TAS undervalued - EDE and CNJ Interests, page-22

Hi whytee,

At the current time it would appear that EdenCrete are saying that they can sell at least 1 milion gallons of EdenCrete over the next 12 months, however, if the demand warrants it they can easily and quickly increase the output to 2-2.4 million gallons p.a. This would appear to be a worst case/best case strategy that EdenCrete and the TAS/EDE BOD's have put together. Smart move IMHO!

Sticking with the worst case scenario of 1 million gallons output of EdenCrete p.a. this would generate US$25 million worth of turnover p.a. with a profit margin of 25% (this margin may be far higher). This would mean that EdenCrete would earn a profit of US$6.25 million p.a. or US$520,833 per month. This should be easily sufficient to cover everything at Colorado and avoid any further CR's to finance the existing CS2 operations. Considering that the final sales price of EdenCrete at US$25 per gallon has been calculated including all costs, the greater part of the US$520,833 per month could thus be used to service the financing of G1a.

If  G1a is going to cost US$37 million, I can imagine EDE raising US$12 million in a private placement to finance G1a, leaving US$ 25 million to be financed traditionally.

With regard to the financing, as you know EdenCrete has been awarded incentives to get G1a up and running. Therefore I can easily imagine a bank or leasing company in Georgia being only too happy to finance G1a. It would be also be good PR for them!

For an amount of US$25 million here are my financing calculations:

1. The repayments would be US$71,488.25 per month for US$10 million (for equipment) financed over 15 years at an interest rate of 3.5%.

2. The repayments would be US$175,093.53 per month for US$15 million (for buildings) financed over 25 years at an interest rate of 3.5%.

3. Together this would mean that the monthly payments for the financing of G1A would be US$146,581.78 per month. I would suggest that the US$520,833 per month that EdenCrete will be earning from CS2 (under the worst case scenario) would easily cover this financing.

I can actually imagine G1a being financed 100% entirely using traditional financing methods. Particularly if CS2 is running at 2 million gallons output p.a. by the end of the year and thus earning US$1.042 million per month. Most importantly, the financing of G1a using traditional financing methods 100% entirely, would mean that EDE shareholders including TAS themselves would not need to suffer another dilution.

I would appreciate your comments on the above. Perhaps this discussion should also be posted on the EDE forum?

With thanks and best regards!

MB

Please note: This post is my own personal opinion and not a recommendation to buy or sell. Readers must do their own research before undertaking any investment decision. The Information herein is based on factual information obtained personally by me, or given personally to me by totally reliable sources.