Agreed. Dilution is necessary (and expected) for any start up company.
The Company has made statements about how it is financially in a much better position than before with strides it has made to clean up the balance sheet. From my view, I don't quite see it that way with simply delaying more convertibles that are coming on the horizon - a catch 22 if no revenues are immediately available to offset that burn rate (and in turn stop doing more convertibles to start/grow the business), I see continued near term decline to feed the dilution train.
Longer term, if in fact the company can come thru on a substantial revenue stream, the convertible debt can be replaced/stopped with ongoing cash coming in the door.
From the licensing deal they have (see below), it would appear they are targeting a minimum net revenue stream of $500k in the first year (otherwise the other party can cancel the deal). 50% of those revenues goes to its partner as part of the deal. Having $250k come in the door could go a long way to stopping the bleeding or at a minimum pay for the remaining $275k licensing fee***, and assuming the Company can get a real handle on the excessive (in my opinion) G&A.
The agreement provides for the Company to pay the Licensor “Flat Fee” compensation of $ 300,000 in 3 installments of $100,000 each (first installment payable within 5 days of the signing of the agreement, second installment payable on July 1, 2014, and third installment payable on February 1, 2015) plus “Revenue Share” compensation equal to 50% of Net Commissions generated by the Company payable monthly. In the event that the Company does not generate $500,000 in Net Commissions by January 31, 2015, the Licensor has the right to cancel the agreement with one month notice (in which case the third $100,000 installment will no longer be due).
***On March 27, 2014, the Company paid $25,000 of the first $100,000 “Flat Fee” installment due the Licensor under the agreement. The other $75,000 due is presently past due.
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