Photo by Between a Rock

The Times Square News Year’s ball is now energy-efficient, PC Mag reported Wednesday. When the famous sphere drops on New Year’s Eve, it will be lit with over 32,000 LED bulbs manufactured by Philips (NYSE: PHG). The new bulbs consume 80% less energy compared to traditional incandescent light bulbs, which the federal government will phase out starting January 1.

The upgrade of the classic New Year’s icon reflects the growing mainstream adoption of energy-efficient lighting technology. In addition to LED lights, homes and businesses are installing “smart” lighting controls such as dimming systems and building automation products to save on energy costs. The lighting controls market in North America & Europe is projected to reach $3.8 billion by 2015, according to Global Industry Analysts.

Blue Earth (OTC BB: BBLU) is well on its way to becoming an important player in this space. The Company performs energy efficiency upgrades on lighting controls as well as refrigeration, heating, ventilation and air conditioning systems. M&A is a key element in the Company’s growth strategy: BBLU acquires companies with established customer bases in one technology area, and then cross-sells its other technologies to those customers. The two acquisitions BBLU completed in 2011 (one of which has a $500 million project pipeline) provide the Company with a strong foundation on which to grow its business.

BBLU is quickly ramping up its deal activity heading into the new year. US Energy Affiliates recently signed an agreement with the Company to finance energy efficiency upgrades to gas stations and hotels in California, the latter marking BBLU’s entry into the lucrative hospitality sector. BBLU is also partnered with Gexpro and eCORE Technology on the eecoStation program, which is expected to help more than 2,000 gas stations and convenience stores in North America implement energy-saving technology. With energy efficiency technology hitting the mainstream, BBLU has the potential to generate strong revenue growth in 2012 as these programs gain traction.

You can gain more insight into BBLU’s growth potential by watching a video interview with the Company’s CEO, Dr. Johnny R. Thomas, from our recent Small-Cap New York Conference. BBLU also presented during our latest virtual conference; click the link to watch the presentation.

Disclosure: The subject security is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.

Commercial buildings accounted for 20% of U.S. energy use last year, and a growing number of companies are looking to offset rising energy costs by implementing energy efficiency upgrades. Green building activity grew 50% between 2008 and 2010, according to Green Outlook 2011: Green Trends Driving Growth by McGraw-Hill Construction. Nonresidential green construction activity is expected to triple between 2010 and 2015—which should bring an influx of customers for prominent energy efficiency service companies such as Johnson Controls (NYSE: JCI), Ameresco (NYSE: AMRC), Lime Energy (NASDAQ: LIME), and Orion Energy Systems (NYSE Amex: OESX), as well as newer players such as Blue Earth, Inc. (OTC BB: BBLU).

Investors should take note of BBLU in particular. The Nevada-based company is growing rapidly through a roll-up strategy, something its management team has plenty of experience with: BBLU’s founders completed 34 acquisitions in four years at their previous venture, growing the company from $29,000 to $350 million in revenues and increasing its market cap to $1.2 billion. BBLU’s most recent acquisition is Xnergy, a profitable energy services company whose clients include Abbott Labs (NYSE: ABT), Pfizer (NYSE: PFE) and Boston Scientific (NYSE: BSX).

BBLU is also partnering with Gexpro and eCORE Technology on a program that will help more than 2,000 gas stations and convenience stores in North America implement energy-saving technology. The program could generate $60 million in revenues over the next two years. To learn why BBLU is poised to become a major player in the energy efficiency space, view the Company’s presentation from our latest virtual conference.

Disclosure: The subject security is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.

During the solar panel manufacturing process, an energy-conducting metallic paste is applied directly onto solar wafers. The fragile wafer often breaks in the process, driving up production costs. APNT has developed spray-on solar inks that eliminate the problem of breakage, providing significant cost-saving potential. Among the other benefits of APNT’s technology:

• With traditional methods, solar wafers need to be thick enough to withstand the pressure of the application equipment. APNT’s non-contact technology enables manufacturers to create a thinner wafer, which substantially reduces production costs.

• Non-contact machines can print several wafers in a single pass, while conventional machines can only process one wafer per pass. Additionally, with non-contact methods, several layers of ink can be printed simultaneously without having to dry each layer between steps.

• Non-contact methods are extremely precise, only placing inks when and where needed. In contrast, conventional machines produce added waste, leaving paste on the printing components.

