NIR and Nacio, Part One
Thanks for the great reception. I probably should have done this months ago.
I don't think there is any question on anyone's mind that NIR is a major thorn in the side of all shareholders. First, a little history. The rotary engine group did not come into Encompass until the summer of 2006. Nova Communications, the forerunner of Encompass had brought in NIR to fund the build up of the Nacio Data Center. It's possible the funds were used to purchase Nacio, but I don't know for sure what the $4 million dollar loan was for exactly because it had already been spent by the time REI and the Webber group came into the picture. (I do know that there were “mandatory” consulting fees paid out of those funds to certain parties which may come back to bite NIR (and others) in the butt someday. In the meantime ECMH is stuck with them.
In the interest of fairness (somewhat), NIR has come through on a few occasions to keep Encompass going. The problem is they are always holding back until Encompass is in desperate straits before acting, hence it's always “catch-up” and never “get ahead” money. I don't know if this is intentional or not, but it sure keeps the company from making the kind of progress it could be making if funded properly and on time. I'm guessing now but I think that after the original $4mil and the subsequent funding, and after several hundred millions of shares converted, the overall debt is still around $4mil or maybe a little less. This is a significant amount even for a company with tremendous potential.
Many of you are correct in your “discomfort” having NIR in the picture. It's also a major stumbling block to new potential funders but they are making slow but sure headway in meeting some of the goals needed to get new funders to act. Webber has also been trying to re-negotiate this debt and while NIR claims to be friendly, not much progress is being made.
The NIR conversion is based on a stock price formula that is onerous at best and by the way conversion on the new funding (that Webber negotiated) was much more inline with standard practices and as long a payments are made, no conversion is allowed. Here's where I really get upset with NIR. It really doesn't matter to NIR at what price they convert shares as they dump them immediately. Whether they convert 10m shares at .001 or 1m shares at .01, it's still $10K. It does, however, make a huge difference to us shareholders. And for that, I hope they burn in hell!
I know it's getting late and the board is pretty quiet on the weekends, so I will put up part two tomorrow about how Nacio fits into this picture (I'm also out of posts for today).
I will also get into what I believe to be the future of the stock issue in another post.
Rotary Guy
