A Crash, a Bang, and a Wallop for eCare Solutions Inc (OTCMKTS:ECSL)
eCare Solutions Inc (OTCMKTS:ECSL) popped up on investors’ radars at the beginning of last month after the company announced that their Singular 96tm fuel had passed several tests at a certified laboratory with flying colors. The stock shot up from the $1.10 range it had occupied for so long and started climbing.
On November 21, ECSL published their latest report and it looked like it could put an end to the run because while the share price was flirting with the $2.50 mark, the figures in the statement weren’t keeping up. The report told us that on September 30, the company had just $44 thousand in cash, about $128 thousand in revenues, and a net loss of about $330 thousand. At the same time, the market cap was sitting precariously close to $150 million and in light of this many people thought that a correction was inevitable.
Yet, ECSL defied the odds and continued running. There was a reason for this as well.
A few days before the publishing of the financial report, ECSL issued a press release and said that their alternative fuel has been approved for sale in the state of Florida. Ron Mills, the company CEO, announced that he has already had initial talks with distributors and informed us that the company’s next target is California.
Investors were convinced that the future is bright, and they apparently thought that all the problems like the lack of cash and the negative bottom line will be sorted out once ECSL start selling their fuel in The Sunshine State.
The excitement helped the stock smash through several 52-week highs and last week it peaked at a whopping $3.15 per share. Yesterday, however, something terrible happened. In a matter of six and a half hours investors traded more than 850 thousand shares which means that the dollar volume at the end of the day stood at nearly $1.5 million. At the same time, ECSL‘s market cap shrunk by a terrifying 40% and the ticker dropped to a close of just over $1.75 per share.
The reason for the massive drop is not immediately obvious. There are no new press releases, filings or paid promotions that could have squashed the stock. Once you do some digging around, however, you’ll see that a website called The Deal has done some research on ECSL. And their findings are not good.
Apparently, the company might not be able to sell their alternative fuels in Florida just yet. According to the article, a Florida official has said that ECSL have never received a letter granting them approval for the sale of the fuels. They have apparently received a list of requirements that need to be met if they are to acquire an approval.
This changes things completely and the rest of the article isn’t really helping ECSL recover some of its dignity. Lawsuits around the ownership of patents are mentioned, and we even find the name of John Stanton – a person who has been involved with numerous penny stocks in the past and is now serving a sentence in jail due to tax evasion.
The negativity coming out of The Deal’s coverage has clearly shattered ECSL‘s credibility, at least for the time being, and although some people are saying that this was a coordinated attack on the stock, the horrific crash from yesterday suggests that the damage might be irreparable.
The next few days will be quite interesting because we will see what ECSL‘s response will be, and we should also see whether the SEC has anything to say about the whole thing. In the meantime, keeping your eyes peeled and treading carefully is absolutely essential.