“Collectively, these changes in processes translate into dramatic material cost savings close to 44%, or overall solar cell cost savings potentially exceeding 27%,” writes Mr. Novak. The implementation of APNT’s technology could bring solar much closer to reaching the industry’s “$1 per watt” goal, which represents cost-competitiveness with conventional energy sources. APNT has already signed its first solar ink licensing agreement with Sichuan Anxian Yinhe Construction and Chemical Group Co., Ltd. (YHCC), a construction, manufacturing and chemical company with a 46-year operating history and $330 million in 2010 sales. Under the terms of the license, APNT will receive an upfront payment of $2.0 million and an ongoing royalty of 3% on sales of solar inks and pastes by YHCC.

Solar ink technology represents only one element in APNT’s massive IP portfolio. The Company has 300 patents (150 issued and 150 pending) in the areas of nanomaterials, nanosensors, inks and more. Having built its business providing research services to high-profile clients such as the National Institutes of Health and the U.S. military, APNT is just beginning to commercialize its technology in such high-growth sectors as renewable energy, consumer goods, and more. To learn why RedChip analysts consider the stock a great buy at current prices, read RedChip Research’s recently published research report on APNT. You can also see and hear directly from APNT’s CEO, Doug Baker, by watching the Company’s presentation from our November conference at the Harvard Club in New York.

Disclosure: The subject security is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.

Photo by: goldberg

Blue Earth, Inc. (OTCBB: BBLU), a provider of energy efficiency services and technology, has signed an agreement with Gexpro and eCORE Technology to create a program that will help more than 2,000 independently owned retail gas stations and convenience stores in North America implement energy-saving technology. The new program, eecoStation, is expected to generate $60 million in revenue over the next two years, making this agreement a game-changer for BBLU. The Company’s subsidiary, Castrovilla, will coordinate and install the energy efficiency measures (which will include lighting and refrigeration improvements), while BBLU will provide financing for the program.

The Company has strong partners in both Gexpro, which will supply the equipment for the program, and eCORE Technology, which will lend marketing and sales support. Gexpro, an industry giant with a well-established national presence, began over a century ago as a division of General Electric (NYSE: GE) and was acquired in 2006 by Rexel (Paris: RXL.PA), the world’s largest electrical distributor.

Meanwhile, eCORE Technology has established close relationships with independent gas station and convenience store owners nationwide. This extensive customer base will provide an excellent starting point from which to build eecoStation’s sales.

As we discussed in a previous post on the subject, numerous businesses are concerned about rising energy prices and are seeking to cut their operating costs. According to a 2010 study by the Lawrence Berkeley National Laboratory, U.S. spending on energy efficiency services is expected to increase from $18 billion in 2008 to $37 billion by 2020 under a low-growth scenario, or $80 billion under a high-growth scenario. The surging demand for energy efficiency services provides an ideal backdrop for the eecoStation rollout.

BBLU has grown rapidly in 2011, executing a roll-up strategy that began with the acquisition of Castrovilla in January and continued with the recent acquisition of Xnergy, an energy services company that produced $18 million in  revenues for fiscal 2010 and currently has a $500 million project pipeline.

BBLU’s founders have proven success executing large roll-up strategies. In a previous venture they acquired 34 companies in approximately 4 years; growing revenues from $29,000 to more than $350 million. With its skilled management team spearheading the Company’s strategic expansion plan, and a potential $60 million project underway, BBLU is well positioned to capitalize on the vast potential in the energy efficiency market.

Investors interested in BBLU will have at least two opportunities in the next month to learn more about the Company and speak one-on-one with its management: Blue Earth is scheduled to present at our virtual conference today at 1 p.m. EDT and then again at our 2011 Small-Cap New York Conference on November 9^th. Register today to reserve your spot for both events.

Disclosure: The subject security is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv

The Lawrence Berkeley National Laboratory projects that U.S. spending on energy efficiency services will increase from $18 billion in 2008 to as much as $80 billion by 2020, and Forbes contributor William Pentland recently described the industry as “the sweet spot in cleantech investing.”

What is the driver behind this growth in energy efficiency services, and why will it continue? Simply put, companies are concerned about rising energy prices and are looking to cut costs.

