Sharc International Systems Inc. (SHRC) is a company focused in harnessing thermal energy from wastewater. We initiated coverage on April 2017, with notes on September 2017, March 2018. September 2018 and March 2019. Here's an update.
Mar. 18 - Powers Second District Heat Network. Appointed to support the development of the new low temperature District Heating Scheme (“DHS”) in Stirling, Scotland. The $10.6M (£6M) project is being developed between Stirling Council and Scottish Water Horizons, The new SHARC installation will be the second District Heating Scheme in the UK to adopt SHARC Sewage Heat Recovery, with work due to complete spring 2019.
Mar. 26 - Announces $5 Million Private Placement of Convertible Debentures. A conversion price of $0.32 per Common Share non-brokered private placement for the sale of up to 5,000 convertible debenture units (the “Units”) at a price of $1,000 per Unit for aggregate of up to $5M.
- Warrant offered at $0.40 cents.
May 2 - Appointment of Olga Ilich to Board of Director. Founder and President of Suncor Developments Ltd.
May 6 - Closed the first tranche of convertible debenture units (“Units”) for $1,3M from the non-brokered private placement (March 26th).
May 9 - Appointment of Eleanor Chiu to the Board of Directors. Seasoned executive with expertise in Audit and Risk, and Corporate Governance.
May 23 - Powering on with Green Heat Milestone with Border College. The award-winning installation at Borders College that was completed in December 2015 and is SHARC Energy’s first installation of their ground-breaking wastewater heat recovery system outside North America.
June 18 - Announces Corporate Open House Event SHARC-A-PALOOZA. June 19-20th a two day event of product demonstrations, expert seminars, Q&A, video presentations, and networking with our management, knowledgeable staff, affiliates and distributors.
June 20 - Invited to Participate in the Canadian Water & Wastewater R&D Mission to South Korea. Invited by Global Affairs Canada (“GAC”) through the Embassy of Canada in Seoul and the National Research Council Industrial Research Assistance Program (“NRC-IRAP”).
July 3 - Announces Closing of Second Tranche of Private Placement of Convertible Debenture Units Closed the second tranche of convertible debenture units (“Units”) for gross proceeds of $550,000 pursuant to a non-brokered private placement (the “Offering”) of Units.
July 29 - Announces the Sale of Ten SHARC™ Units into China Entered into an agreement with RER Technologies Inc. (“RER”) to sell ten SHARC™ units (“Units”) into People's Republic of China with exclusive use with Mammoth (Zhejiang) Air Conditioning Ltd. (“Mammoth China”)
Mammoth China will supervise all sales and instillation of five (“5”) Model 660 SHARC’s and five (“5”) Model 880 SHARC Units. Delivery will begin in the 4th quarter (Q4) of 2019 and completion of the order in 1st quarter (Q1) of 2020.
Aug. 26 - Announces Non-Brokered $2.5 Million Private Placement - Units offered at 0.10 cents with warrants at 0.15 cents.
Business Unit Spin Out
Decided with the consent of the Board, that the business will best serve shareholders and customers by focusing as a green energy innovation developer and original equipment manufacturer (OEM). Under this model we will provide operating license to international partners who are able to demonstrate an ability to sell and operate our technology effectively in their local market.
Company’s UK subsidiary SHARC Energy Systems (“SHARC Energy”) would better serve its local markets as a standalone business marketing and developing SHARC™ & PIRANHA™ installations across the United Kingdom and the European Union.
Refining Sales Cycle
As I have discussed above, much has been learned about the sales cycle and it was only since late 2018 after eight years of research and development, the Company pivoted into full economic commercialization.
New Business Model
"...We are at a very advanced stage of being qualified as a vendor on several district heating systems in the UK, New Zealand, Australia, United States, and Canada all of which will carry the SHARC™ technology systems as the key central heating and cooling service."
The Company’s project pipeline is significant based on 87 projects in various stages of development and across Canada, US, UK, Australia and China. Please note that we are not making a specific forecast for any period of time, but our opportunities are tangible.
SHRC experience a massive devaluation in the last six months from $0.28 cents to closing at $0.075 cents today. Ironically, The decline is sharpest in the last month following the announcement of Ten SHARC Units to China with RER Technologies and Mammoth (July 29).
As previously reported, because SHRC has not been unable to secure the funds needed, it was expected that the company would need further financing. Hence, another private placement (Convertible Debentures) was announced on March 26 for $5M at $0.32 cents (warrant $0.40 cents). The results again came short; $1.85M (or 37%) of total required amount. Specifically, $1.3M - First Tranche (May 6) and $0.55M - Second Tranche (July 3rd).
Fast forward to yesterday, SHRC announced yet another Non-Brokered Placement for $2.5M but this time at $0.10 cents! Today's release revealed that the company is pursuing a "Business Unit Spin Out" along with a "New Business Model". SHRC.V also claims to have 87 projects in various stage but was unable to produce forecast as it often did in the past.
Of note, SHRC has already reported numerous unnamed leads and distribution partnerships agreements (i.e. ATC, Frontier. Midwest Machinery Co, Johnson & Barrow, Highmark (NYC), and ENGIE). Results to date have not been fully articulated and today's release yet again lack details.
Nonetheless, even omitting this, SHRC's previous consolidation, and its recent track record in fundraising, the announced "Business Unit Spin Out" of the UK Subsidiary today is instrumental to the decline in valuation. A drastic shift in narrative with questionable justifications and revenue implications.
In any event, it may be that SHRC recovers with a "New Business Model", some may even see the current price as a gift. However, despite the numerous accomplishments, this story continues to have major credibility gaps. As such, we will no longer be covering it, effective immediately.
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