I want to post for the benefit of the Board the DD I have done that supports my opinion that ECOS management would not be aligned with a merger transaction. here are some facts
1) Each of MS, Jeung Kwak and James Kwak are entitled to annual salaries of $150k. Their CFO Mr St Pierre earns a meager $48k. That is $500k off of the top that they get by keeping ECOS alive. They are also owed a fair amount in accrued, but unpaid salaries. This all comes out under State law before us the shareholders.
2) None of the officers or directors have an right to any options or restricted stock (except Michael St. Pierre) Based on their latest SEC filings the only grant OS should be Mr. St Pierre's (their CFO). Though they say no officer or director has any equity compensation. Normally you want management to have some skin in the game through performance based equity (like options so they will drive the share price). We don't have that in ECOS.
3) The same group of people owe 2.5bn shares out of 13bn OS. Their shareholdings have remained the same from year-end 2015 through year-end 2016. If you look at the 2014 filing you will see the same nice group of people had 27k shares (after the reverse split).
If the 2015 and 2016 filings are correct the insiders either received or purchased about 2.5bn in shares. The Securities laws require when a 5% or more holder acquires shares either through the market or from the Company a filing is required other than filed on Form 10-Q or 10-K. They appear to have never made that filing.
I am now providing you with one of the two SEC issues that they have still not corrected. They should have filed a Form 3, Form 4 or Form 5 to report these ownership moves. The fact these increases happened a few years ago and wasn't fixed doesn't mean it can't be cured by filing a Form 5 and paying a fine.
LRS would never buy or merge with a company that has an insider reporting deficiency likes this as it opens the new owners (as well as the old insiders) to shareholder derivative suits. You can't indemnify the SEC compliance issue and the related derivative issue away. Therefore, my thesis as much as they have tried to fix their reporting issues they missed one of the biggest from a liability perspective. No fix, no merger. They couldn't get a lawyer to provide them a legal opinion with this issue out there.
Maybe they will look into filing Form 5's for all of the insiders and approach the SEC. They do read this Board. They can always pose as an investor and I will be happy to explain how to fix this. If they ask with an acceptable please I might explain the other reporting issue they have which one would fix before a merger.
