EYII.OB

[bw6458]

Starfire - the numbers are very well defined but the most important fact of the whole contact is the order not the numbers.  No order - no sale - no numbers.... as stated below... we should see an order for hopefully 100,000 units soon... that's the big and that's when this deal solidifies itself as binding.  IMO   

"CEIEC will commence purchases under the Purchase Plan
commencing in October 2005, and will place purchase orders
quarterly thereafter"

[starfire]

bw, absolutely! Once the P.O is cut for 100,000 units and delivery begins, they are committed to a minimum of 4million units / $21 million.

[GodisKing]

This is my first post.  I have been reading the posts on this board with great interest. I am pretty new to trading especially in penny stocks. 

I have a question. From reading the agreement that EYI has with CEIEC, it appears that this agreement is somewhat open ended.  By that I mean that CEIEC does not necessarily have to meet the required purchases quarterly or yearly.  It appears that they just would lose exclusive rights to distribute the units.  Is this the case?

[madge20]

Godis King.. Yes you are correct.. You really need to know the product and have a strong opinion that it will be marketing well by EYII and be successful. I have already made that bet.
As others have stated WALL SHEET says show me the money. And that will be when their is a first purchase order.

[JKN]

Well, the way I look at is EYII got a girlfreind (the Chinese), they fell in love and got engaged (LOI with CEIEC).  The marriage went through (the contract).  Now its time to consummate the relationship (the first order) and have some chillens (more orders and some profit).

[vic666]

from the RB board - FWIW

Nothing gets the street's attention like revenues. I think yesterday you saw that most people know the difference between an "unrealized gain" and real money.
HYRF has no contract with CEIEC. The contract is between EYI and CEIEC. So there is no penalty clause for HydroFlo. The penalty for CEIEC is the loss of exclusive agency rights in all of China to sell the Code Blue products, should they fail to meet the contracted minimums. If they fail to meet the contract terms, the exclusive agency rights go back to EYI. Part of the terms of the $210 million contract between CEIEC and EYI is the exclusive agency rights to sell in China. So it will be CEIEC doing the selling in China, not EYI. Remember, CEIEC wanted this product the day they saw it. CEIEC is a billion dollar plus Chinese company that imports and sells products throughout China. If anyone knows the Chinese market, it is a company like this. It is CEIEC that wants this product! And keep in mind, CEIEC is run by the Chinese government which is currently faced with an enormous arsenic and nitrates/nitrites drinking water problem.
Eyi is still not out of the gate on this contract. As soon as they begin to report product deliveries and income, then I suspect EYI price will react. EYI does not seem to go overboard in reporting things. The CEIEC contract was reported, and left at that. The Hong Kong office was reported, and left at that. EYI reports things once and when they happen. HYRF has worked over this CEIEC/ EYI contract and I think that frankly, for them, the EYI/CEIEC dog won't hunt any more. That has long been worked into the share price. HYRF will continue it's march as other positive developments are reported.
But the bottom line for HYRF and EYII where Code Blue production and sales are concerned is that CEIEC saw it, wanted exclusive agency rights in China, and signed a 2 year $210,000,000 contract. CEIEC is a Chinese billion + dollar company that makes it's living knowing the Chinese markets.

[fill_the_gap]

Nice post Vic666,

I added at .088.  When the order and shipments begin, the price will not look back, imho.

EYII is now my # 1 holding as far as percentage of portfolio.  Much time and resources have gone into this deal.  HYRF and EYII opened China operations.  It is just a matter of time for the price to reflect the Contract.

I challenge you to find another stock with such potential to appreciate.  Real companies and orders involved.  The need for the product is well documented all over the world.

Patience is key.

-Jeff-

[vic666]

lol fill the gap, incidentally, this happens to be my no. ! holding percentage wise too!

I've done quite a bit of DD on this to feel confident enough to hold for a while, as well as buy on the dips like now in the 0.08's and 0.09's.

The PR talked about shipment commencing on Oct. 2005, this month. when news of that hits along with the satisfaction of CEIEC over the shipment, that'll be the key.

not before long, I believe this will take off fast...once those sellers that r holding options (as randolph/ramsburg mentioned) convert, this thing will look much better.

i wanna hold this atleast until April 2006, approx. what do u think?

