RE:EYPSF/ All That Glitters Is Not Gold
On November 13, 2001, Stocklemon.com issued a report that brought up many unanswered questions regarding the trading patterns of EYPSF. StockLemon received a plethora of e-mails, many of which requested additional information about the company, including an analysis of EYPSF’s financial statements. This report reviews the more salient points of the company’s annual report, which was filed on November 13, 2001. Additionally, this report reveals interesting discoveries about the stock promotion behind Energy Power Systems.
Review of Annual Report
All conversion is based upon the exchange rate of November 14, 2001.
Cash $1,242,621 Canada $780,536 US
Net Loss for Year $(3,634,916) Canada $(2,283,103) US
We believe that the above-referenced figures demonstrate the company’s need to raise more capital in order to continue their operations. Factoring in the last fiscal year “burn rate,” the company had only 4 months of cash left since June 30, 2001. True, the company has cut back on expenses (i.e. discontinuing independent power projects) but the end result will not be disclosed until their upcoming quarterly filing.
Deficit
$(20,849,848) Canada $(13,095,502) US
Accounts Receivable $4,331,086 Canada $2,720,517 US
On the balance sheet, growing accounts receivable are often consistent with a company’s inability to collect on accounts. The EYPSF balance sheet does not specify who their creditors are and therefore leaves doubt as to the company’s ability to ever realize such revenue. Moreover, these receivables will only stay on their books for a limited period of time before the company is obligated to write them off. That is assuming that the receivable from 2001 is a carryover from 2000.
Investment $3,500,000 Canada $2,198,481 US
Aside from accounts receivable, discussed above, investments are the largest asset listed on EYPSF’s balance sheet. More specifically, this asset is a 12% ownership of a private company called Konaseema EPS Oakwell Power Ltd. located in the State of Andrha Pradesh, India. Upon regulatory approval and financial closure, the company has a commitment from the Konaseema EPS Oakwell Power Ltd.’s parent company to purchase the investment for the amounted stated above. Is this the investment you thought you made?
Oil and Gas Revenue $382,740 Canada $240,412 US
This is the business that Scott Fraser labeled a “cash cow”. The Oil and Gas annual revenue is not even equal to that of a small gas station. It is unfortunate to think that Energy Power Systems gave away close to three times their TOTAL Oil and Gas Division revenues to OTC Journal.com (in stock equivalencies). What business is this company in? The oil and gas business or the stock business?
This is Where it Gets Interesting
In the Subsequent Events section (Note 17) of the annual filing, we read “On September 28, 2001 shareholders of the Company exercised 1,000,000 Series B Warrants for a total compensation of $800,000 Canadian or $502,510 US Dollars. This equals .50 US per share. Ironically, at the same time the stock began it upwards trend. Ironically, a week late the company started to trade on the Frankfurt Exchange. Who are these shareholders? Where can we sign up? Are they part of the pump?
Stock Promotion
The first report put out by StockLemon disputed the credibility of the mass emails sent by Scott Fraser. Now, a new promoter has taken the lead in promoting EYPSF. This is the OTC Journal.com. They have tried their best to discredit the report put forward by Stocklemon.com on November 13. Let it be noted that OTC Journal received 125,000 FREE TRADING shares for their investor relations work. At current market price that is over $600,000.
Let us look at their track record and see what might be in store for EYPSF. Attached is a list of all of the stocks profiled by OTC Journal since 1999 otcjournal.com. StockLemon did the homework and tracked every single stock profiled by OTC Journal up to Energy Power Systems.
Company Name Price when Profiled Current Price 11/15/01
1st Net Technologies $3.50 $.04
Netsol International $7.00 $.26
US Microbics $4.37 $.29
Engineering Power No information available
Envoy Comm. $8.00 $1.52
StockGroup $5.50 $.15
Neptune Society $6.37 $.53
Blue Zone $5.00 $.05
PawnBroker.com $7.00 $.075
MicroAccel Inc. $5.00 $.26
Tropika Intl. Unidentifiable $.03
PhotoChannel $1.75 $.05
IQrom Comm. $9.00 $.23
Medgroup Corp $3.75 $1.72
Visa Gold Exp. Unidentifiable $.05
Interestingly enough, the stock paid to these promoters was not even paid by the company. Rather, it was paid by Fieldston Traders LTD. Who are they? Why are they not listed in the filing? Why do they have such an interest in the stock going higher?
Recommendation
In the next few weeks the company will put out it’s quarterly report for the quarter ending September 30, 2001. We anxiously await this report to see if there is any change in the amount of shares outstanding or material change in the operating revenues of the company. If you choose to purchase the stock of the company than do your due diligence and understand the risk factor of this stock, or for that matter, any stock on the OTC BB exchange. Again, we cannot stress enough the importance of consulting with a registered financial advisor before purchasing any security. Do not buy a stock just because you received an email that promises the world. Good investing to all and don’t forget the old adage, “If it looks to good to be true, it probably is.”
Disclaimer
Stocklemon.com does not guarantee in any way that it is providing all of the information that may be available. We recommend that you do your own due diligence before buying or selling any security.
At any times the principals of Stocklemon.com might hold a position in any of the securities profiled on the site. Stocklemon.com will not report when a position is initiated or covered. Each investor must make that decision based on his/her judgment of the market.
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