According to a Deloitte white paper, Every Company is an Energy Company, energy use accounts for 5% to 20% of a typical company’s expenses. In a recent global survey of over 4,000 corporate executives, facility managers, and other decision-makers conducted by Johnson Controls (NYSE: JCI), respondents cited “energy cost savings” as the primary driver behind their organizations’ energy efficiency decisions. Over 80% of respondents expected energy prices to go up in the coming year.

The desire to boost the bottom line can provide a powerful incentive for businesses, schools, hospitals, and other organizations to implement energy-saving technology such as lighting retrofits and heating, ventilation and air conditioning (HVAC) system upgrades. While these and other energy efficiency initiatives require upfront investments, government incentives and utility rebate programs can defray a portion of the implementation cost, and the energy savings generated by efficiency upgrades often pay for themselves very quickly. With these considerations, energy efficiency is more accessible and more necessary than ever for businesses and other organizations.

One way for investors to profit from the growing demand for energy efficiency services is through shares of Blue Earth, Inc. (OTCBB: BBLU), a company employing a mergers and acquisition strategy to acquire, license, develop, market, install and monitor cleantech-related, innovative technologies and energy management systems. These technologies and systems are designed to enable BBLU’s customers, both commercial and residential, to reduce their energy consumption, lower their generating and maintenance costs and realize environmental benefits.

An important element of the Company’s M&A strategy is to acquire companies with established customer bases in each of its key categories: refrigeration, lighting and HVAC. Each of these customer bases presents BBLU the opportunity to cross-sell retrofits in the other categories. As an example, if a customer was originally a refrigeration customer, BBLU would be in an ideal position to offer energy management services for lighting and HVAC.

In January 2011, BBLU acquired substantially all the assets of Humitech and Castrovilla, which together manufactures, sells and installs commercial refrigeration and other energy efficiency products to a base of approximately 5,400 businesses in northern California. Additionally, Castrovilla currently has contracts with over a dozen municipal utilities throughout its operating region to provide ratepayer-funded rebate offerings and turnkey program administration and implementation.

More recently, in September 2011, BBLU acquired Xnergy, a California-based energy services company that has been rated the #1 Alternative Energy Provider by the San Diego Business Journal. Operating throughout the West Coast, Xnergy has a strong history of providing a broad range of comprehensive energy solutions to major customers, including Biogen Idec (NASDAQ: BIIB), Cox Communications, and LG Philips LCD America (NYSE: LPL). With $18 million in 2010 sales and a $500 million pipeline of projects for industrial, commercial and public sector clients, Xnergy is a strong addition to the BBLU portfolio of companies.

Under the guidance of Johnny Thomas, CEO, and John Francis, VP of Corporate Development, we believe BBLU presents a tremendous opportunity for investors. This is not the first M&A roll-up strategy successfully implemented by these veteran corporate operators. Prior to BBLU, Mr. Thomas and Mr. Francis together spearheaded such a strategy, acquiring 34 companies in approximately four years, growing revenues from $29,000 to more than $350 million, and increasing the market valuation of the company to $1.2 billion.

An experienced management team capitalizing on a fragmented market in a high-growth industry is a recipe for strong capital gains. To learn more about this exciting company, watch our video profile of BBLU and view the Company’s recent presentation at the August RedChip Virtual Conference.

Disclosure: The subject security is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.

Energy efficiency has long been considered the “low-hanging fruit” of the clean-tech movement, and private businesses are just beginning to discover its value. In addition to providing environmental benefits, implementing energy-saving measures and technology can help businesses lower their operating costs and improve profitability over the long term—an attractive value proposition in these budget-conscious times, especially given rising energy prices. A recent CNN Money article outlined the dramatic cost savings generated by energy efficiency improvements at a number of Fortune 500 companies. The most striking example is Dow Chemical (NYSE: DOW), which invested $2 billion in energy efficiency improvements between 1994 and 2009. This investment resulted in cost savings of $9.4 billion over the 15-year period, for a total ROI of $7.4 billion.

U.S. energy service companies (ESCOs) thrived during the 2008-09 recession due to strong business from local and state governments, schools, and hospitals, which received federal stimulus money for energy efficiency projects. These institutions are expected to drive ESCO market growth in the years ahead due to government incentives and “lead by example” programs at the state and local levels. Below are some reasons why investors should consider adding ESCOs to their portfolios:

Robust market growth projected through 2020: According to a 2010 study by the Lawrence Berkeley National Laboratory, U.S. spending on energy efficiency services is expected to increase from $18 billion in 2008 to $37 billion by 2020 under a low-growth scenario, or $80 billion under a high-growth scenario.

