ECDC faithful, I have posted a series of emails to Kayode with his responses (he is always very quick to respond). They are a very good informative read and should continue to provide confidence in ECDC and the direction they are heading (at least for me)...
ME:
Hello Kayode,
I have a couple short questions.
First, I was wondering if you are still confident of ECDC uplifting to a larger exchange, and if so, what would be an estimated time frame for this? Also, what exchange would you be expecting to move to?
Second, do you expect the need for a reverse split, or do you feel this may be avoidable?
KAYODE:
Thank you for your email. We are experiencing significant increase in business activities, I am still very hopeful that when the market take into consideration the appropriate valuation for all of the divisions of the company, we will have no need to reverse our stock.
In my view our company and business is completely undervalued at this time. We will see how much change we will have by year end. There two steps we are now taking to improve this. 1. Get the proper classification for the business (we should have similar SIC code as google and Facebook or twitter) 2. Have an independent research firm provide proper valuation to the market on the company and its business portfolio.
Our intent was to do these things once we see strong stability and clear forecast for our revenue for the year. I can tell you that we are now at that point and management will put all of the tools in place over the next month to get the proper valuation for the company.
ME:
I know this is hard to predict, but I was curious if you have a rough estimate of how long you expect it to be until ECDC shows net positive and profitable financials? I certainly understand unavoidable large debt which comes with building a company such as how you have done, but I'm looking forward to eventually seeing some of that debt and other financial obligations dwindle away.
KAYODE:
Thanks for your inquiry, we are working towards this. The idea of getting debt off the books is very critical because it continuously eats away at needed cash flow to build the operation so we are working on this. While I cannot predict at this stage when that will be, the most important thing is that our revenue is also growing from quarter to quarter. We are continuing to see increasing growth rate in 2012 on a quarter to quarter comparison. However you should be aware that we have created new division s that are still in their infancy that may slow down the march toward profitability but only temporarily. What you will see is individual divisions reaching profitability at certain points before the overall organization reach the profitable point.
ME (this was awhile back when we suspected dilution):
I am concerned about 2 things. One is the recent increase in authorized shares. I am concerned about another round of dilution again now and was wondering if there is a good probability of this happening again soon. Or, if there is even a possibility of any kind of buy back of outstanding or cancellation of authorized shares if current momentum continues. Also, I am concerned about a possible reverse split, especially with the talk of moving to a higher exchange. I am hesitant about investing more until I get a better feel for the possibility of these things.
Any information or thoughts on these 2 issues would be greatly appreciated (I certainly understand your limitations).
Thank you in advance.
KAYODE:
Thank you for your email and I am very grateful for your support. I have been approached with same subject by other and I will try to make some logic out of what we are doing and hope it makes sense to you.
First it is important that you understand that we are development stage company. How will we fund out operation during development without capital? as shareholders we need you to understand that the definition of dilution is relative to the activities of the company. When a business borrow money to build its operation or an individual get a loan to buy a house it is not dilution it is creating asset and wealth. however if you take an equity loan to buy clothes and go on vacation it is creating wealth and diluting.
This is the difference between what we are doing and what other companies do. We are raising money to build the company. We have gone from a single entity to one with 4 subsidiaries. We are not simply spending money, I did not draw salary most of last year, i take stock so do other employees, we invest the resources into buildig the company for shareholders.
If you have not notices in the consolidation of ECDC and RP our balance sheet went form 400,000 to $2ml., that is not dilution, that is asset and wealth building. A lot of people who have traded on the pink sheet or some of the open market do not understand that sometimes issuing shares can be an investment in the company not dilution.
If after we launch our social media division and successfully execute some of the licensing agreements we have been negotiating, lets assume the market valuation jump 30% how would yo classify the shares we issued to develop the deals and the project and to pay for cost of the activities related to the deals. A dilution or and investment?
It is the same as asking us not invest in R&D but expect us to have good technology to grow the company, it is not possible. It takes money to make money. You are purchasing the company stock, and in essence reducing your cash position so yu can make more money?
Do you consider that dilution of your cash or an investment for growth? Issuing shares o raise capital to grow te company is no different. however if mamangent was issuign shares for the sole purpose of staying in business and shareholders see no anything for the cash thats is when it is dilution.
In our case we have the followings:
Earthsearch
Rogue Paper
StudentConnect
WetWinds
Proprietary technology
IP rights
Trademarks
These are not cheap properties for a business to own, manage and maintain. I understand your interest to see us grow, let me assure you, so do the management and we are looking forward to bearing fruits from all of our efforts. I am truly grateful to all investors who see opportunity in what we are doing. We will continue to work very hard not to disappoint you. Let me assure you, for 4 businesses, do you think we have too much stocks issued? Do you not think each one of these companies could have 100ml+ shares outstanding on its own? We will build value to match O/S. Just as you had the opportunity to invest so should others who see good opportunity.
Kayode Aladesuyi
Chairman/CEO
East Coast Diversified Corporation
810 Franklin Court
Suite H
Marietta, GA 30067
(770) 953-4184
(770) 953-4183
www.earthsearch.us
ECDC
