EI website update: December 3, 2010
Investor Bulletin
Dear Shareholders,
Since becoming a fully reporting company at the end of 2008, all of Eternal Image’s annual filings (the S-1 Registration and all subsequent 10-K’s) have made one thing clear: executing the remainder of our business plan would require an additional $1.5 million in operating capital.
As you know, we never secured this funding.
The most recent opportunity we pursued included terms we felt were predatory and not in the best interest of the Company or its shareholders. Some have stated your opinion that Eternal Image was “denied a loan.” This assumption is false. After spending months honoring the due diligence requests from the potential funding source, they returned to us with terms demanding interest be paid up front totaling more than $500k on a $5mm loan, plus another $400k in miscellaneous fees. And they asked us to place $1 million liquid funds into an escrow account of their choosing. While one of our shareholders was willing to do this on our behalf until closing, we did not feel comfortable with it. Management believes it made the wiser choice by passing on this and saving the Company from an unnecessary debt load as well as avoiding the potential of losing what amounted to a large finder’s fee.
Here is the good news. Eternal Image no longer requires $1.5 million to launch the rest of its business plan. You will not see that language on our next 10-K. In fact, the amount required to execute the remaining projects that lead to profitability is much much lower.
After meeting with financial consultants and our own SEC counsel, it was decided that the current share structure is too large for any reputable funding sources to consider us. With 715 million shares outstanding, the Company would need to gross approximately $32 million in annual sales to justify a share price of even 10 cents. Following this split, we can support a 10 cent share price with annual sales around $4 million—more realistic and very much in line with our 2011 sales forecast. The tighter Float and Outstanding share numbers will help our stock act more consistently and get us away from the violent and unnecessary pps swings we’ve seen over the last few years.
Eternal Image will now be able to viably function with far less equity and/or loan infusions. There are larger, more enhanced distribution deals being finalized that we have worked all year on securing. In the last 60 days we launched new Star Trek urn models and the adult Precious Moments casket. Since the announcement of the KISS license earlier this week, Eternal Image has already received order inquiries from European dealers for KISS product.
Cash flow is improving and a wave of new Eternal Image products will be hitting the market over the next 90-180 days that will increase both sales and market share and lead to profitability.
We are looking forward to a profitable 2011 and continue to hold the majority of our shares. Despite the fact that no one in management has drawn a paycheck since early 2008, we still enjoy coming in and working hard every day to make Eternal Image the success that we know it can be.
Management would like to thank those who continue to support us, and we wish everyone a very Merry Christmas.
Eternal Image Management
