CO2 Tech Ltd. - Buy These Shares, Save The World?
Investigative Reports
February 8 2007
http://www/stockpatrol.com
Stock promoters are always looking for a hook – a sexy story that will attract investors and send a stock price soaring. Typically, the touts latch onto "hot" topics to satisfy this itch. The most transparent effort to exploit public attention came shortly after 9/11, when some tiny companies suddenly claimed they were in the "homeland defense" business, while others said they could detect or cure anthrax. See, Cal-Bay International - A Smell Test; Just The Anthrax, Ma'am; Someone's Cleaning Up.
Code words appeal to promoters because of their universal appeal. Who does not want to prevent HIV/AIDs, conserve energy, or protect national security? Unfortunately, not every company that lays claim to an appealing plan or timely product has the wherewithal to succeed. Sadly, many of the companies that utter those code words most loudly lack resources, personnel and capital.
But that does not stop promoters from shouting. And, these days, what code words resonate more effectively than "global warming?" So when a struggling penny stock business morphs into an "anti-global warming" company it is bound to capture some attention. That appears to be the case with an entity now called CO2 Tech Ltd. (Pink Sheets: CTTD) a company based in the United Kingdom – which emerged from obscurity last week to become one of the volume leaders on the Pink Sheets.
CO2 entered the public arena by virtue of a reverse-merger in late January 2007. On January 25, 2007, just days before the reverse-merger was announced, 1200 shares of the Company's stock changed hands. On January 29th, as news of the reverse-merger became public, 729,104 shares were traded. The following day, volume increased markedly – to 12,204,795 shares.
Not surprisingly, the emergence of CO2 Tech comes on the heels of a U.N. report that blames "human activity" and the increased emission of greenhouse gases for global warming. It is the sort of announcement that makes promoters salivate.
Is there information – publicly available facts – that suggest this Company can effectively combat global warming – and turn a profit? Is there a track record here – and signs of substance? If not, what precipitated the sudden wave of investor interest - and catapulted CO2 to the top of the trading charts?
We decided to take a look.
On the Record
Public information about CO2 Tech is sparse. Like many small over-the-counter players, the Company has undergone a series of transformations in search of a successful business. Formed in July 1978, the Company was known as Huayang International Holdings (until October 2004) and Power Capital Corp. (until January 1996), until becoming China Energy & Black Carbon Holdings, Inc. In January 2007, it was transformed into CO2 Tech.
In early January 2007, shortly before the CO2 takeover, the Company reduced its outstanding shares through a 2000 for 1 stock split. As a result – at least according to Pink Sheets – 4,007 common shares were outstanding as of January 9, 2007.
Have more shares been issued since? What were the terms of the reverse merger? What did the owners of CO2 pay to acquire China Energy & Black Carbon Holdings? Who were those owners –and who holds a controlling interest in the Company? A January 29, 2007 press release issued by the Company confirmed completion of the merger, but offered no details of the transaction. And these are sort of details investors should want to know before they plight their troth with an unknown entity.
According to records of the Nevada Secretary of State, the Company increased its authorized common stock from 150 million shares to 999 million shares on January 9, 2007. Less than two months earlier, the Company had increased the outstanding common stock from 90 million shares to 150 million shares. How many of the newly authorized shares have been issued, to whom have they been given and under what circumstances? Can they be traded – and when?
With more than 12 million shares trading on January 30th, it would appear that the outstanding float has grown exponentially – but how? Have additional shares been registered or sold without registration – perhaps to offshore investors? So far, there appears to be many questions but no publicly available answers.
And without those details, how can investors possibly understand the value of their holdings?
Assessing the value of CO2 Tech may be problematic in any event. The Company does not file regular public reports with the SEC's Edgar system and has not filed any financial statements with the Pink Sheets. So, from the public's perspective, the financial condition of CO2 Tech is a mystery?
In the absence of detailed audited financial information it would seem impossible for a public observer to determine whether CO2 Tech has the capacity to compete with established, well-capitalized businesses who already occupy a portion of its chosen niche market.
So why have millions of shares been moving around the market in recent days? If the Company shows great promise, why are existing shareholders suddenly unloading their positions?
Investors seeking information about the Company have limited resources to turn to; the Co2 Tech website; recent press releases; and an aggressive campaign by promoters who have been harping on the anti-global warning angle.
The Company's website offers a rather broad overview of its mission and operations. CO2 Tech says it "provides cutting-edge sophisticated technologies, along with a full range of expert consulting, and environmental products and services to businesses, industries and governments." The Company claims that it has developed "proprietary technologies, products and equipment for controlling and measuring atmospheric emissions, greenhouse gases and related systems for a wide variety of industries, including power, cement, pulp & paper, glass, chemical, food, steel, refineries, mining & incineration."
The Company says it has developed several systems, including a method to improve economics and reduce air pollution by recovering feedstock; flue gas desulphurization systems for utility power plants; an air pollution control system; and a sophisticated system for the removal of fine solid materials from gas and air.
Co2 Tech also conducts environmental audits, consults on environmental standards and assists with development of environmental solutions.
But while the foundation for an environmental-based entity may be present – or in the offing – there is little information to indicate the current state or scope of the Company's operations. The CO2 website does not indicate whether it has applied for or received any patents for its "proprietary" products and it does not identify any historic clients for these products and services. Nor does the Company explain or acknowledge the existence or stature of its competitors.
