EcoloCap Solutions Inc. (fka ECOS)

[was Honey Badger]

Thanks MJ!

MS needs to attract investors. We need a ton of buying power to stop whatever is happening. How do you see us getting out of this mess?

Glad you asked, and If I had a really good answer, I'd probably be a CEO myself, or a Venture Capitalist. But, if you don't mind indulging me, it is a great topic I can prattle on about.

The three rules of business are the only way out: 1) revenue 2) revenue and … you guessed it 3) revenue. Funding comes in fourth on the list, funding leading to little revenue or no profit never works. Revenue attracks new stock investors, breaks dependency on convertible debt and can open up better financing options such as with EXIM.

Many start-ups never even get to revs, but if ECOS can deliver, they can also go profitable. Revenue will allow for them to stop depending on convertible notes to pay the bills. My take is that once a start-up starts down a financial funding path, be it Convertibles, Venture Capital, etc., revenue is the only thing that can break the cycle.

I see an out as this; ECOS produces D-20 as planned in the 8K, and sell in Korea. I suspect they'll also produce this in Korea. The good part about that is supply chain. The not so good part is that producing D-20 in Korea excludes sales in Korea from being a US export. But I am hoping that ECOS can use EXIM bank’s guarantee payment program and start building the EXIM relationship, which is the best funding options that would dilute. I have cruised the EXIM site, and one of the things that EXIM requires for a Working Capital loan (read as US production facility money) is one year of revenue. EXIM doesn’t loan to start-ups that can’t show a revenue stream. So if ECOS can show a year worth of income, a US plant may be feasible. So, I see EXIM as a key player – first as an insurer, then as funding an exporter.

I think start-ups in general are in a bind at this point in history. Commercial lending has all but disappeared to anyone not producing revenue (at least) and preferably a profit. Venture Capital is dried up as well, since most (95%) of start-ups fail in first 3-5 years. I wouldn’t doubt if VC are writing the convertible notes on the paper of these Toxic Debt companies.
I believe the third out is resource. ECOS needs more resources to do the things we want like market and find new investors. They lack resource now, and whenever I am thinking that they need to do this or that, I also remember this the “few guys in a garage”. A few posters who have run start-ups have noted, this is a tough job. These folks make a salary, but those aren’t out of line with standards. Their real financial future is in someday being able to sell some of their stock. Right now, even Mike $21M in stock is only worth a mere $42K. They’d love to attract more buyers, but you can’t be tempted to issue false PRs to do so.

I have to mention that I saw a recent film called “Something Ventured” on Netflix, and in it, one of the early VC guys was approached by Steve Jobs and Woznieck(sp) for VC funding, and he said he didn’t like them, they smelled bad, and the VC turned them down .. and followed that story with the words “Huge mistake. Huge.” Hindsight is always 20/20 vision. After reading a bottom-feeder comment today calling Mike S. a crook, I discarded the comment. But also, thought of the FedEx story of Frederick Smith – who, before turning FedEx into a multi-billion dollar was being sued by his own siblings for raiding the family trust fund, and took the last liquidity the company had and gambled it in Vegas to make payroll. If not, they’d have filed bankruptcy, and FedEx would likely for a long gone and forgotten company as not many invest in Chapt 11 companies that have never turned a profit. FedEx delivered 24 letters their first night, and yet they had 100 million money spent on infrastructure and resource in being able to generate their first $500 in revenue.
Lack of capital is something that is so hard for any start-up to overcome, as in every model, the company has to spend money, sometimes a ton of money, before they ever can make a profit. So, the 100 or so of us worldwide who are long on ECOS, are essentially the start-up seed money, the VC’ers, split among 100 small investors. VC’s only hit 1 in 10, if they are luck, and bet on start up where the invest a few million and get back zilch. That takes a strong stomach, as does staying invested in ECOS with no return. We are looking for unusual returns, so we need to be unusual investors. Most of us are “pot committed” on this hand, and folding doesn’t seem to be a good option for me at this point, but that is a personal decisions. No guts, no glory, I always say.

That said, I am hoping that the Ashos and the like have loss limits that have been triggered in both dips, as somebody unloaded a boatload, but somebody else picked up a boatload at 0.002, and it wasn’t me!

Best wishes and kudos to those who believe in building something, not destroying something.

HB