Further dilution will be required to obtain funds. The Sure Capital financing agreement involves 'dilution' -- not in the form of giving up additional shares, but in the form of giving up a percentage of gross profit.
A similar result will happen when the required JV with a gulf oil company is formed.
Note the SmartWin transaction would have given up half of the company (albeit at a much higher valuation).
And if funding eventually comes from a source other than Sure Capital (IMO, that will be necessary, as I don't think EEGC can provide Sure with sufficient collateral to enable the 'principal protected' notes that are Sure's business model), dilution will be required.
But that's OK; I agree with an earlier poster -- half a loaf better than none, which is where we stand today.
For the Mr. Bendall issue, two points:
- It was a 'no brainer,' IMO, for him to convert the debt EEGC owed personally to him. to stock. This debt comprised salary he had not taken for at least 2.5 years, plus funds he had advanced to the company to keep it alive. a 'no brainer' because the company would not be able to repay the debt unless oil is found, in which case the stock will be worth more than .07.
- This does not explain the debt which he (and other directors) took on which was not owed to them at June 30, per the company's 10-Q. Would have to know much more about those somewhat mysterious transactions to comment on them. Perhaps when the next 10-Q (or 10-K) comes out.
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