Earthcare Energy Investment Summary

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The link below is to an investment summary document that serves as a prospectus for investing in the start-up business known as Earthcare Energy. As the City of Evansville has committed but not received City Council funding approval to go ahead with a $5 Million loan to this business the following questions are relevant and should be answered along with others that will follow when these are answered.

1. In the section called “The Product” reference is made to patented technology. It is now known that there are no issued patents. This discrepancy must be resolved and the reason for claiming patent protection for “old and proven technology” needs to be understood by all.

2. The pro forma for the company calls for a cumulative loss of $26.6 Million by the end of the second year of operation and for a break even to occur in the 38th month. How will a $5 Million loan sustain a 38 month ramp-up to break even when projected cash flows exceed $26.6 Million?

3. In later pages a reference is made to a year one common stock sale with proceeds of $10 Million.

4. The cash flow section of the pro forma refers to financing in years one and two in the amount of approximately $34 Million. This exceeds the City of Evansville’s ask of $5 Million by $29 Million. Should this package be in place prior to the City Council “jumping in first”?

5. There does not appear to be any provision in the pro forma for annual payments of $2.5 Million to the City of Evansville as has been widely reported to be the case.

When these are answered there will certainly be more questions and the CCO encourages the Evansville City Council to get about the business of understanding this business model and the technology behind it before scheduling a vote to play “Shark Tank”.

Earthcare Investment Summary

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2 COMMENTS

  1. 5th year cost of goods sold is ZERO. Whoever wrote this must be a fool. The next Google and then a zero cost of goods? The more you read the dumber it looks.

  2. A word to the wise is sufficient. Investors should be careful when reading a company’s pro-forma financial statements, as the figures may not comply with generally accepted accounting principles (GAAP). In some cases, the pro-forma figures may differ greatly from the those derived from GAAP.

    BTW, I believe that Google brought in more than $10 Million on its IPO.

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