Echo Automotive Pump Continues with Investor Day
I just got another hot press release from the paid promoters working with Echo Automotive to sell this stock and story to the street.
Poor Echo Automotive: the pump isn't working anymore. With volume falling off and (I would like to hope) real investors realizing what a lousy enterprise this looks to be, prices have dropped by 2/3 over the past month, despite the best efforts and tens of thousands of dollars worth of paid email promotion and (reportedly) a multimillion-dollar glossy promotion that's still being mailed out, according to comments here in CAPS anyway. (If anyone would send one of those to Fool HQ, I'd love to see it.)
While Echo is Promising to let investors "kick the tires" on its alleged product, I'd encourage them to kick the tires on the business story instead.
Ask the President and CEO who is hiding in Nevis and paying more than $3 million to promote this stock. If they say they don't know, don't believe it, because I don't. Their hired gun is pictured in that report with members of the Echo Automotive team.
Ask them about their revenue. ZERO. Or $69,000, if you prefer this 8K.
Ask William Daniel Kennedy why he's worth $200,000 a year. Ask Jason Plotke the same.
Ask them about all their businesses back in Arizona that aren't up and running anymore. (MAC Motorsports, KM2 Limited, Plotke and Roehmer, IAG Holdco, Vcommerce International,
Or ask William Daniel Kennedy why he needs entities like Kennedy Collectibles, WDK Enterprises, C9 Consulting, WDKCP1, WDKCPII, through WKDCPIV and more. Seems kinda opaque on purpose to me.
Ask them about their balance sheet that has, as of the latest SEC filing () only $80k cash and more than a million in liabilities. How are they going to fund production of this technology -- even if it does work as promised, which seems completely unlikely to me.
Ask them about their controls and procedures, possibly the worst I've ever seen.
We have insufficient quantity of dedicated resources and experienced personnel involved in reviewing and designing internal controls. As a result, a material misstatement of the interim and annual financial statements could occur and not be prevented or detected on a timely basis.
We do not have an audit committee. While not being legally obligated to have an audit committee, it is the management’s view that to have an audit committee, comprised of independent board members, is an important entity-level control over our financial statements.
We did not perform an entity level risk assessment to evaluate the implication of relevant risks on financial reporting, including the impact of potential fraud-related risks and the risks related to non-routine transactions, if any, on our internal control over financial reporting. Lack of an entity-level risk assessment constituted an internal control design deficiency which resulted in more than a remote likelihood that a material error would not have been prevented or detected, and constituted a material weakness.
We lack personnel with formal training to properly analyze and record complex transactions in accordance with U.S. GAAP.
We have not achieved the optimal level of segregation of duties relative to key financial reporting functions.
I guess I am old-fashioned. When someone asks me to pay $100 million or more for a company, I expect them to have, you know, customers up the wazoo, or managers with a history of success, or a good balance sheet, or something.
Echo Automotive looks like the closest thing to a guaranteed 9-digit-to-zero round trip I've seen in the past couple of years.