Huge untapped opportunity: A 2009 McKinsey & Company report estimates that $130 billion worth of energy-saving opportunities go unrealized in the U.S. each year.

Federal support for energy efficiency projects: President Obama’s Better Buildings Initiative, unveiled in February, aims to achieve a 20% energy efficiency improvement in U.S. commercial buildings by 2020. The initiative will provide tax incentives, grants to state and local governments, and financing opportunities for energy-saving projects.

Utility providers offering energy-saving incentives: It costs approximately seven times as much to produce a kilowatt-hour of electricity as it does to save a kilowatt-hour. To lower operating costs, utility providers are offering rebates to customers for the purchase and installation of energy-efficient products and systems. From 2004 through 2009, customer-funded energy efficiency spending increased from $1.7 billion to $4.4 billion, representing a compound annual growth rate (CAGR) of 21.3%. Spending is expected to increase at a CAGR of 16.1% between 2010 and 2015.

Among U.S.-listed ESCOs, Blue Earth, Inc. (OTC BB: BBLU) stands out for its high growth potential and relatively low profile. The Company offers energy efficiency services as well as refrigeration, lighting and HVAC (heating, ventilation and air conditioning) technology, with a focus on commercial and residential customers. BBLU only began trading on the OTC Bulletin Board in October and has, much like the subsector it operates in, largely flown underneath the radar.

BBLU is currently focused on ramping up its market presence through strategic acquisitions. The Company’s management team has extensive M&A experience, having previously completed 34 acquisitions in 4 years. The team completed BBLU’s first acquisition in January and subsequently expanded the new subsidiary into several states. More recently, BBLU signed an agreement for a second acquisition: Xnergy, a profitable California-based ESCO whose clients include Abbott Laboratories (NYSE: ABT), Boston Scientific (NYSE: BSX), Johnson & Johnson (NYSE: JNJ), Pfizer (NYSE: PFE), Cox Communications, and the U.S. Navy. Xnergy has a $500 million project pipeline and is expected to more than double revenues from $18 million in 2010 to over $36 million in 2012. These acquisitions give BBLU access to an established customer base and position the Company for rapid growth in the second half of 2011 and beyond.

Management’s history of successfully executing roll-ups bodes well for BBLU, which is just starting to implement its growth strategy. The projected increase in domestic energy efficiency spending and the strong recent performance of energy efficiency stocks provide additional reasons to invest in this early-stage clean-tech play.

Disclosure: The subject security is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may maintain positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.

In 2009, China smashed economic records to become the world’s largest auto market and largest exporter. It was hardly surprising, then, when China overtook the United States the following year to become the world’s largest energy consumer. After a decade of rapid economic growth and industrialization, China now requires unprecedented amounts of energy to drive its manufacturing sector, engage in international trade, supply power to its 1.3 billion residents, and fuel the millions of cars on its roads. It’s easy to forget that less than 10 years ago, China’s energy consumption was only half that of the United States.

 However, China’s impressive transformation into the planet’s top energy powerhouse comes with an unintended side effect: increased air pollution associated with fossil fuel use. According to the World Bank, 16 of the world’s 20 most polluted cities are in China, which is the world’s second largest carbon dioxide emitter behind the U.S. With China’s energy needs expected to rise 75% between 2010 and 2035, it’s becoming clear that the nation needs to find a balance between its energy requirements and environmental concerns.

The Chinese government is now taking aggressive steps to address these issues. In fact, China currently leads the world in clean energy finance and investment. Although coal and oil are expected to remain China’s primary energy sources in the coming decade, the central government is promoting alternative fuel sources such as natural gas to meet the nation’s massive energy needs and curb air pollution. Cleaner-burning and more energy-efficient than coal and oil, natural gas is a vital component of China’s national energy strategy. The Chinese government intends to increase the use of natural gas from 3.5% to 10% of the nation’s energy consumption by 2020. Provincial and national governments have enacted favorable pricing and regulatory policies aimed at encouraging the adoption of natural gas.

These policies, along with China’s rapid urbanization, are expected to drive domestic demand for natural gas in the years ahead. Fatih Birol, chief economist for the International Energy Agency, forecasts a “golden age” for natural gas in Asia, with China as the primary consumption driver. Mr. Birol points out that China’s natural gas consumption is expected to more than double from 110 billion cubic meters in 2011 to 250 billion cubic meters in 2015.

