EcoloCap Solutions Inc. (fka ECOS)

[deal guy]

I spent a bit of my holiday time looking at the Korean poutlry market and throught I would share somethings I learned which might be helpful to ECOS investors.

Korea produces only 80-85% of its chicken requirements. The balanc eof its requirements come from the US, Brazil and Denmark. The bulk of imported chicken is imported to serve quick serve restaurant business (read KFC) and the regular restaurant business. This is expected to continue over the next 5 years.

US & Brazilian chicken have an imported cost which rund about 20% less than Korean chicken This gap will increase over the next five years as the tarriff reduction under the US Korea trade agreement kicks in.

Korea principal export markets for chicken are Hong Kong and Vietnam. The export production is less than 10% iof the total production and not expected to grow materially over the next five years.

2014 is epxected to see an increase in chicken consumption due to the World Cup Soccer tournament. The measuring point for this was the 2010 World Cup. The increase will be temporary (10-15%) and fall back in 2015.

Heating and power costs of Korean chicen producers run about 5% of their total production costs. That means use of D-20 is not driven by cost benefits to the chicken farmer as it is not material but needs to be yield related.

Korean poultry production is vetrtically integrated. The farms tend to be part of trade groups which include the slaughter houses and producers. Business model similar to Japan.

The Korean poultry market is regulated by the government in terms of production. When production of a variety of chicken puts pressure on price the government steps in to cut production and manage price.

Here is a link to a useful report.
http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Poultry%20and%20Products%20Annual_Seoul_Korea%20-%20Republic%20of_9-5-2013.pdf

In the spirit of full disclosure I really like ECOS and its technologies. I only wish they would focus on one technology one market and get some traction. I haven't seen that from MS. I had occassion over the past few years to have met MS and think he is a bright person. If I were building a company I would think of him as an R&D person not a CEO. I bought a position in ECOS over 18 months ago. I don't ever see this stock as a 100X return.

I actually looked at taking one of my VC clients into ECOS a couple of years ago. The share price sub penny, market cap, the complexity of the capital structure and the share count takes this off the screen of most investors. I really wish MS would consider a reverse split of 1,000 to 1 or 10,000 to 1 as it would allow ECOS to come on to the screens of many more potential investors.

Sorry for the long post but I wanted to share my research as I think this is agood concept just not a well run company.