is a way to think about it.
- They has $595,815 invested in the digester as of 9/30/17 (see inventory account on 3rd qtr 2017 10Q)
- We know they continued to invest in the digester in 2018 to make it work to LRS expectations before acceptance.
- The purchase price for the digester was about $680k.
If you take $680k less the inventory cost and a reasonable estimate of the costs to complete, they likely made no money or cash flow on the digester. Chalk that up to R&D.
From the proceeds from the digester they need to pay back Kwak/HanscomK since they financed the construction. They owed HanscomK $629k as of 9/30/17. That number is likely higher now. My guess is all of the proceeds from the digester go to Kwak.
I don't think the byproduct sales have been that much. They may be enough to keep the lights on, pay rent and some other bills. They haven't paid the Nevada Secretary of State for their corporate registration or their public accountants for the audit. If the sales were going gang busters you would pay those bills (they are the lifeblood of a public companies existence).
Their annual bill for salaries is about $400k. My best guess is that they haven't paid the salaries in cash so they either paid them in shares or more likely they will show up as accrued liabilities.
I think the digester has or will be paid for (more likely has by now). The question is whether ECOS made nay money on the digester. Here is a way to think about it.
- They has $595,815 invested in the digester as of 9/30/17 (see inventory account on 3rd qtr 2017 10Q)
- We know they continued to invest in the digester in 2018 to make it work to LRS expectations before acceptance.
- The purchase price for the digester was about $680k.
If you take $680k less the inventory cost and a reasonable estimate of the costs to complete, they likely made no money or cash flow on the digester. Chalk that up to R&D.
From the proceeds from the digester they need to pay back Kwak/HanscomK since they financed the construction. They owed HanscomK $629k as of 9/30/17. That number is likely higher now. My guess is all of the proceeds from the digester go to Kwak.
I don't think the byproduct sales have been that much. They may be enough to keep the lights on, pay rent and some other bills. They haven't paid the Nevada Secretary of State for their corporate registration or their public accountants for the audit. If the sales were going gang busters you would pay those bills (they are the lifeblood of a public companies existence).
Their annual bill for salaries is about $400k. My best guess is that they haven't paid the salaries in cash so they either paid them in shares or more likely they will show up as accrued liabilities.
Yes but his 13G can only reflect and measure his ownership against the stock that ECOS has reported as issued and outstanding in SEC reports. Since the last SEC report was q3 2017 that is the number Fife used.
If you use the 14bn number one would expect Fife could receive an additional 500m shares on conversion.
Fife has agreed in the note purchase agreements to limit his total equity interest in ECOS to 9.99%. That is to keep under 10% for SEC disclosure purposes.
All his 13G tells you is that the maximum number of shares he can receive on conversion to keep him under 10% is 1.1bn (based on the 3rd qtr 2017 10Q).
To the extent he can not convert all his debt into shares, his remaining debt including interest remains outstanding.
The game that Fife and other note sellers used to play was the following
- converts notes into shares of issuer keeping equity stake below 10%
- sell shares from conversion reducing equity stake back to 0%
- convert more notes into shares, sell shares and again reduce to 0 ownership
The 2018 SEC changes do not let them convert and sell. So Fife can convert enough notes into shares but now must sit on the shares. The rest of his debt remains outstanding earning default interest. The likely outcome is his dollar value of his debt will never go down as the interest will exceed any debt reduction from conversion.
Fife put his money into this back before the end of 2015. If you look at the old filings you will see had a loan balance of $571k at December 2015. His balance between then and the 3rd quarter of 2017 only changed by default interest.
Part of Fife's investment in ECOS notes came when he acbought the position of
He stopped putting money in before LRS was ever on the scene.
go back to the old q's you can see he stopped
My analogy to payday loans is that he is a lender of last resort. You don't go to him if you could raise capital through traditional sources. He is one step above Lenny the Loan Shark on the capital markets tree.
