Well! I see our board has been somewhat busy this weekend after Fridays after hour filing of the PRE 14C.
I've read pros, cons, and neutral opinions, and now I'd like to give my opinions.
This statement in the PRE 14c can be taken a few ways, but let me say how I see it:
The Board believes that it is advisable and in the best interests of Eternal Image to have available additional authorized but unissued shares of common stock in an amount adequate to provide for Eternal Image’s future needs. The unissued shares of Common Stock will be available for issuance from time to time as may be deemed advisable or required for various purposes, including the issuance of shares in connection with future financing or acquisition transactions and/or to possibly issue shares of common stock to existing noteholders of the Company who have indicated an interest to convert the debt into equity
The way I see it, there are a couple of possibilities.
1. Those who lent money to EI last year, could be taking restricted shares instead of cash. This would be GOOD for EI, as it would wipe out their debt. The shares would be restricted, so they wouldn't hit the float for awhile.
From the PRE 14C again:
Except as indicated above regarding the possible conversion of debt to equity, Eternal Image has no present plans or commitments for the issuance or use of the proposed additional shares of common stock in connection with any future financings.
HOW is wiping off debt a bad thing?
2. Also as hinted above, it could be for a large licensing agreement. What if Harley or the NFL agreed to go with us, but wanted the royalties right up front immediately? To me, that would also be a reasonable reason for the shares. I am NOT saying we have either one of those licensing agreements!! I just used them as examples, since those would be the biggest licensing agreements for us.
Some expect miracles from EI? Has anyone noticed all the big board companies that have gone bankrupt, or merging with other companies to keep their heads above water, or adding shares, or cancelling dividends, or did F/S's or R/S's.. Or worst of all, trading with the dreaded "Q" after their symbol?
Has anyone noticed all the banks going under? It's not easy getting loans nowadays. It's not easy for the bigboard stocks, so it sure isn't easy for the new little companies that are growing either. "It takes money to make money". EI has finally started to sell their MLB caskets in the last quarter of 2008, but until all their lines are in full production and being shipped to FHs and being sold, they are still catching up. The caskets ARE their big dollar item, and they have just started. I've said all along that I expect to see a red bottom line quarterly, BUT, less each quarter. I also think we'll see green by the end of 2009. I'm NOT expecting miracles, and I DO understand how a business works and what it takes to survive and grow. Heck, even with my small business, we had to borrow at the beginning of each season for supplies. Eternal Image is no scam. Eternal Image is a growing business that is REAL. Wilbert distributes for us now, Waterloo makes our caskets. Think that would happen if we weren't real? Think we'd be shown on THEIR websites? Think that we can work out debt differently than any other company out there? Like every other business out there, Eternal Image is doing what it takes to grow. Go back to mid October and look at the pictures that Heppie, Perk and I took at the NFDA convention. Those aren't cardboard props.
If, like it says in the 14C, that existing noteholders are taking restricted shares instead of cash, that's good for EI! Gets that debt off our books! If part of it is for a licensing agreement, again, that's good for us, as another licensing agreement means more sales and more money.
EI is no different from other companies out there when it comes to their desire to grow and to be a force in their chosen industry. Why should we expect it to be different for EI?
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