China’s larger cities are dominated by large natural gas distributors and state-owned companies. However, many of its small and medium-size cities remain untapped, with fragmented gas distribution markets. China’s second- and third-tier cities are expected to drive the nation’s next phase of economic development, and with their growing populations, these underserved cities leave plenty of room for a well-positioned natural gas utility to emerge as a regional market leader.

One company successfully penetrating these markets is Sino Gas International Holdings, Inc. (OTC BB: SGAS). SGAS owns and operates natural gas distribution systems in 35 cities in China and has an 11% share in its addressable market. The Company primarily targets cities with an average population of 300,000 to 1 million people and a natural gas penetration rate of less than 10%. Because smaller cities typically don’t have the leverage of large cities, which can attract multiple bidders for their utility franchises, SGAS faces limited competition for its services. The Company has signed exclusive agreements to be the sole natural gas utility in a number of cities. These contracts last as much as 25 to 30 years, ensuring SGAS a stable, long-term revenue stream as it works toward expanding its distribution network. SGAS plans to expand to 60 cities over the next 3 to 5 years.   

By focusing on smaller cities where operating costs are lower and competition is less intense, SGAS has generated strong profit margins and growing returns. For the most recent quarter ended March 31, 2011, revenues increased 14.8% year-over-year to $8.0 million, and net income improved to $0.11 million from a net loss in the first quarter of 2010. Gross profit increased 13.9% YoY to $2.4 million, for a gross margin of 30.7%.

The Company currently trades at a steep discount compared to industry peers such as China Gas Holdings Ltd. (SEHK: 384) and Towngas China Co. Ltd. (SEHK: 1083), which trade at an average P/E of 20. With green energy poised to account for a larger proportion of China’s rising energy consumption, SGAS provides a way for investors to simultaneously capitalize on two of China’s top energy trends.

Disclosure: The subject security is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.

Are LEXG Investors “One Flew Over the Cuckoo’s Nest”?

By Dave Gentry, President of RedChip Companies, Inc.

The American thinker and writer Tom Wolfe wrote a book called the Electric Kool-Aid Acid Test in 1968 describing the counterculture fascination with hallucinogenic drugs à la “acid” in the 1960s. The LSD culture was led by Dr. Timothy Leary, the Harvard psychologist; Ken Kesey, author of One Flew Over the Cuckoo’s Nest and the founder of the Merry Pranksters, the group of acid heads who gained notoriety for their antics on the Merry Pranksters tour bus; and of course the Grateful Dead, one of the greatest rock bands of all time. The Grateful Dead became legendary and quickly built a cult following by playing in rented warehouses in Palo Alto, California, where their followers would fill pools with LSD mixed with Kool-Aid: hence, the title of Tom Wolfe’s book (See http://obie1.homesite.net/deadcd/acid_test_files.htm). The “Acid Test” was what Ken Kesey called the experience of tripping on LSD on his ranch in the Redwoods of California.

The Pranksters’ destination was “Furthur,” and a sign on the back of the bus warned, “Caution: Weird Load.” Investors associated with the Lithium Exploration Group (OTC BB: LEXG), a $0 revenue micro-cap stock, recently spent $4.5 million for a massive promotional piece, a slick 12-page pamphlet mailed to millions of investors that caused thousands of them to suck up the LEXG Kool-Aid by the gallons. You might say the stock went “Furthur,” shooting up during a five-week period between March 18 and May 24 from $1.50 to $10.00, allegedly almost putting the broker-dealer, Wilson Davis, out of business on a short margin call.  

Yes, like the Merry Pranksters’ LSD bus tour, the stock movement was fueled by a “Weird Load,” a promotional piece that used the classic sales technique of Association, the use of quotes and research about lithium by well-known investors and financial periodicals, implying weirdly and deceptively that LEXG is around the corner from explosive growth and profits from the sale of lithium. 

(To learn more about the uses and composition of lithium, click here: http://education.jlab.org/itselemental/ele003.html)

Spread liberally and strategically throughout the promo piece were quotes from Bloomberg News, The New York Times, Forbes, The Wall Street Journal, Deutsche Bank, Ford, Nissan, BMW, and Warren Buffett. All mention lithium and/or the use of lithium in electric-powered cars. None of the quotes, of course, said a word about LEXG.