If there is no bid Fife can only get paid by pursuing bankruptcy. In the meantime his claim grows by default interest. Since there is very little in this shell the only way he likely gets paid is to chase the promoters (like Kwak and Siegel).
Potentially depending on there relative holdings. However, firms like John Fife's do not ever want to hold the shares. They really want cash for their notes.
John is one of a group of investors who bought convertible promissory notes in microcaps. He has historically converted his shares at a discount to the market (50-70%) and then flipped in the market for cash. When the notes default (which the ECOS notes did) the interest rates becomes usury. He made his money on the purchase at discount and resale.
When the rules changed in 2018 he no longer could convert and flip. His debt is a carryover from before the rules changed.
His remaining plays are (i) to enforce his rights as a creditor if the company tries to dispose of its assets; (ii) hope for a buyout where he will get cashed out; or (iii) hope the rules changed and he could convert and flip again.
John doesn't care about the company he invests in. He needs a company with a low stock price, an ability to issue shares and some sort of investment thesis. He doesn't want to be a shareholder, he wants to make money flipping notes to shares to cash.
John (and the other promissory note issuers) are the equivalent of the payday loan company or the juice loan guy. The last person you really want to go to for a loan.
they actually hold ) shares. These are shares they could acquire if they converted the promissory notes into shares which they haven't
I wouldn't read anything into Fife filing that indicates ECOS is awake.
Fife is required to update his filing no less frequently than annually. His last filing was one year ago.
All he did is met his legal obligation. He could do this without even talking to ECOS.
No none of these are shares he owns just the beneficial right to acquire shares from conversion.
The note agreement between Tonaquint/Fife and ECOS says he will never increase his potential ownership above 9.99% of the o/s shares of ECOS.
The 1.1bn shares is the product of 9.99% times (8.9m shares o/s as of 12/2017 plus 1.1bn shares he could receive on conversion.
If the current o/s of ECOS is 14bn, Fife's beneficial ownership will increase to 1.5bn or 9.99% times (14bn + 1.4bn)
He will not report any more changes on a 13G until ECOS files updated
Actually what it tells you is that
- Fife/Tonaquint still have outstanding convertible notes.
- We actually don't know the face amount of these notes since they are not required to disclose that amount.
- Since they only reported beneficial ownership on their 13G they must have dumped any other shares they acquired based on prior conversions of their notes into shares. Otherwise their reported ownership would be higher
- Fie has no actual shareholdings just shares he can acquire on conversion.
This disclosure is based on the number of shares that were issued as of the 3rd quarter 2017 10Q (8.9m shares o/s then). Since there are 14bn o/s now, it means that Fife actually has the right to acquire another 400m shares beyond what is disclosed in his 13G
It’s an old site from 2015. The new site is ecolocap.com.
Don
They actually pay about $25k per annum for the accountants whether they work one month or all year. They are paying for the signature on the audit report. That is what is needed for SEC purposes.
ECOS accountants do a drive by audit at year-end and a high level review of the quarterlies. It is really not a lot of work to get the audit done.
Kenny nothing has ever happened in ECOS land on any sort of reliable schedule. I am not surprised that we sit at the end of 2018 with one machine.
By the way on your earlier post a couple of notes.
Siegel didn't start selling ECOS shares until he was out of the strip club business. He exited the strip club business in 2008 and started promoting ECOS in 2009.
Here is some history for those that don't know how we got here.
2004- ECOS predecessor goes public as a software development company
2005- ECOS predecessor changes business model to artificial turf
2008- ECOS predecessor changes model to carbon credits
2009 - Dr. Truong sells business to Siegel and partners in reverse merger
2009- ECOS changes strategy to selling Nano products (enter Kwak stage right)
2016- ECOS changes to digester business
It wasn't long after reverse merger that ECOS began selling shares. They only had about 100m in 2009 after reverse merger.
