ONYX Withdraws From Honduras

ONYX Services and Solutions, the Colorado-based company, announced today that it is withdrawing from its contract with ENEE to install a 22 megawatt solar farm on Roatan.

This contract was signed October of last year, and called for ONYX to supervise the installation of 18.5 megawatts of solar power, later increased to 22.5 megawatts.

The company is just walking away from the contract.

Their press statement claims the political, regulatory, and financial situation in Honduras presents an unfriendly environment to alternative energy projects.

At the same time, they say they are continuing small solar projects on Roatan, which calls into question their explanation.

What happened?

Longtime readers of this blog will recall that when it was announced in October of last year, we called this contract into question because of a lack of expertise in installing solar power in ONYX, a lack of financial backing to carry out such large projects, and a lack of employees.

We noted at that time that the company's own statements to the SEC were about running banking ATM networks in upstate New York, not solar power.

So while it is convenient for ONYX-- which did not have the financial resources to carry out its part of the contract-- to portray Honduras as an unfriendly environment for their business, we would suggest that if you follow the money, there was never any reason to expect ONYX to be able to complete their end of the bargain.

It's Good News Time in Honduras: And You're Invited!

Yesterday, La Tribuna published an article about the need to get newspapers to print good news stories about Honduras so that tourists can be lured back.

Now, UPI is distributing a story with the headline Honduras inching back to economic recovery that starts

Honduras is inching back toward economic recovery and sees more international tourism as a way out of the crisis triggered by its June 2009 coup.

La Tribuna was reporting on a meeting of leaders of the National Chamber of Tourism of Honduras-- CANATURH-- with, among others, "directors of communication media" to "discuss a strategic plan to manage security". The story quotes the president of CANATURH, Epaminondas Marinakys, as saying that due to the bad press that has come out in

international media where the country is categorized as the 'City of Crime', it is urgent to seek a mechanism to change that image... One of the strategies will be to create a committee that will draw attention to positive news from Honduras and that will also give immediate response at the moment that negative information comes out publicly.

In addition, Marinakys added that the participation of the media is important so that they will consider highlighting good news and not magnifying bad news, and for that they will seek the assistance of the Asociación de Medios de Comunicación de Honduras.

The tourism promoter said that a change in the attitude of Honduran society and the communications sector has to begin to recognize the attractions that the country has.

Happy talk!

And UPI steps up to oblige. What makes their story surreal is that it is essentially a press release for none other than-- Onyx Services and Solutions, one of the highly questionable contractors awarded juicy contracts by the Honduran government.

As we reported just days ago, the SEC suspended trading in Onyx in January, after raising questions about its statements of its actual business. In its filings with the SEC, Onyx describes its business-- accurately-- as based on collecting fees on financial transactions (specifically, it owns a small number of ATMs in New York State). But for months, the company has been sending out press releases about its move into solar power. What the SEC had to say about Onyx was that it was concerned about the

accuracy and adequacy of publicly disseminated information concerning, among other things, the company’s business projects and prospects.

Looks like UPI did not get that memo.

Their article starts with the claim that "U.S. diplomatic help enabled Lobo to start rebuilding the Honduran economy and relieve poverty and suffering among 8.2 million Hondurans" after the 2009 coup. It ends with a couple of throw-away lines about the Lobo administration coming into office with "huge off-budget debts".

What comes in between that is truly mind-boggling: the content of an Onyx press release, reproduced without any apparent knowledge of the ongoing SEC investigation.

The UPI article-- which is unsigned-- says that a "solar-powered tourism resort" on Roatan, the West Bay Lodge Resort, "expects to start receiving larger numbers of tourists" due to the installation of a 330-watt solar panel installation. It touts Roatan as a retirement destination for US expatriates.

The rest of the content comes from a company press release published on MarketWatch on February 8. UPI simply lifted the promotional information that is news-like out of the marketing context.

