29 Nov Echo Automotive Inc (ECAU) – research request
Echo Automotive Inc (ECAU) had its first ever volume on Tuesday, November 27th, followed by some more interesting volume today. A quick glance at the ticker shows some common p&d trends including the way the shell went public, changed control, and conducted a 5:1 forward split.
According to the ECAU website:
Echo Automotive Inc (ECAU) is a development stage company and the creators of EchoDrive, a revolutionary patent-pending cost-reduction solution for converting fleet vehicles into highly fuel-efficient plug-in hybrid. EchoDrive can be easily bolted onto new and existing vehicles cost-effectively, for the purpose of substantially reducing a vehicle’s fuel consumption. For the first time, fleet operators have an option that allows them to significantly reduce their fuel expenses with a solution that makes both short term as well as long term economic sense.
The EchoDrive platform enables existing vehicles to leverage grid power at a fraction of the cost of fossil fuels (allegedly for $10,000 - $12,000 per unit).
"Echo’s battery is expected to be in production by March.
The company’s new conversion product, EchoDrive, is to lessen fuel consumption by converting vehicles into plug-in electric hybrids. A vehicle could travel up to 100 miles per charge with charging taking about six to eight hours.
The cost of the battery is expected to run between $10,000 to $12,000, which is perhaps a cost savings compared to some current compact car battery packs that begin at $12,000 to $15,000."
Learn more about EchoDrive here.
The EchoDrive technology derives from the dual-fuel, plugin hybrid technology provisional patent (#61587987) which ECAU obtained the rights to through a licensing agreement signed with Clean Futures LLC back on February 1, 2012.
On June 28, 2012, ECAU also signed a licensing agreement with Bright Automotive Inc to use their equipment and programs to help with the development of ECAU's intellectual technology. Bright Automotive Inc is based in Anderson, Indiana. The CEO of Bright Automotive is Reuben Munger.
ECAU which does business as Echo Automotive Inc was originally known as ControlledCarbon LLC and is based in Scottsdale, Arizona, but allegedly conducts its research and development at an office in Anderson, Indiana.
According to ECAU they use Suite #122 at the Flagship Enterprises technology based business center. ECAU even offers photos of their facility on their website. ECAU is not listed as a client on the Flagship Enterprises website, but I do, however, have reason to believe that they are using that facility as claimed.
Turns out if you read the licensing agreement between ECAU and Bright Automotive Inc it is disclosed that Bright Automotive Inc is located at Suite #122 at the Flagship Enterprises Center in Anderson Indiana.
Bright Automotive Inc was at one time a very promising company that in November 0f 2011 had entered into an agreement with AM General LLC as the exclusive assembler of the Bright Idea plug in hybrid electric vehicle (PHEV).
Bright Automotive Inc waited 4 years for a response from the Department of Energy for a loan to help move forward with its operations, but was never granted the loan making it impossible for Bright Automotive to continue to sustain its operations causing Bright Automotive to cease all operations on February 28, 2012.
Trying to dissect the filings is not an easy task, but it appears that maybe the $50,000 paid to Bright Automotive Inc may have something to do with being able to have access to their facility and equipment which Bright Automotive Inc kept at Suite #122. Since ECAU signed the licensing agreement with Bright Automotive Inc after Bright Automotive Inc had already shut down shop it could be possible that Brighton Automotive Inc is selling equipment that they no longer need.
It seems odd that the same amount allegedly paid to Bright Automotive Inc ($50,000) is the same amount that ECAU says they are expecting to get paid back from their land lord at Anderson Indiana.
To date, ECAU has not developed the technology into any marketable products, but the company carries a very large management and advisory team making ECAU seem very serious about eventually becoming more than just a developmental company.
The balance sheet isn't the all that pretty
$323,356 in assets including:
$80,454 in cash
$142,325 in vehicles, computers, and equipment
$48,750 for a license agreement with Bright Automotive Inc
$50,000 advanced to the land lord in Anderson, Indiana and due back before the end of the year
$1,268,671 in liabilities including:
$761,000 in Notes payable
The filings are very clear that ECAU plans on surviving on loans and private stock sales to pay for operations until their technology can be molded into a revenue producing product. That means that the liabilities and accumulated deficit (which stood at $1.8 million at the end of September will continue to grow).
