LCTI Low Carbon Technologies, Inc. (LWCTF)

[John Q Trader]

Ok people, here is why this stock could pop 1000% or more at any time in the coming weeks. With the low volume and low price despite the good news, I began to question my investment in this company myself, so I went back and did some homework. Here is what I found. (This is from their 2012 filing and Yahoo Finance News. I included the links if anyone wants to do their homework)

Background:

LCTI was incorporated August 11, 2008. Its fiscal year ends Aug. 30th. As of Nov 30, 2012 the company had a working capital deficiency of $2,105,792 and had accumulated losses of $10,095,857. LCTI specializes in “green” and environmentally friendly products and services. It has 3 operating divisions; Energy Efficiency, Environmental, and Technology Management.

On November 30, 2012, LCTI acquired a 25.5% stake in Industrial Commercial Mechanical, which provides a broad range of energy solutions, as part of its Energy Efficiency division. Also included in this division is wholly owned subsidiary Teposolar Technologies, and its subsidiary Commercial and Institutional Mechanical LLC.

The environmental division has a focus on mitigation banking, which is basically environmental cleanup and restoration of wetland habitats. East Bay Farms, an affiliate LCTI company is in the process of receiving US Army Corps of Engineers approval for a 1900 acre project known as the Gulf Coastal Plains Wetland Mitigation Bank, a $96 million dollar project. LCTI also has plans for the development of a second mitigation bank project of 3500 acres on the Bolivar Peninsula stretching from Florida to Texas.

The Technology division is highly diverse and includes ventures in waste to energy, LED street lighting, heat transfer technology, desalinization and salt production, solar energy capture, atmospheric rare earch metal production, bio-composite building components, kinetic energy conversion….too much to list here, see the complete list in their filing for EOY 2012.

One important note on LCTI’s strategy:

"Most of our investments are strategic acquisitions," continued Jarnagin (CEO). "Our discipline prevents 'style drifts' in our investment strategy. This affords us the ability to fully leverage the competency and value of one investment to acquire another asset -- be it an operating company, technology or real estate. We keep cash and equity payouts to a minimum. This has allowed us to maximize our assets and realize healthier gains." (Yahoo Finance News – April 4,2013)

This explains how they are able to position themselves into so many different deals and greatly diversify their offerings across the 3 divisions. I believe this has been successful thus far, and will continue to be a critical part of their growth.

Now to the present timeline:

- August 30, 2012 – End of fiscal year

- November 30, 2012 – LWCTI acquires 25.5% of ICM (note this was acquired after end of last fiscal year)

- March 13, 2013 – LWCTI falls from $1.15 a share to 0.077 by March 18. On March 13, financials were released for end of fiscal year Aug 30, 2012

- April 4, 2013 – LWCTI announces acquisition of additional 24.5% of ICM, bringing total to 50%. Per CEO, U.S. Army Corps of Engineers has “pre-approved” the Gulf Coast Mitigation Project, and is expected to give final approval within 30 days. Again, this is a $96 million project.

- April 12, 2013 – LCTI acquires a 43.5 stake in Northwest Critical Minerals, a Rare Earth Elements mining company. "Countries across the globe are scrambling to develop their own rare earths production to break China's stronghold," said Jarnagin.

- April 15, 2013 – LCTI receives 3rd party valuation by distinguished appraisal firm Marshall and Stevens of approximately $142 million in technology assets. Also announced is a 50% equity position in a joint venture with Hubard Engineering Services in Mexico.

- April 19, 2013 – LCTI announces that preliminary YTD financials (Aug 30, 2012 – Feb 30, 2013) reflect an EBITDA of over $13M and net income of roughly $10.75M (600% increase), which puts it on course for $28M EBITDA by fiscal EOY Aug 30, 2013. CEO noted that with the Gulf Coast Mitigation project and another acquisition, LCTI was on target to see revenues of $100M annually.

- April 22, 2013 – LCTI announces that YTD contracts exceed fiscal 2012 year end revenue. Several other potential relationships or partnerships were mentioned with Hunstman Petrochemicals, EI Dupont, Boise Cascade and others.

Summary

Everything here looks very positive here. First, I like the fact that this is a green company and it appears it is going to be profitable. Another thing I can appreciate is the transparency this company has shown. They have been putting good PR out there as it arises, and it arises fast as they are making moves fast.
The company is clearly making some interesting moves with partnerships and acquisitions, and has significantly improved its position since the EOY 2012 earnings. These mitigation projects are huge, and we should see USACE approval any day now, which could further bolster this stock. The second mitigation project appears to be twice as large, and could be valued at somewhere around $180 million.

I really am interested in the rare earth element (REE) mining though. There is reportedly some mandating from the US to begin stockpiling up to $120 million in REEs to lessen dependency on China, which has clamped down on exports of REE’s in recent years.

http://www.freerepublic.com/focus/f-news/3002874/posts

I believe once we have some finalized financials from the first half this stock will begin to rise. I would expect this stock to be back up to its post financials drop, and actually trade higher, possibly in the $2’s after EOY Aug 30, 1013 results are in. Everyone loves green stocks, and for once we have one that is profitable. Once people catch on to this hidden gem, it will be big. I am buying up as much as I can at these current prices.

References:


http://finance.yahoo.com/news/lcti-low-carbon-technologies-ytd-164700308.html
http://finance.yahoo.com/news/lcti-low-carbon-technologies-ytd-121300020.html
http://finance.yahoo.com/news/lcti-low-carbon-technologies-receives-121300267.html
http://finance.yahoo.com/news/lcti-low-carbon-technologies-makes-121300193.html
http://finance.yahoo.com/news/lcti-low-carbon-technologies-demonstrates-121300638.html
http://finance.yahoo.com/q/is?s=lwctf
http://media.wix.com/ugd//48d698_7460e3c4fcbcf56661ea8b5884bbc277.pdf