Onyx, not coincidentally, today announced its plans to acquire 25% of the actual source of the solar panel systems it is marketing, a Chinese company called Optimum Solar. The Roatan installation is Onyx' first solar project and the only evidence that it can successfully sell this technology.

Meanwhile, all our questions about where a small ATM company with reported negative assets, under investigation by the SEC, is getting the financing to acquire a large stake in a Chinese solar company remain.

One thing we do know: one 330 watt solar panel installation is a far cry from the contract awarded Onyx, which called for installation of a total of 18.5 megawatts of solar panels on Roatan in return for payments amounting to $84 million.

But this is undoubtedly 330 watts of good news for Honduras.

And what timing!! Good news!! Come on, all you tourists, join the rising tide!!

CANATURH assures you that Honduran crime is not taking place in tourist destinations, and now, you can enjoy your piña coladas with ice produced with solar power! The march to modernity begins now!!!

ENEE Can Sure Pick 'EM

The Empresa Nacional de Energía Eléctrica (ENEE) can sure pick its partners for generating electrical energy in Honduras.

In October, 2011 ENEE decided to partner with ONYX Services and Solution to build an 18 Megawatt solar electric generation facility on Roatan. We blogged about it here. At the time we noted that the company until six months prior to the contract with ENEE had listed its business as running a network of installed ATM machines, and that at the time ENEE awarded the contract, ONYX Services and Solutions had no solar installations either underway or completed. A strange choice to partner with, right?

An astute reader of our blog just alerted us to the news that on January 27, 2012, the Securities and Exchange Commission of the United States announced it was suspending trading of the company's stock. It stated:

The Commission temporarily suspended trading in the securities of ONYX because of questions that have been raised about the accuracy and adequacy of publicly disseminated information concerning, among other things, the company’s business projects and prospects.

In a press release about the suspension ONYX claimed not to have any communication from the SEC giving any reason for the suspension. So here's what ONYX says about its business and prospects in its latest 10Q filing with the SEC:

The Company derives its revenue from surcharge revenue and inter-exchange revenue. Surcharge fees are added fees which the Company charges the ATM user for dispensing cash. Inter exchange fees are fees charged between banks for transferring money. The Company all of the Surcharge Fees and receives a portion of the Inter exchange fees as income. The Company recognizes the net fees received as revenues.

And later:

The Company had total Revenue for the Three Months Ended October 31, 2011 of $2,142. This reflects a decrease of $4,169 or 66% when compared to the total revenue of $6,311 for the Three Months Ended October 31, 2010. This change is primarily attributed to a decrease in the number of transactions on the system.

As of October 31, 2011, we had total current assets of $70,258 and total current liabilities of $481,923 which results in working capital deficit of $411,665.

See any mention of solar installations there? There are none. Yet, since November they've been issuing press releases every week, if not several times a week, about how wonderful their solar business is and how its moving forward and they'll be buying 25% of their Chinese partner, Optimum Solar, any day now. With what, one is left to wonder. Did I mention that they only have $7, 298 in actual cash on hand?

That's one ENEE partner.

There's also news about Westport Finance LLC and its emergency power contract for 100 Megawatts. In light of the questions raised about the lack of any visible compliance with the terms of the contract ENEE has with Westport Finance LLC, the head of ENEE, Roberto Martínez Lozano was forced to make public statements that only raised further questions. There's also an investigation underway by the Tribunal Superior de Cuentas and the Public Prosecutor's Anti Corruption office.

Six days ago we found out the ENEE board of directors might not have actually approved the contract before Martinez Lozano sent it on to the Executive Branch for approval. That would be a violation of the Honduran law of government contracting procedures.

Next, three days ago, Martinez Lozano told the press that Westport Finance LLC had not paid the contractually required performance bond of $1.3 million, because of an arrangement he had made with them. What he said was

"We have an arrangement with Westport and Wartsila; they're ready to pay it when we tell them."

ENEE has an arrangement!! Well, then why bother to have a contract when you've just voided the protections it provides the government of Honduras? More soberly, this is also is a violation of the Honduran law of government contracting. If the money is there and waiting, why not have them pay it and comply with the contract? Perhaps it has something to do with what we found out six days ago?

