Ecare Solutions Inc (OTCMKTS:ECSL) on a High-Octane Run

Ecare Solutions Inc (OTCMKTS:ECSL)’s performance over the last two weeks has been quite impressive. The last red session was logged on November 3 and since then, the ticker has managed to add a total of 66% to its market cap.

At the moment ECSL is sitting at $1.75 per share which means that it still has a long way to go if it wants to top the 52-week high of $2.50. Nevertheless, the volumes are growing and most of the people around the message boards are excited which goes to show that investors might just push the stock further up.

The question is: “Is there anything to suggest that ECSL really deserves a valuation of around $2.50 per share?”.

As far as the latest financial statement is concerned, things seem a bit dubious in that respect. At the current price, ECSL‘s market cap stands at just under $100 million and that seems like a bit of a stretch considering the figures registered on June 30. Here they are:

• cash: $0
• current assets: $496 thousand
• current liabilities: $129 thousand
• yearly revenues: $647 thousand
• yearly net loss: $1.3 million

You might have calculated already that on average, ECSL has been logging monthly revenues of around $50 thousand and at the same time, it has been losing money by the bucket loads. All in all, it’s not ready to make a significant impact on the numerous industries listed in the rather diverse business plan.

Still, we should also note the positive things in the report like the 20% jump in revenues year over year. And we mustn’t forget that the current appreciation of the share price was triggered by a press release from October 30 which informed us that an independent laboratory has certified ECSL‘s Singular 96 fuel. The management team believes that this will give them the chance to sell it in Florida and California – two big markets that might help the company gain more recognition and, consequently, more revenues. Unfortunately, you’ll need to wait for a while and see if everything will go according to plan.

But while you’re at it, you should bear in mind that there are some things that could potentially knock ECSL off its perch. In order to find out what they are, you need to open the latest Supplemental Information filing and scroll down to the table that starts on Page 3. In there, you’ll see that over the years, ECSL has printed around 5.5 million shares of common stock as a conversion of $1.8 million worth of debt. The conversion rates range from $1 per share to as little as $0.05 per share.

So, what does that mean?

It means that many people stand to make quite a lot of money from the current valuation by unloading a large amount of stock on the open market. It also means that you should be extremely careful when making your investment decision because if the aforementioned people decide to cash in, ECSL might tumble down and recovery could prove to be nothing more than a mirage. Especially in light of the less-then-impressive financials.