Just in the 3 months ending September 30, 2012, ECAU had $823,622 in new expenses including $405,000 in salary, $248,000 in consulting fees, $65,000 in legal fees, $32,000 in rent, and $13,000 in miscellaneous expenses.
In my opinion, ECAU does look to have some real intellectual technology and access to a staff and facility which could potentially allow them to advance that technology towards something material, but I am far from convinced that they will ever achieve that goal. Many investors are not just interested in the operating status and future prospects of the ECAU business model. They want to know if ECAU has what it takes to be put on the watch list for a future paid promotion.
Does ECAU have what it takes to be put on the watch list for a future paid promotion?
To determine this we have to go through the history of the shell from the set-up to the most recent events.
The Echo Automotive Inc shell started out as Canterbury Resources Corp incorporated in Nevada on September 2, 2008. Canterbury Resources Corp was based in New Zealand.
Bruce A Wetherall was the sole officer/director of the shell and owned all 11,500,000 outstanding shares at the time that the Canterbury Resources Corp shell went public on June 3, 2009. Wetherall received the stock for $.001/share ($11,500).
Canterbury Resources Corp went public using a mineral claim they purchased for just $5,000 from Plymouth Enterprises. The claim was located in New Zealand.
Canterbury Resources Corp didn't have one of the common P&D attorneys help with taking the shell public. Canterbury Resources Corp used O’Neill Law Group.
The Seed Shareholders
After going public, Bruce A Wetherall sold 5,000,000 of his shares to some private shareholders for $.01/share.
Nothing happened with the shell over the next 3 years. Nothing was ever done with the property. It seems obvious that the shell was taken public with the intention to sell the shell at a later date and to use that change of control to effect a forward split increasing the free trading stock owned by anonymous insiders (seed shareholders).
The Change of Control
In August of 2012, Canterbury Resources Corp did a share exchange with Echo Automotive Inc issuing 52,500,000 shares for the acquisition of Echo Automotive Inc.
The attorney helping with the share exchange agreement was Greenberg Traurig, LLP.
Prior to the share exchange agreement, Bruce A Wetherwall resigned and a total of 7,000,000 shares were cancelled.
A 5:1 forward split was effected on the remaining 4,500,000 shares of Canterbury Resources Corp stock owned by the seed shareholders giving those anonymous insiders 22,500,000 free trading shares of ECAU stock.
Several debt Notes were issued to or inherited from Echo Automotive Inc
A $2,000,000 financing agreement was signed with Hartford Equity Inc. giving Hartford Equity Inc the option to purchase up to $2,000,000 worth of stock at $.50/share.
Below is the new management team:
|William D. Kennedy||39||Director, Chief Executive Officer|
|Jason Plotke||39||Director, President|
|Rodney H. McKinley||63||Chief Financial Officer, Secretary|
There isn't much information out there about William D. Kennedy or any of the other officers/directors having been involved with any past publicly traded shells with the exception of Jason Plotke.
Through the share exchange agreement with Echo Automotive Inc, Jason Plotke and William D. Kennedy ended up in possession of all 52,500,000 shares issued in the share exchange through a company controlled by the two of them and their familes called DBPJ Stock Holdings LLC.
Jason Plotke had previously been involved in a group of now bankrupt companies (KM2 Limited, SMA-Billet, LLC, and SMA-Patents, LLC). After those businesses went bankrupt, Plotke started Innovative Automotive Group. Innovative Automotive Group specialized in the automotive aftermarket customization, exterior styling and performance products for luxury cars, trucks, and sport utilities from 2006 - 2008 before also shutting its doors. Jason Plotke is also the control person of Korkar Investments LLC which is an investment company based in Scottsdale, Arizona.
ECAU certainly has a background that makes a future paid promotion possible, but after studying the ticker, I think ECAU is set up more for the long term rather than some kind of quick pump&dump for insider enrichment. If ECAU does get promoted it will probably be a slow and steady climber supported by some kind of boiler room/internet ad type of promotional campaign supported by a slow steady stream of press releases reporting progress and clarity about the business operations and the company's future goals.
I'll keep an eye on ECAU and watch future filings for more clarity about the shell. I'm sure as more information becomes available it will be easier to determine what to expect in the future for this ticker.