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$EEGI Letter to shareholders to clarify disclosure of recent events




Oct 27, 2016
OTC Disclosure & News Service

Scottsdale, AZ -

Dear Shareholders,


I am writing this to address some of the questions we have been receiving over the past two weeks. I am hoping that I can answer your questions and clear up some confusion about several issues.

I know everyone is extremely frustrated by the poor performance over the past month, and we share in that frustration. Although our main focus is building a company, not the stock price, I know how discouraging it is to see any investment shrink. Especially when the information you are getting is confusing or conflicting.

The first thing I’d like to address is any confusion with the Cranium, Inc. transaction. When first introduced to the public Cranium was simply a project. Initially that project was acquired by EEGI in exchange for controlling shares that would put the project founder in control of EEGI. This is why it was initially referred to as an acquisition. Since that time, Cranium was officially incorporated in the state of PA as Cranium Corporation. At that time the agreement was amended and changed from acquiring a project to acquiring and ultimately merging the entity that owned that project into EEGI. This is why it was then referred to as a reverse merger.

Now, the “literal” merger has only taken place in agreement form, it has not yet been filed with the secretary of state because we would like EEGI to undergo a change of Domicile to Wy as previously announced. So while it is a “reverse merger”, and was announced as such, it has not been implemented into the corporate structure as of yet, and that is a detail we would like to make clear to avoid confusion. Basically, EEGI has acquired Cranium in exchange for a majority ownership of EEGI, making Cranium and it’s owner/founder the controlling person of EEGI. EEGI owns Cranium as an asset until such time that they officially have their corporate structure merged which will be after the move to WY, and upon the approval of the WY secretary of state. That detail is one of semantics only and will not affect you, the shareholders in any way. At the end of the day, EEGI owns Craniums product line and the founder of Cranium is the controlling shareholder of EEGI. However we do understand that when something changes slightly, is inherently confusing, and not explained fully, that can easily create mistrust.

The second thing we would like to clarify is that of the recent and very apparent dilution. Additional shares, and the movement of shares from “restricted” to “freetrading”, which has caused a spike in selling volume recently have come from two channels. The first is previous shareholders of restricted shares requesting that their restrictive legends be removed. We have no control over this. The more relevant and interesting to you is the conversion of shares from pre-existing debt, and I will attempt to explain that to you more thoroughly. An 8k was put out in July explaining a deal whereas the majority of debt on the books was to be sold to a new company and settled in court in something called a 3(a)(10). This is an exemption to registration whereas the debt in the proceeding is settled to be satisfied with the issuance of a number of freetrading shares, and unlike traditional conversion of debt to equity, where the debt is removed from the books as it is converted, all of the debt comes off the books of the company immediately, cleaning up the balance sheet and putting the company in a very good place. Now this deal required the purchaser of the previously existing debt to make payment to the original owner within the course of a certain timeframe. During that timeframe shares were issued to them as per the agreement and that was a cause of some dilution of the company’s common stock. However, the purchasing party defaulted on payment nullifying the entire settlement and rendering the debt covered in that deal as uncollectable and therefore extinguishing the threat of that debt causing any future dilution. As of right now, the debt is off the books and cannot be converted into shares. Now, it is true that shares were issued and sold in the time between the settlement and the default and although unfortunate, it is up to the seller of that debt to collect payment for it from the purchaser, not ours. As far as we are concerned right now, that debt, which was significant in amount, is for all intensive purposes gone and off of our balance sheet. No further shares can or will be issued in that transaction from this point forward. One question some people have is “can the purchaser ask the court to force us to allow conversion even though the deal was terminated?” Well, we don’t think so, but we always keep the mindset that anything is possible. We are saying that as it stands right now, its gone. If that should change, we will, of course, disclose it immediately. I would also like to make the definite and final statement to let you know that nobody in this company including current or former board members have benefitted financially from any transactions or issuances that have taken place this year. We fulfill our obligation to issue or free up shares as required by law and none of us have benefitted from it in any way. We have received no compensation, no funding, not a dime. I only say this to let you know there is no conflict of interest here, and we have no reason to issue shares unless required to by law.

Soon, we will complete our 3rd quarter disclosure and we will lay things out much more specifically for you as far as specific issuances, share amounts, debt amounts etc. until that time the above description should tell you what you need to know about where we stand. We vow to be 100% transparent and the only thing stopping us from spelling it out share by share right now is that is simply a ton of work doing the accounting and we need to be sure it is accurate.

Lastly I want to talk about the future. Our number one job is to try to build a company. I know you are all frustrated and I know the first half of this letter may sound pretty dismal, but we are still charged and excited about the future possibilities. As of right now, EEGI is not going anywhere. We have no reason to do a reverse split (I know a lot of you are asking this question), and we do not think it is “over” by any stretch of the imagination. We are super focused on making something big here. At the end of the day we are talking to many potential partners and financial institutions, and we will get this project off the ground one way or another. We are also seeking potential acquisitions, that could bring value to the company and we are confident that we will have a very successful future here. In the mean time all we can do is promise to do our best, and to try to keep the public informed whenever possible. Whatever the results, we will continue to work very hard every day to build something great, and we sincerely hope that you stick with us on this journey.


Please watch for our upcoming disclosure for more specific information.

Thank you for your time and patience.


-Management

Eline Entertainment Group, Inc.

Copyright © 2016 OTC Markets. All Rights Reserved


The above news release has been provided by the above company via the OTC Disclosure and News Service. Issuers of news releases and not OTC Markets Group Inc. are solely responsible for the accuracy of such news releases.