And the Company's website identifies only one officer, director or employee – Ms. Helga Schotten, who maintains an office on Wilton Road in London, England. Does the Company manufacture products – and if so does it maintain manufacturing facilities? Are there other officers, directors and employees? What is Ms. Schotten's experience? How long has she been with the Company? We were not able to find any of this information on the CO2 Tech website. And, surfing the Internet, we were unable to find any useful information on CO2 or Ms. Schotten predating the reverse-merger,
And in the Press
The Company's website sheds little meaningful light on CO2 Tech's history. Recent press releases are intriguing, and provide fresh fodder for promoters, but also fail to provide significant details of the Company's pending projects. A January 30th press release, for example, implied a relationship between the Company and Boeing. The press release, headlined, "CO2 To Join Boeing's Global Environmental Efforts," declared that "CO2 Tech, a UK-based provider of cutting-edge, anti-global warming technology solutions, will join Boeing's global commitment to support anti-global warming activities and other environment efforts."
The Company applauded Boeing's determination to invest in technologies that will improve the environment, and noted that CO2 had developed a new solution for reducing gas emissions from airplanes at high altitudes. But despite the captivating headline, nothing in the press release indicated that CO2 had entered into any relationship with Boeing – or that Boeing is even aware of CO2's claimed technology.
Yet, on the day the Boeing "news" was released, CO2 traded over 12.2 million shares and jumped from $0.91 (the closing price the day before, to $1.65 a share.
The next day the Company issued a somewhat more substantive press release. In January 31st, CO2 announced that it had been "commissioned to perform environmental effects monitoring and analysis and develop environmental solutions to the Sakhalin II Project, one of the largest new energy development projects in the world today."
The Sakhalin Project, which is controlled by a joint venture consisting of Shell, Mitsubishi and Mitsui, is producing oil from an offshore platform in Russia. The project is well-underway – Phase I commenced in 1999 and Phase II had been 60% completed by 2005. The joint venturers acknowledge that they must address environmental issues as well as the concerns of the area's indigenous inhabitants.
The joint venturers could reap significant profits – but where does that leave CO2? The Company says that it will "conduct an environmental analysis of the project delivery routes in terms of detrimental effects on forests, which has a direct impact on oxygen concentrations in the atmosphere [;]…monitor potential emissions from the project's systems, and develop appropriate environmental solutions to the project's partners. This would appear to be a valuable project, but will it generate meaningful income for CO2? The January 31st press release does not indicate the economic value of the contract.
On February 1st the Company issued a press release reiterating that it had been commissioned to perform environmental analysis for the Sakhalin Project. Again, the Company did not address the details of that arrangement.
Later that day, the Company issued another press release. This time CO2 revealed that it would lead the "analytical assessment phase of the Guyana Conservancy Adaptation Project," which it described as "a large-scale World Bank environmental project, sponsored by the Global Environment Facility." According to the Company, this venture is designed to help reduce the vulnerability of Guyana to intense climatic events.
Here, again, the scope and value of the Company's services are vague. CO2 says that it "will lead specific actions, including a comprehensive analytical assessment, for upgrading the conservancy and strengthening drainage capacity in the face of increased sea levels and more variable rainfall." Still, while it states that project costs are estimated at approximately $20 million, the press release does not indicate how much CO2 will be paid for its services.
In its most recent press release, issued on February 5th, the Company announced that it would submit a proposed plan to address soil contamination in the State of Pennsylvania. The press release did not indicate that the proposal had been solicited by state authorities or whether the Company had engaged in any discussions with appropriate authorities in Pennsylvania. Consequently, it does not appear to assure any immediate financial return to the Company. So why issue the release?
Although each of the Company's recent press releases failed to address critical issues – like revenues – demand for CO2 shares continued at a brisk pace. Over 5.2 million shares of CO2 common stock were traded on January 31st, another 5.5 million shares traded on February 1st, and another 6.4 million shares changed hands on February 6th.
Save CO2, Save the World
Of course, it is unlikely that a significant buzz would have been created for the Company by press releases alone. Since the reverse-merger, promoters have been actively working to boost interest in the otherwise obscure company. On January 30, 2007, an "investor relations" firm called WhisperfromWallStreet issued a press release describing CO2's "cutting-edge technological developments and outstanding reliability to support anti-global warming actions."
That same day, a number of other press releases spread word about CO2. "The StockPic.com" sent out a press release recommending the Company, while "OTCStockExchange.com, "redhotpennystock.com," and "WallStreetCapitalFunding" each issued "alerts" for CO2.
Since then, similar press releases have appeared virtually every day, referencing the Company's press releases or, in many cases, issuing stock "alerts" – but never offering investors a detailed, credible rationale for purchasing CO2 shares.
Promotion proceeded on a second front as well. On February 5, 2007, a "communications" company called "Azteca" hit the fax machine – sending out a fax that declared "CO2 Tech To Join Boeing's Global Environmental Efforts along with Mitsubishi Corporation. NOW IS THE TIME."
The effort to identify CO2 with Boeing and Mitsubishi was transparent – despite the fact that there is no sign of any relationship between the Company and Boeing and no clear definition of the value of the Company's role in the Mitsubishi venture. Such concerns were lost on the promoter, who declared "If Boeing Likes CTTD, So Will You!"
And what if Boeing doesn't?
The promoter's agenda was clear - perhaps because it was paid $200,000 to distribute its "report." So, after describing CO2 as a "cutting-edge global warming company," the fax turned to those code words we noted at the beginning of this article: "Global Warming is HOT, and EMISSION REDUCTION TECHNOLOGY is the sector. Help save our world and seriously consider [CO2]."
Or, in other words investors should part with their savings, buy CO2 stock, and somehow save the world.
A noble goal – but is there any evidence that CO2 is up to that task?
Couldn't we just save the cheerleader first?
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