Replies to post #1074 on Wireless Age Communications, Inc. (fka WLSA)

[VistaViewer]

D theG, I wasn't referring to any cost sharing of the construction...

...but to the various startup costs associated with being able to actually bid on big contracts.

Usually on any really big and complex project all players have to enter into a "performance bond" which is a kind of insurance that will pay out should they fail to deliver. With the plasma incinerator being such an important part, surely there will be such a bond to cover a multi-year period during construction. I would expect that bond to cost at least a few hundred thousand dollars upfront.

Then there is the labor issue of protecting the employees from harm due to on the job accidents, whether they cause them or not. This type of thing varies from state to state, but it is typical that the state itself collects a bond (insurance) for this purpose. Probably another $200K or there about.

I am just guessing at this but I would think that the company is going to have to come up with about $400K to cover their initial participation in this project. I am sure there will be "progress payments" paid to them as they accomplish certain project milestones. But until the plant gets built out to a certain level, they can't really start any construction of the incinerator. They will be on the hook for this money for several months.

All of these expenditures, whatever they may be, must be paid out BEFORE they can even get a signed copy of a contract. This is part of demonstrating that they are financially solvent enough to be deemed responsible, and actually capable of undertaking the work.

So unless they have the cash in hand now, then they will have to raise it somehow. I am concerned about any further dilution, potentially massive dilution, to cover upfront costs. I would be far less concerned if they were to borrow the money from a bank, etc. since that doe not affect share equity directly.

VV