Good morning, one and all. We weren't planning on sending an early edition today, but sometimes, things come up that merit immediate attention. This one of those times... news from Cardinal Resources (CDNL). I know a bunch of you have been watching this polarizing company closely, so this morning's press release is one worth diving into. Long story made short, Cardinal Resources has lined up some big-time funding in exchange for about half the company. Deals like this aren't always ideal, but we broadly like the way this one took shape. The big buyer is also a customer/distributor, which means not only does the buyer like the product, but it also has enough faith in the company's RedBird Systems that it's willing to put its own money where Cardinal Systems' mouth is. Cardinal Resources, at a Glance As a quick refresher, Cardinal Resources is the developer of systems can turn any non-salt body of water into clean, potable water using nothing but a special filter and a little electricity (which can be generated using solar panels, if need be). There are other water-cleaning solutions out there, but nothing like Cardinal Resources' RedBird Systems. About the size of a concession stand and easily portable, one unit can provide clean drinking water for as many as 20,000 people. And the need is stark. There are 750 million people living on this planet today that don't have access to clean drinking water, even though many of them live near a body of water that could easily be tapped if there was only a way to make it safe. Well there is a solution, as we explained with our first look at CDNL. The challenge with big-ticket items like RedBird Systems is, it can sometimes be a slow sales process and often it requires government-backed funding... a whole new kind of red tape. The company is making headway there, however, with the most interest seeming to come from Cameroon and Panama right now. On the flipside, a mining operation right here in the United States also recently tapped Cardinal Resources to help manage its wastewater, so there's domestic opportunity as well. So, Cardinal Resources isn't necessarily filling up the sales funnel at a blistering pace, but it's making progress on that front. I suppose that's been the toughest part of the story for those following it... the length of time it takes to sell big-ticket items. We always said this was a long-term (late-2015 through all of 2016) story though, so have patience. It's just the nature of this particular business. Another Market Opens Up While Cameroon and Panama have been pegged in the recent past as the customers furthest along in the sales process, we can't help but wonder if we need to usher China to the head of the line. A distributor there is close to becoming an investor, and this company has lots of experience moving big-ticket items. The specifics: This morning, Cardinal Systems announced it had signed a letter of intent to sell 51% of the company - via newly issued shares - to China's Hangzhou Sky Valley Water Co. Ltd. for a sum somewhere between $6 million and $12 million. The money is to be used to pay down some of Cardinal's debt and for working capital. If all goes according to the current plan, the deal should be done by the end of Q1-2016. I know what you're probably thinking here. To be honest, probably nobody else is completely thrilled with the mass sale of stock to raise money either. But, here in the real world it takes money to make money, and if some dilution is what's necessary to get the revenue ball rolling in a meaningful way, there's no better funding partner than China's Hangzhou Sky Valley Water Co. As was noted, the company has experience selling large infrastructure equipment like RedBird Systems. Now it's actually promoting RedBird Systems while fiscally supporting the company. If that's not a vote of confidence in Cardinal Resources and RedBird Systems, I don't know what is. Food for Thought There's no denying CDNL has been tough to own lately, reminding everyone that stops and limits are absolutely necessary when dealing with speculative small cap stocks. In retrospect, I can't help but think at least enough people knew - either intuitively or literally - a rather big wave of dilutive financing was in the works. That would explain a lot. The thing is, if this partial acquisition of Cardinal Resources does indeed happen (and we're fairly confident it will), it not only breathes life into the company but it also sends a clear message to the market about how underestimated CDNL currently may be. Think about the math here. China's Hangzhou Sky Valley Water is paying somewhere between $6 million and $12 million for half the company, implying the company itself is worth $18 million. Its actual market cap right now after the pullback, however, is less than a million bucks. You think Hangzhou knows something the rest of the market doesn't know about what's apt to happen next to justify paying that premium? That's the only explanation I can think of, considering Hangzhou has seen RedBird Systems in action and wants to set up a joint venture to sell them in China. The need is certainly there. After all, like the press release below says, as of June of this year there were still 381 million people in China lacked access to piped, treated water. The U.S. Dept. of Commerce estimated the total addressable market in China for this sector was $29 billion, as of 2010, and RedBird Systems are a fast, viable solution to that problem. Bottom Line The news is apt to further polarize the two camps following this company. On the one hand nobody wants to see more shares issued, but on the other hand, this joint venture could be one that eventually leads to