Over the past few months I have asked the company several questions to reassure myself of my investment.. Here are some of the responses I got:
This was shortly after the conference call.
Jose:
Good morning. Thank you for participating on the call. As I mentioned on the call, we appreciate the shareholder support and certainly understand and appreciate your concerns. As to plans, we are pushing for the PPA, that is the final milestone for the Company before we can begin the next phase of construction, generation etc. Our Chairman is in Costa Rica working on that goal. As to dilution and your other concerns, we have responded over time to these types of queries and I want to ensure that we state that the below is public knowledge (for SEC purposes). Our position is as follows:
1. Dilution is relative. The reason the PPA is so important is that it takes us from "pre-operations" to an "ongoing operation". This should not imply we are not real today, just that we are operating "pre-PPA". Once we have the PPA in place, one of our critical tasks is to ensure Earnings per Share. Based on preliminary research, our industry can expect a good but conservative EPS multiple of 10. So we need to try to ensure that we maximize the EPS as much as possible to ensure a good multiple on the earnings per share metric and thereby increasing your share price.
2. Based on our current financial projections we expect an asset valuation (turbines, sub-station and facilities) of $56-60 million. This book value should also be part of our future share price as well as the Net Present Value of the PPA. We expect the overall PPA cash flows to amount to approximately $300 million over the term of the contract we have negotiated. These significant numbers are achievable with the future additional issuance of shares. So the dilution is for assets and book value not for insiders to "sell into the news", something we have never done.
3. Please keep in mind that the float does not provide the Company any funds, although it is important in attracting capital in the future. (The shares in the float where issued many years ago, likely around 1999, and whatever funds were raised have long since been used and were not part of our current effort.) This brings us to our current set of challenges.
We have operated on this type of budget for some time. We have tried to limit fund raising until the PPA, we have done this to protect dilution as much as possible. Many shareholders have asked us to not raise a dime, which is not possible, but we have minimized as much as we can. We know that the PPA is not under our control but do not anticipate it to be a long wait away. We believe we have large investors interested and prepared to fund once we have the PPA in place. In other words, funds and companies have shown interest, have undertaken due diligence, have received data and are willing to invest and have the funds to invest as have other large investors. These funds would be investing millions, so they need the PPA to engage but know of us and we have had meetings and discussions.
As previously disclosed, an IR program costs $40,000 for the first month and about $10,000 per month thereafter. We agree on the awareness, but at that price, it makes more sense to engage the IR after the PPA. Our planned IR cost is lower than most but long term. Many IR firms ask for $40-50k per instance based on our many conversations with IR firms.
As to operations, we have already invested in numerous studies and work, our only operational cost now is SEC related and achieving the PPA which we believe is manageable in the short term. We would like to pay down debt, maybe retire convertible notes etc but cannot do much until we raise funds post PPA. As to peace of mind, we have invested a significant amount personally, at times more than the entire float of 39 million plus shares, so we too have a vested interest in the PPA and getting to that milestone. We cannot afford to not achieve the PPA, and while that is not a guarantee it certainly should let you and all the shareholders know that we are committed and aligned with your interests.
Best regards
I sent another series of question recently and these are the responses I got:
On Sept 28, 2013, at 3:46 PM, <binkers87@gmail.com> wrote:
Thank you for the detailed response. Sorry it has taken me awhile to respond. I like the idea that you are minimizing dilution until the PPA has been executed. I understand that you need funds to fuel the company's operations. As long as it is done after the PPA is signed I think the share price will be at an acceptable level if dilution is necessary. We do appreciate how forthcoming and transparent you are with your investors. I have invested in many pink sheet companies and never had a CEO be so open and honest in communicating. Thank you for that.
Jose: You are welcome, we do our best.
My only question remaining is what is holding everything up? I understand that governments take more time but they have had the documents for almost a month now. What happens if the PPA is completely rejected?
Jose: We do not foresee a rejection. A rejection would have happened already in our opinion. We are far along the process and we did have some news today (posted on Facebook). We share your frustration and it is hard to understand the slow pace but that is what we are dealign with.
Do we have a backup plan or are you pretty confident with your connections that it will go through? I don't know much about the Costa Rican government so I am a little confused.....any light you can shed on this would be appreciated!
Jose: We are confident that we are on a good rack, albeit slower then we anticipated. Costa Rica requires patience.
