STOCK DETCTIVE
May 6, 1998
Uneven Possibilities
by Lynn N. Duke, staff writer
Will Eventemp investors get burned, or left out in the cold?
Imagine an Arctic oasis in August and a tropical den in January. Sound like a
brochure from a travel agent? Guess again. It's your car, long before you get in it,
according to the picture painted by Eventemp (OTCBB: ETMP), a company
claiming to have the keys to remote automotive climate control.
Eventemp is proposing success based on some dicey marketing predictions that
would spook many investors, and the company's numbers are chilling as well.
Based in Scottsdale, Ariz., Eventemp markets a product that allows you to pre-heat
or pre-cool your car's interior without actually starting the engine. The company's
invention supposedly works independent of the car's battery and can be activated
through a paging device using any phone.
But orders for the device, which retails for $3,295, are difficult to confirm, and
nowhere near what Eventemp would need to back up claims like this one made on
its website: "It is the strong belief of the company that consumer desire for the
Eventemp product line is so large and diverse, that the demand will exceed supply
for an indefinite period of time."
According to the company's website, it expects to post sales of $72.5 million in the
first year of operation (presumably 1998) based on moving 50,000 units. Eventemp
estimates sales will increase five-fold during the next five years to more than
250,000 units for revenues of $362 million. No bottom line figures are forecast, but
gross profit is estimated at $30 million the first year and growing to at least $150
million in the fifth year of operation.
In person, Eventemp officials are not quite so optimistic.
Ken Simonis, Eventemp's director of sales and marketing, said the company is
hoping for sales of about 10,000 units this year. Even at those numbers, Simonis
considered the future bright.
With a net profit of $700 to $800 per unit, "this company is profitable at 5,000 units,"
Simonis said. "We'd be a good stock if we only sold 5,000 units."
Pretty heady stuff for a company that's barely trading at
just over $3 per share and has no track record. At that
rate, the company might look tempting to the
unsuspecting investor, but a closer look reveals a shaky
foundation. Since Eventemp is "non-reporting" to the
U.S. Securities and Exchange Commission - and has
no plans to start reporting anytime soon, according to
Simonis - there are few documents to rely on. But
according to financial statements posted on its web
site, Eventemp has had no sales for two of the past
three years ending March 31, 1997, the last year for
which figures are available. The one year when
revenues did come in, they tallied only $3,000. During
that same time the company accumulated a $249,383
deficit. There are about 3.9 million shares of Eventemp
outstanding, according to Simonis. Of those, Eventemp's inventor and CEO, Barry
Schroeder and his family control 2.5 million. It is not clear when the shares will
become free trading, but Eventemp started trading publicly in August 1997.
Lap of Luxury
At $3,295 a pop, Eventemp units are prohibitively expensive for most car owners.
Americans bought almost 15 million cars last year, spending $20,000, on average,
according to the National Automobile Dealers Association. It's unlikely many would
care to add another 16 percent to the sticker for a device that's almost pure luxury.
Especially when devices that accomplish virtually the same thing are available at a
fraction of the cost.
Eventemp has big plans for the after market, too. With 200 million vehicles on the
road, the company figures capturing even one-half of one 1 percent would yield 1
million customers. Less than 10 percent of all car owners spend any money on
after-market products, according to Jim Spoonauer, vice president of marketing
and research at the Specialty Equipment Market Association. And most of those
dollars are spent on high performance add-ons like tires and turbo chargers. Only a
fraction of the after market is spent on luxury items, like leather interiors or sunroofs,
Spoonauer said.
Simonis admits Eventemp is not targeting the average consumer, aiming instead at
people who are already buying at the high end of the automotive retail market. If
that's true, Eventemp will have to capture a good chunk of that market. Last year
187,279 luxury cars - cars with stickers above $41,000 - were sold in the U.S.,
according to Ward's Automotive Reports. Luxury Sport Utility Vehicles were more
popular, with almost 600,000 moving out of showrooms. Many of these vehicles,
however, were toward the bottom of the $25,000 and up price range.
Conversion vans and Motor homes are also expected to be big customers at
Eventemp, Simonis said. But again, that market is limited. Last year 438,800
recreational vehicles were shipped from the factory, according to the Recreation
Vehicle Industry Association. Of those, 184,300 were conversion vans, with an
average price of $28,500. The rest were towable trailers and motor homes, the
latter carrying average prices of $47,000 for compact models to $79,000 for larger
machines, according to the RVIA.
But people who are interested in stepping into a
pre-heated or pre-cooled car don't have to shell out
more than $3,000 to do it. Remote start systems that
do the same thing as the Eventemp unit, but with the
engine running, are available for between $300 and
$400. Sound Conceptions, a Fort Lee, N.J. firm that
installs more than a dozen such units per week, said
they have never heard of Eventemp.
Eventemp's claims that cars with remote starting
systems versus their non-start system can't get
insurance are untrue. Representatives at two of the
country's largest automobile insurance firms, GEICO and State Farm, said they
would write policies for cars with remote start systems. And Eventemp's claims that
remotely started cars pose a theft risk are also misleading. According to Sound
Conceptions' sales manager, remote start systems include a variety of anti-theft
features. On some systems, for example, the engine will cut off if it is revved above
idle speed without the key in the ignition. On others, the engine will simply quit after
a prescribed amount of time if the key is not in the ignition.
Elusive Agreements
Eventemp has accomplished its already spotty success through a series of
misleading press releases and a Spam attack apparently launched by its promoter,
Sloane Fitzgerald. Sloane Fitzgerald isn't taking calls regarding Eventemp and its
only other apparent client, J.T.'s Restaurants. A recording at the company's toll-free
number tells you they've been so inundated with calls about the two penny stocks
that they can't take your call, so please leave a number and they'll call back. So far,
they have not called back the Stock Detective.
One press release heralds a $28 million agreement with a manufacturer in
Wisconsin, Excalibur Automobile Corp., but inquiries to Excalibur to confirm the
contract were referred to that company's attorney, Milwaukee-based John Staks,
who did not return phone calls.
Another dose of ambiguity comes from a survey Eventemp conducted at a recent
classic car auction in Arizona. Eventemp says it randomly sampled 700 people
over a four-day period and 86 percent said they would "like" to have Eventemp's
product on their luxury car or sport utility vehicle. There is no indication how many
people said they would actually buy the $3,295 unit, but Simonis said the price was
included in the survey question.
Simonis said another market will be the swank casino resorts of Nevada, where, he
said, the state legislature passed a law prohibiting cars to sit idling at the airport
waiting for pickups.
"Every limo in Las Vegas is going to have one of our units," Simonis said. "Nobody
wants to get out of the airport and into a hot limousine."
Um, maybe not. But there is no such law at the state level, and in Clark County,
which includes Las Vegas, there is only an ordinance prohibiting diesel trucks and
buses from idling their engines for more than 15 minutes. There is no prohibition on
cars, according to Harold Glasser, a spokesman for the Clark County Health
Department's air pollution office.
If Eventemp can ever bring its prices down close to its competition, perhaps the
company will take off. But at current levels, and with nothing on record at the SEC to
back them up, investors would be wise to tread lightly.The Stock Detective.
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