Don
They actually stopped promoting this product line a number of years ago. They were a distributor of this product for another Korean company. They never manufactured nano batteries. The nano product never went anywhere and generated no sales.
They moved from nano batteries to diesel emulsion additives and then to digesters.
Not actually new news.
Kenny
ECOS financial statement should show a full consolidation of the operating results of the JV within its financial and a one line item after the income tax expense line for minority interest. That reporting would occur all during the year with each quarter's results. That is what GAAP accounting requires.
LRS would only show a one line pick up for their share of the income (loss) of the JV in a line called income from unconsolidated affiliates (or something similar).
Cash would be allocated once a year assuming the JV has positive cash flow. Cash allocation would not go through the income statement, but be reported as an offset to their investment in the JV.
LRS since they only own 5% only reports their proportionate share of income or loss of the JV. They have no responsibility for any operating taxes (like sales or withholding) of the JV.
Any transaction (like the purchase of a digester) would be reported as
-a sales by the JV who would report the sales revenue and the related cost of sales; and
- a fixed asset acquisition of the digester by LRS.
It's an LLC the entity consolidates into ECOS for tax and financial accounting purposes).
And by the way ECOS Bio-Art is also not registered in the State of Illinois for sales tax, withholding tax or income tax. It is not even registered or qualified to do business in the State of Illinois with the Illinois Secretary of State
JA they actually haven't exercised the warrants so they own no stock just the right to acquire stock. The 13G merely reports potential beneficial ownership if they exercise the warrants.
we actually don't know the answer to that since the distribution agreement was never filed with the SEC (as it should have been). That agreement would tell you who (ECOS or the Kwaks) have the rights and whether they are terminable (which they normally are). It would also tell you whether LRS could go around ECOS or the Kwaks.
My money is on the idea that Kwaks company HanscomK International is somewhere in the mix for the distribution rights. He distributes products for a number of Korean companies.
Actually that is not right. The company that makes the digester is Hyoung Chang Magnetic Co. Ltd.. It is not owned by the Kwaks. Their CEO is Lee Jun-chang.
neither is registered with the Illinois Department of Revenue
It is on all of their SEC filings. The SEC makes you put it on the cover of all of their filings.
T
There are other companies in Korea that make aerobic digesters. Three I found a while back were ExBio, EMKorea and Conpotech. They all manufacture digesters using microbes and aerobic methodologies for commercial uses. ExBio has a scalable model that goes from a single store type model up to a 10 ton model. They also have a patent on their process. I also think the EMKorea unit is scalable up to 10 tons as well.
ExBio has opened an office in Iowa and has a number of installations focused on hospitals, universities and large single use sites.
EMKorea is only in Korea and uses distributors in Europe and Asia. It is a large defense and industrial manufacturer that got into the waste business.
Conpotech has an office in the US. Their focus is on single use sites. To date their only installations are in Korea where they have about 500.
There are a number of Korean companies that make anaerobic digesters and a number of companies that make household digesters. In Korea it is becoming more prevalent to see mini-digesters in the home. The Government encourages this though subsidies.
I am sure there are other aerobic digester companies as well but this is a start.
I think there is something else telling
LRS is stating they do not package and sell the product from the digester.
I checked with the Illinois Department of Revenue and did you know that ECOS is not registered for sales tax purposes in Illinois and as of the end of Q3 they reported zero sales in Illinois of any products (digester or output). This either means they are not selling the output in Illinois (which I know isn't true) or they are failing to collect sales tax on their output sales (which would be another no-no since it is clearly taxable). Hey Kwak register your business and pay your tax.
By the way they also did not report sales tax on the sale of the digester either. That they also should have done since the supply of the digester is subject to sales tax.
For those of you who care to verify their lack of registration go here
https://mytax.illinois.gov/_/ and type in 36-4668489 for their FEIN.
Who knows they may send you a fruit basket made up of fruit they picked up for recycling. At least it would be a gift related to their business