FuelNation Releases a Letter to Shareholders From Its President
DAVIE, Fla.--(BUSINESS WIRE)--Oct. 7, 2002--FuelNation Inc. (OTCBB:FLNT) today released the following letter to shareholders from its President.
President's Letter By: Chris R. Salmonson, President, CEO & Chairman
October 7, 2002
The thrust of this letter will address the developments that have encompassed the business as well as some personal and professional issues. As you are probably aware, I was arrested by the Sheriff's Office in Broward County, Florida and was held on charges of grand theft relating to a real estate transaction with Abundant Life Christian Centre. It is alleged that I received $1,670,000 from the Church in exchange for real property that was never conveyed to the Church. We trust reconciliation will take place at some point.
FuelNation is currently facing some very difficult decisions and is trying to resolve these decisions in a very professional and systematic manner. Since our acquisition of controlling interest of the Former Regenesis Holdings in October 2000, we have focused our attention on the development of one of the best Management Information Systems (MIS) in the petroleum marketing and convenience store industry. The MIS systems that existed for the industry were very technologically laggard and very burdensome to integrate. The designers of the existing systems wanted you to change the way you operate to fit their system, and this was not a choice. The time, money and effort that went into the development of our MIS system was no different than Blockbuster video spending $16 million dollars in 1987 with Arthur Andersen to develop an MIS system to track the company growth for the roll up of the video industry. Anyone can grow rapidly; the most important part of the growth is to make sure your have the people and the quality tools they need to assist in the successful growth.
Currently, we have the quality system to launch a successful roll-up in the petroleum marketing and convenience store industry we just lacked the financing. The petroleum marketing and convenience store industry is very rarely company owned and operated, most of the big names sign franchise and license agreements with independent owners and operators. The big franchise names supply advertising, training, credit cards at outrageous fees and products for resale. The big name companies do not supply any MIS systems to assist in the management of the stores, their solution is to hire more people. The hiring of more people has proven that it does not work because the industry has a 300 percent turnover rate. One company, we have been following has 2400 employees and loses and retrains 600 employees per week. We have studied and found that the average employee has over 100 tasks to perform daily in addition to servicing customers.
At FuelNation we have worked diligently with the petroleum marketing and convenience store industry automating manual tasks. We have been able to automate in excess of 80 of the 100 manual tasks performed daily without any additional equipment being installed other than our routers and internet connection. During our studies we have found that it is far less burdensome and much more profitable to use our software MIS system for our own use and roll up of companies in the industry. This is no different than the blockbuster MIS system, blockbuster did not offer their system to competitors, and they used it at their franchises for their competitive advantage. We have seen the automating of manual tasks increase the bottom line as much as 30 percent and the customer is not willing to share any of those profits, on the other hand, if we own the company these profits and efficiencies will go to our bottom line.
On August 14, 2002 FuelNation announced the signing of a term sheet for the first $80 million of bond funding. FuelNation finalized the commitment of $10,500,000 to pay for the cost of issuance and the funds to guarantee the interest shortfall for the $330 million bond funding. The length of the loan will be for a total of 18 years and amortized over 25 years. The interest rate was estimated to be 4% per annum. Upon the signing of the term sheet FuelNation was required to accompany the term sheet with a payment in the amount of $80,000 dollars. Since FuelNation does not have any operating revenues or capital in the bank I approached my existing banking relationships and borrowed additional funds for FuelNation by pledging my securities in FuelNation and personally guaranteeing the loans. The commitment to fund arrived on August 16, 2002 and required an additional $80,000 dollar commitment fee to be returned upon the final negotiations before August 23, 2002. FuelNation was also required to verify the proof of funds to pay for the costs of issuance and the shortfall letter of credit by August 23, 2002. Since I was absent from the operations of FuelNation in excess of 45 days after the signing of the term sheet, the necessary fund raising and negotiations to complete the bond issue were not performed. We made several attempts to try and finalize the transaction telephonically, but made no progress. On October 3, 2002 the day of my return I made arrangements to meet with the bond issuers and the shortfall letter of credit providers and started to revitalize the negotiations. The current situations is as follows: FuelNation is required to resubmit the loan application with an increased loan amount of $100 million dollars and an additional fee of $120,000 dollars for a total of a $200,000 application and commitment fee. FuelNation must also provide proof of funds to pay for all of the cost of issuance and any shortfall interest costs in the approximate amount of $3,300,000 dollars. These taxable revenue bonds are being sold at par and need to have all fees paid at closing. I have also agreed to step down from my management roll as CEO and President prior to funding, until the allegations against me are settled or we can find a permanent replacement.
I would also like to address the compensation being given to the investors putting up the funds for the cost of issuance and shortfall letter of credit. Many shareholders have addressed their concerns to myself, and the board of directors about giving an investor 10% of the outstanding shares of the company and $1 million dollars cash payment at funding for the use of their $3,300,000 dollars. We are receptive to other proposals from investors known by shareholders that can provide the funds necessary for the cost of issuance and shortfall letter of credit in the amount of $3,300,000 dollars to be held in escrow to be used for the closing costs. All of the investor's funds and their profit will be paid from the first draw within 60 days of funding. We have had additional inquiries as to why Shaikh Isa Mohammed Isa Alkhalifa, a board of director of FuelNation, does not fund the bond offering. We have approached these scenarios with the board of directors and have come to the conclusion that buying into the company with equity, not a loan would be too dilutive for all parties.
The board of directors was actively trying to negotiate a contract with two of its trusted business partners, Duncan Oil Company and Tower Communications, Group, Inc. to assist the Company's management in the ongoing operations of the Company. We were unable to reach an agreement prior to my return and have therefore cancelled the negotiations until we have a clear direction of the bond funding for FuelNation. We are also preparing documentation to list FuelNation on the BBXSM(Bulletin Board ExchangeSM) exchange that will eventually take the place of the OTC Bulletin Board (R) (OTCBB). The BBX will appeal to many of the same companies that are currently quoted on the OTCBB, but will be a higher quality market.
The BBX will have qualitative listing standards, but will have no minimum share price, income, or asset requirements. In addition, the BBX will have an electronic trading system to allow order negotiation and automatic execution. The new system will bring increased speed and reliability to trade executions, as well as improve the overall transparency of the marketplace. Once FuelNation has successfully completed the bond financing we will work on continuing our listing on either the NASDAQ or AMEX exchange.
The board of Directors Pursuant to the purchase contract dated September 14, 2000 between Triad Petroleum, Inc. and Regenesis Holdings, Inc. exercised our rights in the purchase contract article 6, item 6.7, (resignation of directors and officers) to demand the resignation of Edwin Ruh, Jr. as a director effective immediately. We would like to thank Edwin Ruh for his assistance on the board and wish him many successes with his future endeavors. The current active board of directors consist of three individuals; Shaikh Isa Mohammed Isa Alkhalifa, William Schlecht and Chris Salmonson.
In short, a lot has been happening on the development and financing front. We will keep you posted on any significant events. As always, please feel free to contact me directly with any questions or topics you would like to see discussed in these messages. You can reach me via e-mail at csalmonson@FuelNation.com.
CONTACT: FuelNation, Inc., Davie, Fla.
Chris R. Salmonson, 954/587-3775 x 102
csalmonson@FuelNation.com
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.......According to the Great Pumpkin, ".....You're in .....iHub....., Charlie Brown....."!!!
