E-Waste Systems Inc. (fka EWSI)

[12yearplan]

23 April 2014
The Shareholders
E-Waste Systems, Inc. OTCQB: EWSI
By Posting to the EWSI Social Media Sites and website: www.ewastesystems.com
Re: Open Letter to Shareholders

Dear Fellow Shareholders:
As you know, the 10-K was filed on time but excluded revenues from our important operations in China for technical reasons. In the interests of transparency, assurance, and forward movement, it is important to explain what occurred and the strategy behind our current course of action.
We began 2013 with a detailed and complex strategy including a comprehensive business plan to rapidly build from the 2012 results - starting the year with very little revenue, few assets, or cash, but with a solid goal of rapid expansion. Through a combination of strategic teaming agreements, licensing and leasehold agreements, we worked to accomplish our aggressive targets. Interest in our management, technologies, and supply chain spread very quickly and, by the end of 2013, we had acquired two operations in the United States, including three operational facilities and significant functionality. We also engaged in teaming and licensing agreements throughout the United States and other countries, including Australia, India, China, Italy, Argentina, Mexico, and more. In addition, we secured significant interest in our ePlants, some of which should come online in 2014.
In addition to all of that progress, significant resources were dedicated to gaining a measurable and sustainable foothold in China through agreements with XuFu (formerly known as Yazhuo) a Shanghai based entity ('XuFu') and set the legal framework for our operations in China. XuFu entered into a series of significant contracts to utilize the assets and reputation of specific operations in China. Those transactions involved the leasing of significant assets by our business units and were structured to provide the foundation of business growth in targeted industries and markets predominately in China. Revenue from those operations was included in our 10Q filings based upon an initial review of the structure. While our belief that it was appropriate to report the results of that business on a consolidated basis, after careful consideration of all of the implications, we made the tough decision to voluntarily suspend the VIE agreements to adopt controls, structure, systems, and audit processes to our standards. The result of this decision was that XuFu was necessarily de-consolidated for 2013 for accounting purposes. However, that did not negate or eliminate the business development opportunities achieved by our team in China nor did it slow down our progress there or investment in that market. The revenue generated by

XuFu is substantial and is expected to continue to grow at very rapid rates. Our decision merely

changed how we accounted for it in 2013.

Our work with XuFu is on going and we expect significant, continued brand development in China and internationally - and at the same time, we will benefit from our work to date with improved systems, controls and agreements. The support from our managers in China has not wavered and we have reviewed our business development opportunities in great detail as we work on our plan to meet growth and other targets announced for revenues of $100MM for this year. Paramount is our commitment to remain 100% compliant and to ultimately up-list for the benefit of our Shareholders.

We recognized the need for changes in management and controls in the China operations, and to meet those needs we appointed our Senior Vice President, Dan Feeney to oversee the eVOLVE Group. We expanded the involvement of our new financial and accounting team, supported by our commitment to adopt a state-of-the-art, fully compliant, multilingual, and cloud-based accounting software solution. These systems and these disciplined processes will continue to be expanded as we grow and pave the way for our expansion.
I remain highly confident that we are on track to accomplish our 2014 goals. Our company will continue to expand, and our commitment to tapping into the great opportunities available in China remains steadfast. With the fastest growing economy and the largest demand for e-waste solutions and ecologically advanced technologies, China represents the single greatest opportunity for growth for EWSI with opportunities created by our strong and talented business development team in that market. We are committed to business development and to utilization of a leasing program under the eVolve Group as a key part of our growth strategy.
We have made significant progress in many other geographical areas, particularly in the United States, where the acquisitions of 2013 will be supplemented by an aggressive quest to close on other opportunities and in Europe and Asia where expansion of our brand is a key focus.
We have a talented core management team, and we have great confidence that this team will continue to carry out our mission by integrating best practices, innovative strategies, revolutionary technologies, and global leadership into our operations and our network affiliates.
From challenges arise opportunities. We see the true value in what we are doing, and remain absolutely committed to executing our plan, attaining our goals, and increasing value to our Shareholders.
Sincerely, Martin Nielson
Founder and CEO
- See more at: http://www.noodls.com/view/2082065B1486550DA00E1C3601DEACD0C569FB10?5055xxx1398258400#sthash.1PEMYQW7.dpuf