[fill_the_gap]

Vic,

I agree.  The appreciation may be fast and fierce.  I missed the run selling HYRF too early.  Also sold AMEP too early.  I will take some profits on the way up while letting most ride for the future.  The stock should continue to rise over the long haul with the domestic and international sales beginning.  Imagine the residual income from the filter replacements alone. 

EYII sales will begin to snowball.  No way I am selling to miss this ride.

Let me know the status of the options.  Where is the overhead supply coming at this time ?

EYII is a long term company to have in the portfolio.  No logical way to time EYII, imho.

[422fwhp]

I agree with both of you!  This is my second largest holding (HYRF is 1st).  I also added...at .086, .089, & .09 bringing my overall cost basis to .092 and patiently waiting.

Jody

[JKN]

Well said Vic.  As soon as EYII shows some sales, we start up the ladder.  If the sales are really good, it goes through the roof.  EYII is my 2cd largest holding.  I got lucky on HYRF and got a solid 4-bagger, in at .175 and .225, all out at .88, piecing out on the way up.  I would have made alot more but I never could get complete fills at .175 and finally got a half position at .20 avg before it started its march.  I didn't buy the gap fill, I was expecting it to pierce the gap a wee bit more so I didn't pull the trigger.  It filled the gap quickly and well, you know...

If this deal works the way its expected, EYII will be a cash cow.  If the sales are through the roof, we can expect at least a HYRF-style move.  I'm in at .075, .085, and .095 and I haven't sold a share in all of the spikes.  I may begin adding if I move out of some other positions.

Just a hunch but I bet this new Hong Kong office is working on Indonesia.  I hope they are also thinking about India.

[bigdogs99999]

For EYII, better do some fundamental analysis not TA.

One question about the China's deal:

Minimum purchase 4 mill units with $21 million. That translates to only $5.5 per unit.

Am I right on this?

Shaw,

Your question is a good one, and I think there is a fundamental problem of EYII issuing press releases that misstates the contract with CEIEC.  The full contract is on EDGAR.  The fundamentals are (the contract is quoted extensively below):

1.  The minimums for exclusivity are:
"If, in any year, CEIEC purchases fewer than two-thirds of the Code Blue Water Filtration Systems specified in the Purchase Plan (i.e. fewer than 4,000,000 in 2006, or fewer than 4,000,000 in 2007), it will cease to have the exclusive agency rights granted in paragraph 1 hereof, but will continue to be non-exclusive agents of EYI."

2.  "The agreed price for each Code Blue Water Filtration System ... set out in Schedule 'A.'"  The pricing on Schedule A is:
Code Blue Water Filtration System Water Filter--$7.00 per unit
Code Blue Filtration System Water Pitcher--$13.00 per unit
The contract also says that "CEIEC ... agrees that it shall not re-sell the products for less than the agreed price."  That price is not stated.  Apparently someone thinks that Chinese law allows price fixing.  And it might.

3.  There can be a price adjustment of an unspecified amount:
"If, in any year, CEIEC purchases fewer than one-half of the Code Blue Water Filtration Systems specified in the Purchase Plan (i.e. fewer than 3,000,000 in 2006, or fewer than 3,000,000 in 2007), EYI shall be at liberty to adjust the price of the Code Blue Water Filtration System supplied to CEIEC under the Purchase Plan." 

4.  CEIEC commits to purchase Code Blue in accordance with the following purchase plan:
"Year 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Units Total 2006 100,000 400,000 2,000,000 3,500,000 (filter)item 6,000,000 2007 4,500,000 5,500,000 6,500,000 7,500,000 (filter)item 24,000,000 Total: 30,000,000 Code Blue Water Filtration Systems"
Notice that the term "filter" appears in parens twice ... the commitment is to buy the $7 per unit filters.  $7 times 30,000,000 units equals the $210,000,000 that is cited as the value of the contract.

5. The purchase requirements are completely illusory:
"CEIEC may, upon reasonable notice to EYI, increase or ... decrease the number of units of the Code Blue Water Filtration System that it purchases under the Purchase Plan, based on its evaluation of market demand in China."

