Encompass Holdings (ECMH)

[Rotary Guy]

I hesitate to write this, but I think it should be said.

I'm a little concerned about all of the emphasis being placed on the 750M AS. Are we setting ourselves up for disappointment? I am a long-time supporter of Encompass / Rotary Engines, however, I prefer that people look at the reality of the company's situation and stay, go, or increase holdings based on these realities and their own investment temperament.

As much as I would like to see the company maintain the current stock authorization, I just don't see how it is possible. Even if the company can mitigate the NIR debt conversions with some payments, there is still going to be conversions. The NIR debt is just to big and the terms too difficult to overcome near-term. Even with the 100M share return, at these stock price levels, those shares will not last long. My personal opinion is that the current shares won't last more than a month or two. I think that mid-term and long-term, Encompass will be a big winner, but first they have to survive.

I think the Quadrant move (in such a short period of time) took its toll on their funds (not to mention the court induced overpayment in rent). In my opinion, it will take some time for Quadrant to be much of a factor in helping to pay the NIR payment obligations.

If we are not prepared for an increase in the AS, I'm afraid some of us may lose sight of our primary goal; a real company with real products and income. Increasing the AS may be the only option they have to continue to improve their business situation.

The truth is that new funding is (at best) on the horizon but for right now, demon or saint, NIR is the only game in town. Encompass will have to do whatever it takes to keep moving forward. If increasing the AS is the only way they can do that, then what choice do they have? And let's not forget that just because they may have to increase the AS doesn't mean they won't do everything possible to reduce the NIR conversions.

Bottom line: if they can continue to move forward with their business initiatives, even with additional shares outstanding, the stock price can still improve and that in itself will decrease the conversion numbers and the NIR effect on the future price. If my choice is to see the company continue (hopefully with modest gains in the stock), or no progress at all, I'll take the former.

Rotary Guy