15 May 10QSB between the lines
as I see it :
The business plan is consistent and ready to move forward, along with the expected modification and continued development of the current prototype (which, I believe, is getting closer to spinning at optimal rpms in ongoing tests and adjustments on one of three modules which compose the engine).
The good news I read in the report is the expectation $5 million line of credit becoming liquid from the German bank Wertpapier und handelskasse von 1857* anytime now, since we are in second quarter of which the report states this agreement should be finalized.
This funding would not make it imperative for the company to sell common stock at undesirable prices. Rather, this funding will make it possible to carry out all the company's building and testing for years, if necessary, and as positive testing results proceeds, to issue common stock at desirable prices. We would also see, i.e., the previously issued options and warrants (listed at the bottom of the report) of the report go for the average price of 85 cents, followed by private placements and secondary offerings at yet higher prices.** Proceeds from these activities both go to continue road tests, initiate manufacuring, if necessary, and pay down the $5 million line of credit.
This engine might be selling for other uses such as in the oil fields and to the military ("proceeds from sub-licensing agreements")** before satisfying the DOT requirements enable truck engine sales, providing further funding.
TTE has their act together with this business plan in place, giving themselves the options to rock the world with the DCGT.
There's always the possibility of breakthrough news about a joint venture partner or even an all-out buyout.***
*Instead, the Company has signed a term sheet for a $5,000,000 line of credit with Wertpapier und handelskasse von 1857. The Company anticipates finalizing this agreement during the second quarter and accessing the line over the coming 12 month period to fund continued engine development and to provide additional operating expense coverage. The Line will bear interest at the lower of 8% per annum or Libor +3% at the time of each draw. Interest is payable semi-annually in arrears. The Lender has the option to convert in part or full the loan amount into equity, up to 35% anytime after the first 24 months, unless repaid. Conversion would be based on 70% of the average bid price for the 7 trading days preceding the conversion.
**The Company intends to finance our future development activities and working capital needs largely from the sale of public equity securities with additional funding from a private placement or secondary offering and other traditional financing sources, including term notes and proceeds from sub-licensing agreements until such time that funds provided by operations are sufficient to fund working capital requirements
***The Company is continuing to search for a Joint Venture partner to manufacture and produce the final engine for sale. To date the Company has not entered into any agreements with any manufactures, but is looking to develop such a relationship before the end of the 2007 fiscal year. The Company's ideal Joint Venture partner will provide the engineering support and manufacturing facilities to take the engine from prototype, through vehicle testing, government testing and into the market.