6.  The press releases of EYII appear to mix up the requirements to maintain the price and the requirements to maintain exclusivity. 

6a.  To continue to purchase at the same $7 price, CEIEC must purchase 3 million units at $7 each year.  That adds up to the minimum of $21,000,000 that shows up in press releases.

6b.  To continue to have exclusivity, CEIEC must purchase 4 million units at $7 each year.  That adds up to a minimum of $28,000,000, a number not stated in the press releases. 

Some of the above is not the best of news.  Like what?:
1.  CEIEC has no real minimum purchase requirements.
2.  $7 per does not imply a huge profit for EYII.   But even if it is $1, that is potentially $30,000,000
3.   EYII is not a sophisticated company.  There are no excuses for not being able to explain to investors accurately what a contract says.  But this point leads to the good news.

The good news is that the press releases do not seem to factor in the sales of the pitchers at $13 a pop.  The contract itself is silent about whether EYII will sell or CEIEC will buy any pitchers, but the inclusion of pricing on Schedule A suggests that the parties have discussed supplying pitchers (with no stated minimums) and agreed on a price.  EYII could therefore have something that is even better than a $210 million contract, or could have a secondary product to take up some slack if CEIEC does not buy as many filters as anticipated. 

What does this mean? 

Let's say that all 6 million filters are sold in 2006 at $1 per share profit.   Let's say that sales of pitchers are 500,000 at $2 profit.  We have $7 million in profits in 2006 which is about 4 cents per share ($7 million divided by 167 million shares outstanding).  Obviously, higher margins are more profits.  I am just guessing on the profit margin, but 15% for a huge contract to a huge distributor is a pretty decent guess.

Let's say that 2007 is not too optimistic and 24 million filters are sold in 2007 at $1 per share profit.   Let's say that sales of pitchers are 2,000,000 at $2 profit.  We have $28 million in profits in 2007 which is about 16 cents per share ($28  million divided by 167 million shares outstanding).

All this assumes, of course, that no more shares are issued (300 million are authorized). 

If all the above is correct ... 4 cents a share at 10 times earnings would be a 40 cent stock.  The other posters who say that those purchase orders need to come in and need to validate the volumes are correct.  If throughout 2006 the validation continues, then this could be a really good stock.  Hoping from a HYRF reaction may be unrealistic though - and HYRF (I posted there too) has its issues too. 

I own a bunch of this one, for good or ill, so good luck to all (or at least to me ).  Dave

[GodisKing]

Dave,
Are you having second thoughts on EYII.OB because of HYRF?  From earliers posts I have read, it appears the EYII is levered to HYRF.  I did notice that  EYII.OB was down today also. 
Your thoughts would be appreciated.

Thanks

[bigdogs99999]

No, I have some reservations about HYRF.  The initial valuations are based on huge margins on its products, and those are not there.  If EYII is selling a filter at $7 and making a profit, HYRF (actually its sub MARTI) is actually making the filter (or having it made) which costs money and selling it to EYII for somewhere south of $7.  HYRF's only known business of any substance is the EYII contract which we have been hearing about for a couple of months (with no other business of note mentioned for HYRF) and with HYRF going overboard to try to revalue its entire company based on that one contract.  It seems to me that EYII may make as much on the China deal as HYRF, and that one contract does not legitimately turn HYRF from a 20 cent stock to a $2 stock.  $1 is too high IMHO.   Don't get me wrong - I have made more money on HYRF than any other stock this year, but sitting around thinking it is worth several dollars a share is just not there.  When HYRF announces 10 contracts to sell products (and lets face it, if there were more we would know it), then maybe.  Bottom line - I think EYII is a good stock at this level.  I bought at 13 cents thinking that a double in 6 months was a good bet.  HYRF - I am a seller at this level....

[fous]

Technically todays price action broke out of the first trendline only to confirm a new trend as long as the new ascending trendline doesnt get broken tomorrow by another down day of price action. Its only a matter of time before this one heads to the highlife. This price is a great buying opportunity, i may just have to pick up some more tomorrow morning.

-fousc