By: Dylan Sikes - AllPennyStocks.com News

Friday, September 19, 2014

For small and microcap companies, finding financing can often be extremely difficult, especially following the market fallout in 2008. There are a lot of moving parts to bring funding together that casual investors often don’t see. All the investor knows is that they don’t want a capital raise to be heavily dilutive, or toxic as it’s often called, which leaves investors underwater. But, for the company, when everything is factored in from liquidity to current stock price to requisite dollars for executing a business model, finding favorable funding can definitely be a challenge. On Friday, Ener-Core, Inc. (OTCQB:ENCR) and EuroSite Power (OTCQB:EUSP), two companies in the clean energy space, both announced funding that should help the companies move forward. Here’s a look at two different ways companies can put some cash in their accounts.

EuroSite is an on-site utility solutions provider that offers Combined Heat and Power (CHP, or cogeneration) systems in the United Kingdom and Europe. Cogeneration derives its name from the fact that two sources of energy are created from a single source fuel, often times natural gas, although it can be biofuel, propane or more. In the production of electricity, the “waste” heat is captured and then repurposed for any variety of uses, including space heat, cooling or hot water. The crux of cogeneration is that it is far more efficient than traditional electricity production that feeds the grid. The company, a subsidiary of American DG Energy (NYSE MKT:ADGE), offers its systems to institutional, commercial and small industrial facilities without any start-up costs if desired, shouldering the initial investment themselves and retaining ownership, while generating revenue through the sale of the energy used under long-term contracts with clients. As with the parent company, EuroSite Power guarantees the energy rate to be lower for the client than buying it directly from the grid.

Earlier this month, EuroSite Power announced new agreements for projects at two hotels belonging to FJB Hotels. The Haven Hotel and Sandbanks Hotel, both located on the exclusive Sandbanks peninsula in Poole, UK, will be outfitted with CHP systems and maintained by EuroSite Power under independent 15-year agreements. The contracts are worth approximately $6.26 million to EuroSite Power.

On Friday, EuroSite Power put some extra cash in its coffers through the closing of a five-year, $3 million loan from John Hatsopoulos, Chairman of EuroSite Power and CEO of American DG Energy, to fund the future growth of the company. For investors, the terms in the announcement don’t get much better as the loan bears a zero interest rate.

John Hatsopoulos commented that, "with the recent public offering of American DG Energy behind us, the American division is well funded. With a several site backlog, I wanted to personally assist EuroSite in its near-term growth."

Shares of EUSP are flat at 45.1 cents in early Friday afternoon trading. Shares of ADGE are ahead by 4 cents at $1.03.

Ener-Core didn’t muster such favorable rates in their private placement disclosed on Friday, but the company, which designs and manufactures systems for producing continuous energy from a broad range of sources, will receive gross proceeds of $4 million for its books. Ener-Core has developed the 250kW Ener-Core Powerstation FP250, and its larger counterpart, the 2MW Ener-Core Powerstation KG2-3G/GO, to transform methane gas, especially "ultra-low-Btu gas" from landfills, coal mines, oil fields and other low quality methane sources into continuous clean electricity with near-zero emissions.

In exchange for the $4 million, Ener-Core issued roughly 26.7 million shares of restricted stock, which will be sold for 15 cents each. Participants in the financing include existing shareholders, institutional investors, Ener-Core’s CEO and Chairman, CFO and two members of the Board of Directors.

"The proceeds from this private placement will strengthen our balance sheet and provide us with working capital to achieve revenue-generating milestones," stated Alain Castro, Chairman and CEO of Ener-Core, in a statement today. "We remain focused on the deployment of our Gradual Oxidizer into multiple industries, as well as the scale up of this technology to larger power capacities,” he added.

The company’s Gradual Oxidizer technology this month successfully completed initial testing at its full-scale operational facility in Irvine, California at the request of a “major Canadian integrated oil company” with significant operations in the oil sands region of northern Alberta. The fuel used for the test was an ultra-low energy density fuel similar in composition to the associated petroleum gases flared around the world during the exploration, refining and production of petroleum and natural gas. The exhaust emissions and energy production were measured and independently verified by the University of California, Irvine (UCI); demonstrating “remarkable results in reducing harmful exhaust emissions and generating energy,” according to Dr. Vince McDonell, Associate Director of UCI's Combustion Laboratory in the School of Engineering.

While the cash will certainly be valuable in Ener-Core taking the next step to reach scale, the markets don’t seem real happy with the discounted rate (shares closed Thursday at 33.2 cents). Shares are down 30.1% at 23.2 cents in early Friday afternoon action.

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