multi-million dollar quarterly sales, and it would keep Cardinal Resources solvent in the meantime. My honest opinion? On a net basis, today's news is good for the company, not because of the capitalization (which is a wash, as I see it) but because it could put a company partner in place that's probably the best one Cardinal Resources could have anywhere on the planet. Is issuing shares to raise funds an ideal scenario? No. But, issuing these shares should let Cardinal Resources do what it needs to do at this stage of the game to further fill up the sales pipeline and act on opportunities in a way it may not have been able to before. That's the upside, and I think it's bigger than the downside. I also wasn't kidding when I said there's a good chance today's news or something like it has already been priced into CDNL shares... and then some. But, that selling pressure may be coming to an end. How so? As I look at the chart, I see a huge volume spike over the course of the past week or so, suggesting a capitulation has already happened, or that a bottom has finally been made. That's good for CDNL shares in that it clears the deck for forward progress from here after a disappointing Q3 for the stock. In any case, now that you have some of our perspective, here's the press release. Cardinal Resources Signs LOI With Chinese Firm for Major Equity Investment, Asian Distribution JV and Global Support PITTSBURGH, PA--(Marketwired - October 13, 2015) - Cardinal Resources Inc. (OTC PINK: CDNL), a global producer of patented, solar powered, community-scale drinking water systems, today announced it has signed a non-binding Letter of Intent with an Asian consortium for an equity investment and an Asian Distribution Joint Venture. The China-based consortium is being formed to market and commercialize Cardinal Resources' water treatment technologies in Asia and other international markets. The investment, if closed, will consist of two tranches which combined would total between $6-12 million for a 51% stake in the Company in exchange for newly issued shares of the Company's restricted common stock. Cardinal Resources has not yet entered into a contract for the offer and sale of shares and any transaction is conditioned upon and subject to the parties agreeing on definitive contracts to complete the prospective transaction and customary closing conditions. The first tranche is expected to close in the fourth quarter of 2015. Proceeds from the transaction will be designated toward general working capital, retiring the Company's existing debt, and establishing the new joint venture. Closing of the first tranche is subject to due diligence and customary closing conditions. The second tranche is slated to close in Q1 of 2016, subject to certain benchmarks being met including satisfactory establishment of the JV. Commenting on the proposed transaction, Cardinal Resources CEO, Kevin Jones, said, "In addition to the positive impact for our shareholders and the opportunity to strengthen our balance sheet, we are very excited to enhance the Company's ability to access Export Credit Agency financing for large overseas contracts including those pending in Africa and Latin America as well as the potential for expansion into a number of major developing and mature markets." "We are pleased to be in discussions with this group of Chinese investors and industrialist in furtherance of commercializing Cardinal's technology broadly in the Asian marketplace," Mr. Jones added. "Throughout 2015, Cardinal has gained a significant increase in the flow of business and sales opportunities through our evolving relationship with this diversified consortium." The United Nations reports as of June, 2015, 381 million people in China lack access to piped, treated water, and the US Dept. of Commerce ITA estimated the total addressable market in China for this sector at $29 billion in 2010. About Cardinal Resources Cardinal Resources brings a unique blend of experience, technology, and focus to projects worldwide and across the United States from its office in the Pittsburgh, Pennsylvania area. Its commitment to "Clean Water, Clean Environment, Worldwide" includes the patented Red Bird System, a solar-powered community-sized drinking water system, and the Grey Bird Approach to wastewater treatment and green infrastructure as well as a wide range of traditional environmental and engineering services. For more info, visit: www.cardinalres.com. Forward-Looking Statements Certain statements in this presentation constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs but they involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, such as our ability to obtain financing to continue our operations; reliance on third parties for parties and equipment to produce our products; unexpected design and engineering problems related to our products; business and political conditions in the geographic areas in which we sell our products;; outcomes of government reviews; continued compliance with government regulations; legislative or regulatory environments; requirements or changes adversely affecting the businesses in which we are engaged and jurisdictions in which we market and sell our products. The information set forth herein should be read in light of such risks. You are urged to consider these factors carefully in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. The forward-looking statements made herein speak only as of the date of this presentation and the Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company's expectations. Information on the company's website does not constitute a part of this release. Contact Information Company Contact: Kevin Jones 412-374-0989