Positive Friday, great Monday and it is far from over, yet since Ecosphere Technologies Inc.(OTC:ESPH) is obviously set to bring confidence back in investors and get the stock back above $1. Although a wishful number at the present moment, it is not an exceptional one, since the company stock used to trade way over $1 just less than a year ago. Whether it will happen again, is another matter entirely and depends mostly on a few vital factors. 
Although Ecosphere appears on promotions and alerts from time to time, they have nothing to do with the great performance of the company stock on the market in the last few days. Ecotechnologies is using one of the best ways to inspire investors – by showing a more than 400% increase of revenues for 2010 compared to the previous year. The actual 10-K document was released on March 16th, but it was the Friday press release covering it that started the trading frenzy. This is why the Friday session opened at $0.58 per share, while the first one this week closed at $0.72. And as mentioned above, it is not over yet.
Today, the company announced that an exclusive technology agreement has been signed, which would eventually mean a $44 million additional revenues for Ecosphere over for the next 24 months. Even more inspiring, it is mentioned, 44 million is the minimum number if the terms of the contract are executed accordingly, but it is also possible for additional sale of equipment to take place, thus increasing the above number. It is possible that the market would respond to this with intense trading again.
Now, despite the current prevailing excitement and its effect on the stock market, there is additional financial data from the last 10-K report that should not go overlooked. After all, while there is a noticeable increase in the share price in a short time frame, it is not so exceptional. In fact, the stock has been orbiting around $0.6 for quite some time now. [BANNER]
The 10-K in numbers, besides the 409% increase of revenues on an annual basis, reveals also:
- net loss of $22.6 million for 2010, which is 19% than for 2009;
- working capital deficit of $5.5 million;
- indebtedness of $6.9 million;
“If the holders of our outstanding warrants and options exercise their securities into common stock, we will issue up to 81,779,671 shares, which will materially dilute the voting power of our currently outstanding common stock and possibly change control of Ecosphere.”
Changing control can also mean changing the course of the company, let alone what issuing additional 81 million shares would do to the value of the existing ones held by the company’s investors.
That being said, there is actually one risk factor which should not be of such serious concern anymore. As specified above, the company experiences problems with securing finance to sustain operations. One of the risks was the fear that the non-binding term sheet with a third party would not turn into a contract. Again, taking into account today`s announcement, it seems that the non-binding term sheet is now a binding contract for $44 million at least.
With the above in mind, while it is perhaps too early to talk about steady growth and continuous increase of the price over the next months, it is clear that solid factors are in place and might at least push the shares to the descent price levels from last year.
