EcoSystem Building Business but Remains Risky
EcoSystem Corporation (ESYM) shares nearly doubled on heavy volume Monday as speculators played a technical breakout. However, prudent investors may want to wait on the sidelines before committing capital to this risky venture.
EcoSystem Corporation [[ESYM.OB]], which is developing an industrial-scale bioreactor technology, saw its shares nearly double on heavy volume Monday as speculators played a technical breakout. However, long-term investors may want to wait on the sidelines before investing in this risky alternative energy venture.
EcoSystem is developing industrial-scale applications of bioreactor technology that is designed to resolve compelling ecological challenges, while producing value-added carbon neutral products. The processes are those that nature has already selected to bioconvert food, animal and human wastes into feedstock for biofuel production, animal feed and fertilizer.
Through a partnership with GS CleanTech, EcoSystem is party to an Early Adopter License Agreement to use its Cellulosic Corn technology platform on a most favored basis. In exchange for using the technology, EcoSystem must pay royalties equal to 10% of its pre-tax net income and sell fats or oils that it produces but doesn’t refine into biofuel for 60% of the price of diesel. However, the technology is royalty free for the first 100 million gallons per year of ethanol.
Last month, EcoSystem also entered into a Management Services Agreement with Global Ethanol to provide corporate and plant management services. The company is currently evaluating a number of qualified acquisition opportunities, and it will need the infrastructure to implement and scale its technologies. Global Ethanol brings existing operational expertise and commodities management infrastructure that will be key for success.
Last quarter, EcoSystem reported a net loss of $287,668 with no revenues. Meanwhile, the company reported total assets of just $6,916 compared to total liabilities of $267,579. These numbers suggest that the company will need to raise additional funds via debt or equity in order to remain a going concern – a sentiment echoed by their auditor. As a result, prudent investors may want to wait until revenues start coming in the door before committing capital.
In the end, it appears that EcoSystem is working towards making acquisitions and building a successful business. However, no revenues have yet materialized, while its financial condition remains risky. The success of this stock will depend on management’s ability to make and manage acquisitions, as well as raise sufficient financing to continue as a going concern.
CONTACT: Daniel Minton, Managing Director, 406-862-5400, daniel@accelerize.com