Dr. John L. Faessel
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Poised for Explosive Growth
Top pick GlyEco mentioned in a Bloomberg Business Week article.
GlyEco (GLYE) $1.12 OTCQB
Worth mentioning, but also worth shedding some needed perspective on, is the September 12th Bloomberg Business Week article that mentioned GlyEco near the end of the piece—the subject matter there was the five-year anniversary of the demise of Lehman Brothers.
The retrospective article mentioned that Mr. Dick Fuld, former Lehman Brothers CEO, is a shareholder of GlyEco. This has been common knowledge and mentioned in GlyEco SEC filings for some time. But because of Mr. Fuld's notoriety, the author fleshed out some of the ancient history regarding the early origins of the reverse merger of the company that was to eventually become GlyEco. Also mentioned was the not so recent news that GlyEco had hired a new auditor.
Firstly, the most important and obvious thing to highlight is that ALL reverse mergers from shell companies by definition were once failed companies. Therefore, to set the record straight; On November 21, 2011 the private company Global Recycling Technologies reversed merged into a shell with 1300 shareholders named Environmental Credits (ECCL). The surviving new public company was renamed GlyEco Inc, (GLYE) OTCQB. The 1300 shareholders are now shareholders of GlyEco. It should be emphasized that GlyEco is completely unaffiliated with the previous shell company.
See Wikipedia's "reverse merger takeover" explanation for the many reasons and benefits, including the drawbacks, here.
And a note: Did you know that the New York Stock Exchange and Berkshire Hathaway both have their origins as shell companies, and reverse merged into their current corporate structure? In addition, there are many other well-known companies that came to be via the reverse merger route.
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Now a few words about the July 2013 news that GlyEco hired a new auditor referenced in the Bloomberg article. As tiny companies become larger they will need larger accounting firms. It's as simple as that. And certainly GlyEco fills the bill of a small company on an exceptional growth trajectory. GlyEco's new auditor is orders of magnitude larger than the previous auditor that began with the company when it was almost an idea. After over $10 million has been raised to date and with six (6) finalized acquisitions and one more on the front burner and with stated international aspirations it was time for GlyEco to progress to a larger auditing firm.
To further set the record straight: the Bloomberg article also stated that, "It's [GlyEco] recently run into trouble. In April [2013] its auditors raised 'substantial doubts' about its ability to remain a 'going concern.'" The fact is, the accounting firm had qualified the company with the same stipulation in filings since 2009 when it was a private company.
Part of the text of the April 2013 SEC filing for GlyEco was a confusing "going concern" reference. The phrase "going concern" has to do with a myriad of specific requirements of the financial reporting framework for, and the auditing standards common to, nearly all growth companies in development—and this usually remains the case until the subject company becomes cash flow positive and profitable. In today's world where litigation is almost a given, new companies in development are universally deemed by the audit committees to carry the "going concern" moniker.
Alicia Williams, GlyEco's CFO, stated in their recent conference call that GlyEco will be profitable beginning in the Q3 of the current fiscal year. Ms. Williams projected the company's revenues for 2013 to be approximately $10 million to $12 million with an EBITDA of $1.5 million to $2 million, and the company's revenues for 2014 to be approximately $45 million to $50 million, of which it is anticipated that $30 million to $40 million will be attributable to the production of Type I material, with an EBITDA of $13 million to $16 million.
Let me add to Ms. Williams financial projection and reiterate re the new auditor / "going concern" issue; "After over $10 million has been raised to date and with six (6) finalized acquisitions and one more on the front burner and with stated international aspirations it was time for GlyEco to progress to a larger auditing firm."
The world uses over 5.5 billion gallons a year of glycol priced at about $5.60 a gallon. Each year there is about 750 million gallons of waste glycol "feedstock" created in the USA and about another 250 million gallons generated in Canada. The patent-pending GlyEco Type 1 recycling process is the only technology that can process and clean all five types of hazardous waste glycols to meet or exceed ASTM standards indistinguishable from refinery grade glycol. Furthermore, the US Environmental Protection Agency [EPA] requires that most federal agencies buy products like antifreeze with the highest feasible recycled content level. Most federal agencies report a lack of supply of recycled glycol to meet their demand.
(GLYE) revealed in a recent press release (link here) a partnership deal to collect hazardous waste glycol from Waste Management (WM) NYSE to create the first nationwide program for recycling used glycols. The deal was 'alluded to' in the recent conference call when management stated that two major feedstock suppliers are in "the final stages of negotiations" and are expected to "supply millions or tens of millions of gallons per year." So there is another big deal and announcement 'cooking', and the supply of toxic waste glycol moving to GlyEco is going to be to be very, very large.
The concise and powerful GlyEco story is that the company owns a unique, disruptive, and breakthrough technology that takes a 'throwaway' toxic waste acquired at a cost of near zero or less (actually getting paid to pick it up), processes it, then sell it for $5.60 a gallon—and there's over a billion gallons within easy reach. GlyEco's revenues and profits should expand significantly as the acquired assets upgrade to the GlyEco technology to produce Type 1 material, and that news flow will drive share price. With a market-cap of only $46 million, I can see it escalating markedly—much the way Waste Management's tracked in its early hyper-growth days—if management keeps up the same development and acquisition pace. Hence, my optimistic outlook concerning the GlyEco shares.
Visit (GLYE)'s comprehensive website: www.glyeco.com
Disclosure: I am long GLYE - I have purchased shares and will likely buy more. I have no affiliation with the company.
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