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Lot78 Inc (OTCMKTS: LOTE) Is Today's Penny Stock Focus

Lot78 Inc (OTCMKTS: LOTE) Is Today's Penny Stock Focus
Written by
Jarrod Wesson
Published on
April 24, 2017
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Lot78 Inc (OTCMKTS: LOTE) is a new profile that has drawn our attention. The stock has made very some volatile moves right after the company released news about an exclusivity agreement signed with sPARK to sell and install Lot 78, Inc.'s Juice Bar Electric Vehicle Charger in Canada. Have a look at the recent price action:SourceBusinessAs we always do, we will assess, first of all, the business history of the company. The business entity is quite old. Hence, we believe that the executives in the firm have developed ample expertise in business. The company was incorporated in the State of Nevada on June 27, 2008 and has changed the name several times. On November 12, 2012, the company became Lot78, Inc. Finally, the investors should know that the company very recently entered into a Letter of Intent to merge with Compound Holdings, LLC. According to the merger agreement signed with this company the business entity will finally change its name to Compound Holdings, Inc.We believe that this corporate structure change responds to a strategic plan to reduce the amount of taxes paid by the company. In addition, the Board of Directors have a lot of experience and we could see a lot of M&A activity.Recent Business decisionsOn April 18, 2017, the company announced that it was interested in the development of electric vehicle charging stations. This was the most relevant part of the press release:

"It announces its intention to target opportunities associated with the Province of Ontario's announced $20MM of incentives to build electric vehicle charging stations. LOTE has signed an exclusivity agreement with sPARK (www.sparkev.ca) Electric Vehicle Charging to market, sell and install Lot 78, Inc.'s Juice Bar Electric Vehicle Charger (www.juicebarev.com) products in Canada." Source

As you could read in the press release, the government will give $20 million to private companies to develop a network of electric vehicle charging stations. Taking into account the market capitalization of the company of $667,870, this is a big deal. In addition, David Schmid, CEO of the company, stated that the holding was interested in targeting opportunities created by governments like this one created in Ontario Canada. According to him, the high growth expected by the electric vehicle sector is aligned with the value proposition of the holding. In another communication on April 11, 2017, David Schmid provided more motivation for entering in this sector:

"The Canadian electric vehicle charging station market is one that is rapidly emerging as an opportunity for major growth as more electric vehicles become available to our neighbors to the north. Our Juice Bar Electric Vehicle Charging Stations has taken a decisive step in partnering with an innovative company like sPARK with its experienced and diversified management team." Source

The most relevant communication received by the market was on March 28, 2017. This day, the company announced that the GSA, the General Services Administration, had given the approval to LOTE to sell its products.Additionally, we reviewed some press releases provided by the company and saw that the reorganization was even bigger than what we expected. The CEO, David Schmid, was elected on March 21, 2017. This is the way the company introduced the new CEO:

"As part of an executive team that took Hartford, Connecticut-based Propark America from a small regional parking management company to a leading national parking management firm and parking real estate acquisition company, David has held key positions within the company including Chief Financial Officer, Chief Investment Officer and Chief Operating Officer. As COO, David was responsible for daily operations of over 400 locations in 45 cities in 14 states. This responsibility encompassed 1,200 employees and generated over $100 million-dollars in cash flow with $1.2 billion dollars in parking assets." Source

In addition, in the same press release, the company presented its new target: Garage Juice Bar (Juice Bar EV), an Electric Vehicle Charging Station provider. The acquisition was planned to be executed in two steps. First, the company would buy 20% in the first quarter of 2017, and the rest before the end of the year.Market reactionAs we promised, have a look at the spike in the share price on March 27, 28 and 29, 2017. The GSA granted its approval during this time period. We see what normally happens in such situations. Have a look at it:SourceThe other information related to the new agreement signed with sPARK was released on April 11 and April 18, 2017. As a result, the traders bought some more shares in this period of time and the share price spiked from $0.8 to $1.1. As it happened in March, the share price went back down to $0.8. Hence, now it may be a "buy the dip" opportunity.ConclusionLot78, Inc. has reorganized the company, changed its CEO and may change its name soon. In addition, the directors of the Board decided to create a business holding company. We believe that it is an interesting idea since their business expertise accumulated in previous activities will be applied to new businesses acquired. We also included, in this piece, the first acquisition made by the company and the first agreement with a very relevant business partner, sPARK. To sum up, try to keep yourself informed about the press releases of the company. LOTE looks to get a lot more interesting. We will be updating our subscribers as soon as we know more. For the latest updates on LOTE, sign up below!Disclosure: We have no position in LOTE and have not been compensated for this article.

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