The difference in borrowing money to invest in the company verses printing shares of stock and diluting the shareholder's value. On a balance sheet, shareholders equity is the same regardless of borrowing or dilution. The difference is that you have to pay back interest, which would increase future expenses, when borrowing and you don't when diluting. The reason is that when diluting you are "selling" a part of your company to new investors which leaves your old investors with a smaller piece of the pie and thus the old investors (you) are paying that cost. IF they invest the money and "make it back" the new investors make money and the old investors "break even". And that is usually a BEST case scenario.
To the point, either way is a cost to the shareholders . Until there are FULL financial statements, one will never know.
Here is a simplistic example for EXISTING shareholders: You want to get some money for your house and your choice is to borrow it or sell part of your land making your lot smaller. Either way, you decrease your equity portion for cash. Now, the question is how you spend your money. (1) If you spend that money paying existing and customary bills, you have lost equity. (2) If you spend that money on an addition, you have (hopefully) MAINTAINED equity. (3) If the value of the house after the addition is more than the old value, you have made money.
They may want us to believe the third option is correct when it is 95% likely that the first option is true. If the second option is true...who cares why they spent the effort in the first place?
Shareholders need a copy of the resolution and minutes wherein the Board authorized the dilution (that is our right). Normally, that will give us a hint why the money was raised. Not necessarily, however, if the Board is trying to hide things from the shareholders which is a breach of their duty of trust.
