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Apr
16
Clean-tech small caps have big vision but no profits
Posted by: Gerry Wimmer
4/16/2012
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The dream of the jackpot sales order is diluting shareholders of many clean-tech companies.

It was not too long ago when Legend Power Systems Inc., a small cap clean-tech company (TSXV: LPS $0.14, Basic: 76.5 million shares) was releasing news about how the Company is revolutionizing the energy conservation market, launched a North American sales and marketing program and had multiple unit sales of its energy savings equipment to a major retailer.

Today the news headlines are much different for Legend Power Systems, a company that manufactures and markets voltage optimization product solutions to help commercial and industrial customers to reduce monthly electric energy monthly costs. Legend Power's latest corporate update is about the Company's progress to reduce its own monthly costs to operate a business that has a negligible sales outlook.

Legend Power Systems is not alone in its plight to survive. MicroPlanet Technology Corp. (TSXV: MP $0.055, Basic 102.9 million shares), Smartcool Systems Inc. (TSXV: SSC $0.08, Basic: 64.2 million shares), Sustainable Energy Technologies Ltd. (TSXV: STG $0.055, Basic: 200.3 million shares) -- just to name a few -- are other TSX Venture listed clean-tech companies which are in "life support” mode too, issuing millions shares for funding to stay alive.

Most CEOs of small clean-tech companies have very big dreams for their respective company. They can communicate a rosy vision to investors on the global sales potential of their green technologies but are never able to execute on a business plan to produce profits.

There is a false hope for most clean-tech small caps that the jackpot sales order is just around the corner.

It is the perception of that big order which has allowed clean-tech small cap companies to raise new equity each year to fund the annual losses by issuing of millions of new shares for pennies and consistently diluting existing shareholders.

Last month, Legend Power Systems raised additional funds by selling another 16 million of its shares to investors at $0.08 each. In the prior two years, the Company issued 22 million shares at $0.15 and 15 million shares at $0.50 for financing.

Maybe this time Legend Power Systems has a plan to make money. Otherwise, how about a $0.02 per share offering for next year?

Author's Ownership Position:
TSXV: LPS - None
TSXV: MP - None
TSXV: SSC - None
TSXV: STG - None



Read Disclaimer:

This article is for informational purposes only. This article is based on the author's independent analysis and judgment and does not guarantee the information's accuracy or completeness. The information contained in this article is subject to change without notice, and the author assumes no responsibility to update the information contained in this article. The information contained within this article should not be construed as offering of investment advice. Those seeking direct investment advice, should consult a qualified, registered, investment professional. This is not a direct or implied solicitation to buy or sell securities. Readers are advised to conduct their own due diligence prior to considering buying or selling any stock.

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Hi Gerry, Your philosophy is focused on principles that have been shown to produce above average results over time and your record has clearly proven that. Congratulations on a great blog and thank you for the hard work that you do in sharing and updating your ideas; it is much appreciated.