ecoTECH Energy Group Inc. (OTC:BB: ECTH, Stock Forum) , a company that is being touted in paid promotions as a hot new entrant in the renewable energy field, saw its stock price fall 14.3% on Thursday.
Trading at 30 cents, Seattle-based ecoTECH, which also has an office in Abbotsford, B.C., currently has a market cap of $61 million, based on 203.4 million shares outstanding, and only $721 in cash. The 52-week range is 55 cents and 20 cents.
Thursday’s stock market tumble comes just two weeks after ecoTECH was featured in a paid promotion which described the company as a development stage energy firm with plans to manufacture biomass-fuelled power stations, supplying renewable energy to customers in the United States and Canada.
Biomass is plant matter, or wood waste (usually dead trees, branches and tree stumps) which is used to generate electricity using steam turbines and gasifiers. Biomass is widely available in British Columbia due to the forest devastation caused by a pine beetle infestation.
“Can you ignore a company that secured $55 million in financing?’’ trumpeted Stockexploder.com in a June 18, alert. “Well ECTH just did this year,’’ it said.
Footnotes in the alert say Stockexploder was paid $9,000 for its work by a third party, which may be an ecoTECH shareholder.
The alert appeared on a day when the stock jumped 44% to 29 cents, prompting Stockexploder to predict that ecoTECH was in the early stages of a rally that could send the stock to over 60 cents.
The fact that this hasn’t happened may have something to do with the fact that ecoTECH has not yet secured $55 million in financing, or anything close to that amount.
In a February 16, 2012 press release, ecoTECH said it was pleased to announce that it had received a non-dilutive debt financing package from Corpfinance International Ltd. to fund 60% or $55 million for a five megawatt power plant and Aquaponic project in McBride, B.C.
Aquaponics refers to a combination of acquaculture and hydroponics, where fish effluent from traditional aquaculture systems is used to fertilize plants in a hydroponic system.
Two weeks later, the company issued a clarification stating that its original headline wrongly implied that a draft offer for debt financing from CFI was “secured,” when in reality the offer was subject to due diligence.
“We apologize for any confusion that has resulted from the condensed headline,” the company said.
According to information available on its website, ecoTECH has already secured 1.5 million tonnes of biomass feedstock from suppliers in British Columbia, Alberta and Montana.
The company also said land has been purchased near McBride in hopes that it will secure an energy purchase deal, setting the stage for construction and operation of a $78 million (24 megawatt) biomass power plant. “The electric power produced would be sold to British Columbia Hydro & Power Authority under a pending energy purchase agreement,’’ the company said.
However, it is highly unclear from ecoTECH’s balance sheet how it will finance this plan.
As of March 31, 2012, the company had only $721 in cash, and total liabilities of $4 million. Regulatory filings reveal that ecoTECH is generating no revenue, and in the quarter ended March 31, 2012, posted a loss of $276.497, compared to $438,951 a year earlier.
Due to its limited capital, the company said it needs $600,000 to $1.2 million to continue its development activities and provide the working capital it needs for the next 12 months.