We found out three days ago that ENEE hasn't complied with its part of the contract either. Under the terms of the contract, ENEE is responsible for helping Westport Finance LLC obtain the necessary permits. All of this to be done within 60 days of the contract signing. Yet, that date has come and gone with nothing being done. Roberto Cuellar, head of Secretaria de Recursos Naturales y el Ambiente (Serna), where environmental permits come from, says no application has been filed by anyone.

They haven't done it, nor have they presented any application.

In light of all the controversial statements by Martinez Lozano, Congress has called him to testify before them on all of the above on February 15, 2012, and Ricardo Alvarez, head of Lobo Sosa's National Party, has called on Congress to invalidate the contract.

Incompetence? Corruption? Any way you look at it, there's sure to be more information coming out on ENEE and both of its partners here.

Solar Powered Wedge against Chavez?

There's a lot of renewable energy projects being authorized, or coming on line, in Honduras in the last month. But I've never seen one described as a wedge against the political power of Hugo Chavez, of Venezuela, before today.

Onyx Services and Solutions, Inc., a solar power contractor that "focuses on energy solutions that empower our democracy and its allies’ strategic national and international energy policies", will expand into Honduras, building an 18.5 megawatt solar generation station on the island of Roatan. The project consists of installing approximately 65,958 280 watt panels and connecting them to the island's power grid at a total cost of $84 million.

Now this company is a strange bird. As recently as its November 2010 SEC 10K filing, its principal business was the ownership of a small network of ATM machines in Onondaga County in upstate New York. It obtained its capital by selling shares of stock, which expanded from 309,000 shares in November 2010, to over 4 million by April of 2011. As late as July, 2011, its business was the Automatic Teller Machines network in upstate New York.

It has no cash, no employees other than officers, according to its audit reports.

But then, in August of this year, it replaced its CEO and CFO with Malcom Burleson who previously ran a company called Solar-nomics, which he founded in 2009. Now Solar-nomics is a Centennial Colorado company founded in the category "Repair shop and related services" with 3 employees. Their mailing address is a PO Box in Aurora, Colorado. They don't list a phone contact anywhere on their website, which is filled with stock photography and generic solar information.

The first thing he did at Onyx was acquire Southern Geopower for a stock swap, with the help of Blackstone Equity Partners, who end up owning 78.5 % of the issued stock. Southern Geopower was developing a "unique wireless power transmission technology," but had no customers and was no longer a going concern. On September 13 they filed a stock registration statement with the SEC, proposing to compensate directors, officers, and consultants, with a pool of 5 million more shares of Onyx stock.

In September 2011, they wrote a proposal to be the lead contractor for an ENEE photovoltaic installation on Roatan. You can read the proposal (with the pricing data redacted) on their website here. Other than the price, there are no specifics in this proposal, only generalities about what they might do. No guarantee about whose panels, which inverters, what substation components, only suggestions about what they might use. They say they source their panels and inverters from Optimum Solar, a Chinese solar manufacturer. Yet on September 28, ENEE selected them to install the project.

Onyx writes in their description of the Roatan project:

"Many nations of Central America, South America and the Caribbean find themselves being squeezed by the need for power coupled with the temptation to use Venezuelan diesel for electrical generation. While this solution has provided a quick supply of power - it comes with a very high cost to the sovereignty and free will of these nations. .... Without power projects that reduce reliance on Venezuelan diesel, prices can be raised and lowered at will to force leaders of these nations to bend to the will of Hugo Chavez."

Someone better tell the poor of the US northeast not to use CITGO home heating oil, or CITGO gas, as CITGO is a wholly owned subsidiary of Venezuela's state owned oil company. CITGO has been working with states in the northeastern US to provide free or reduce cost home heating oil to poor families through groups like Citizen's Energy.

Perhaps Onyx needs to wage a campaign for solar contracts closer to home, in the northeast United States.