Consider for a moment the remarkable claims made in the promo piece about LEXG:  

“LEXG Will Turn the Energy World on Its Head.”

“LEXG owns properties in regions that contain approximately 22.7% of the world’s known lithium reserves…”   

“And in the LEXG’s brine-based claims, the lion’s share of the work is done by 98 oil and gas drilling rigs… where others pay $2400 a ton to extract lithium…our tiny company pays a mere $1200 a ton…”

FACT: They do not own the properties in Venezuela or Canada; they simply have options to purchase the properties based on a strict payment schedule spread out over, in some cases, three to four years. 

FACT: LEXG does not own, operate, lease or license any oil and gas drilling rigs.

FACT: LEXG has not extracted any lithium, nor will they do so in the near future, if ever.  

FACT: “A qualified person as defined under NI 43-101 has not done sufficient work to classify the historical estimate as current mineral resources or mineral reserves of their ‘lithium’ properties.”  (10Q-March 31, 2011)

In regards to both of their “Lithium” properties in Venezuela and Canada, we find this disclaimer on their website:

The tonnages, grades, and other technical data are taken from historical estimates prior to the implementation of NI 43-101. A qualified person as defined under NI 43-101 has not done sufficient work to classify the historical estimate as current mineral resources or mineral reserves. Lithium Exploration Group is not treating the historical estimates as current mineral resources or mineral reserves as defined in NI 43-101 and the historical estimate should not be relied upon.  

Electric Kool-Aid Lithium Claims Continued

“It’s only a matter of time before the battery-driven demand spike drives the price, and LEXG’s stock, to the heavens permanently.”   

FACT: The stock went from $1.50 to $10.00 and closed yesterday at $2.44.

The word “misleading” does not accurately describe the cornucopia of phantasmagoria the mailer creates around LEXG. On page 9 in the section titled “The Spark That Ignites the Bonfire,” the writer, Elliott Dobbs (if that is actually his name), says, “I can tell you one thing with utter confidence: Everything is positioned perfectly for LEXG.” 

To which I ask:  What about your financials?

Electric Kool-Aid Lithium Test:  Financials

This company was founded five years ago. From May 31, 2006 through March 31, 2011, it has invested $276,200 in “mining expenses.” On its most recent 10-Q, LEXG shows a cash balance of $43,000 for the three months ended March 31, 2011.  From the same 10-Q: 

The Company has been in the exploration stage since its formation on May 31, 2006 and has not yet realized any revenue from its planned operations. It is primarily engaged in the acquisition, exploration, and development of mining properties. Mineral property acquisition and exploration costs are expensed as incurred. (March 31-2011 10Q)

Electric Kool-Aid Lithium Test: A Going Concern

The ability of the Company to emerge from the exploration stage is dependent upon, among other things, obtaining additional financing to continue operations, explore and develop the mineral properties and the discovery, development and sale of ore reserves.

In response to these problems, management intends to raise additional funds through public or private placement offerings.

These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.  (March 31-2011 10Q)

Electric Kool-Aid Lithium: Management Compensation

The Company recently granted 2.3 million shares of stock to its directors, which consist of the president, the chief mining engineer and one other individual. At the time of issuance the stock was trading at roughly $7.00, so they granted themselves $14 million in compensation. This is a company that has spent a total of $256,000 in the past five years on mining expenses, a company that is years away from extracting anything from the ground.  

Conclusion 

Welcome to the Electric Kool-Aid Lithium Test and the Merry Pranksters Management Team. Investors who bought the stock at $10.00 may want to see their doctor for a prescription of lithium, a form of which is used to treat depression. 

Meanwhile, a sensible way to invest in companies in the Lithium space is through the Global X Lithium ETF (NYSEArca: LIT), which is composed of companies in the lithium industry engaged in mining, exploration, and lithium-ion battery production.

Disclosure:  The author has no position in the subject security.

The shortage also underlined China’s significant reliance on imported supplies of oil and gas. China imported 204 million tons or more than 52% of its crude oil needs last year. Import levels of more than 50% are widely considered an energy security alert. With China’s oil and gas consumption rising at an average of 7.5% per year in recent years, domestic suppliers will need to boost their output to meet China’s massive energy needs and reduce the nation’s reliance on oil imports.

