Is this strengthening of balance sheet like converting Zaiq voting rights shares to liquid shares of common stock?
I saw on the 10-Q that you filed yesterday a reference to a $6 million loan. Has this loan been funded?
We have not yet closed the deal, but we are cautiously optimistic that we will. In February 2003, Mercatus & Partners Ltd. made a proposal to us regarding a $6 million loan package. We understand that Mercatus is making loans similar to ours to a group of companies that it has presented to a consortium of banks that are to fund the Mercatus loans. On February 24 the Board of Directors formally authorized this transaction and created a series of preferred stock that would be issued to collateralize the loan (filed as an Exhibit titled, "Certificate of Designation for the Series C Preferred Stock" on our most recent Form 10-Q). We told shareholders in the March President's Letter that the deal existed, and that we would keep them posted.
We would remind shareholders, however, that until this loan closes and Mercatus disburses funds to us, the loan is not complete. We would also request shareholders to refrain from contacting Mercatus or other companies in the loan group to discuss this matter.
Once we receive the loan proceeds, we will use it to accelerate our investment in Embarq and to pay some of our significant obligations. As a result, our balance sheet, and therefore our future prospects, will be significantly strengthened. We are excited to be looking at this real possibility of significant funding in the near future.