The technology to improve the efficiency and productivity of oil and gas companies has existed for years and is now gaining serious traction in China as the country becomes increasingly industrialized and its oil reserves are depleted and become more challenging to extract. Oilfield services providers such as Recon Technology, Inc. (NasdaqCM: RCON) provide automation services that allow oil and gas companies to get the most out of the ground. What Halliburton does worldwide, Recon does in China. Recon provides equipment and software that enables its customers to locate oil fields, increase extraction levels, reduce impurities in extracted petroleum, and lower production costs. Because of its important role in improving the yield and efficiency of China’s oilfields, Recon has been profitable and achieved robust year-over-year growth rates and margins since its inception.

Recon services two of China’s largest oil and gas providers, CNPC and Sinopec. The Company has conducted automation projects for about 80% of CNPC and Sinopec’s oil and gas fields, covering three of China’s four highest producing oil fields in Daqing, Shengli and Xinjiang. Recon serves 14 of China’s 26 oil and gas production bureaus. The Company also acts as a sales agent in the PRC for non-China-based oil services companies such as Cooper Oil Co., Siemens Oil & Gas, Emerson Oil Co., CoreLab, and Unigas.

Recon is the first Chinese non-state-owned oil and gas field service company to be publicly traded in the U.S. Although China’s oilfield services industry is only in its infancy, the Company is already a market leader with three software copyrights, eight product patents and four pending patents for its technology. Operating in a highly profitable industry that incurs smaller capital expenditures and lower business risk than oil and gas companies, Recon represents an excellent opportunity for investors to capitalize on China’s energy boom.

Disclosure: The subject security is a client of RedChip Companies, Inc. RedChip Companies, Inc., employees and affiliates may have positions and affect transactions in the securities or options of the issuers mentioned herein. For full financial disclosures for all RedChip clients, please visit http://www.redchip.com/disclosures.asp?src=rcv.

China’s surge in energy consumption over the past few years has turned the country into the world’s largest energy consumer, surpassing the U.S. well ahead of schedule. However, double digit consumption growth has also created one of the biggest source of greenhouse gases, putting China in a position of mounting pressure from the international community to reduce its pollution levels and energy use.

While the PRC government is reluctant to adopt binding restrictions on its energy use, it has pledged to make its consumption more energy-efficient and has put a strong emphasis on the development of alternatives to fossil fuels as a growing proportion of its total energy use.

Ten years ago, China consumed only half the amount of energy of the United States.

The combination of China’s increasing energy consumption and greater emphasis on clean energy resources are the key success drivers for energy-producing companies in China. The PRC government is forcing energy producers to move away from polluting energy sources such as oil and gasoline and move toward cleaner sources such as natural gas, solar, and wind energy.

Currently, natural gas makes up approximately 4% of the total market share in energy production, but that share is expected to increase to approximately 7% by 2015.

Consumption of natural gas is forecasted to quadruple over the next ten years as China’s cities expand and the government continues to support the natural gas industry. Sino Gas International Holdings, Inc. (OCTBB: SGAS), a natural gas distributor and distribution system developer and operator in China, has taken advantage of the projected demand increase for natural gas through strategic placement of its natural gas pipelines. SGAS offers a large percentage of its product to cities smaller than 300,000 that are experiencing rapid urbanization. By investing in the initial pipeline infrastructure of small, developing cities (Tier-2 and Tier-3 cities), the Company can expand at a faster rate than by focusing exclusively on breaking into Tier-1 markets like Beijing and Shanghai that already have large, established industry players.

With a penetration rate of just over 11% in its addressable market, Sino Gas International Holdings, Inc. (OTCBB: SGAS) has significant running room for further exposure in both the residential and industrial markets of China’s fastest growing cities.

Sino Gas’ strategy involves offering emerging cities the resources, capital, and pipelines needed to distribute natural gas. This is an important factor in SGAS’ strategic plan due to the fact that these emerging cities lack the capital to add new infrastructure. In return, the Company can obtain local monopoly agreements for up to 30 years from the municipal governments in many of its markets. Although these contracts are relatively common in China’s natural gas industry, SGAS’ early entry in these underdeveloped markets gives it a natural advantage over its competitors, who may attempt to expand into the same fast-growing provinces later in the game.

The PRC government’s resolve to increase the country’s reliance on clean energy sources coupled with the huge opportunity to increase natural gas penetration (only about a quarter of China’s citizens have access to natural gas, compared with 70-80% in most developed nations) providing attractive long-term opportunities both for SGAS and for its investors.

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