My take is a little bit different.
I think the share dividend was really just a hat tip to current shareholders to make them feel like they are getting something, which they are. But it is designed to take the spotlight off the $2.5 million being raised from the 1 million series B shares currently being sold to raise capital. This 1 million shares will be convertible into 100,000 shares of the common per share of the preferred. So current shareholders are potentially being diluted by 100 billion shares, if the conversion happens.
Now add to that 40 billion more shares and you get a possible whopping total of 140 billion shares, if everything is converted. The 40 billion is simply the current 20 billion outstanding times 2, which takes into account the series E share dividend, which is also convertible into 100,000 shares of the common per share of the preferred.
Now, just for the sake of argument, say the company has a shareholder value of $14 million, which is the value of the restricted cash it has on the books. The last quarterly report shows $10 million, but lets bump that up mostly because of the $2.5 million from the series B shares being sold. Anyway, $14 million divided by 140 billion shares is about where we are now, or about $.0001.
Bottom line is that management is using creative financing to keep this company going long enough to see some necessary growth in the Wyoming wells, now that natural gas is going back up, and long enough to see a possible home run in Ohio with the Utica shale play. If you noticed, the company quit filing SEC quarterly reports some time ago and now simply posts them on their website. In my opinion, this was because audited quarterly reports for the SEC would have included a "going concern" clause, which FNRC did not want to see. It is a near bankrupt company that refuses to go bankrupt, in my opinion.
There is money to be made in this kind of company at this share price if they get Wyoming back on track and if they strike oil in Ohio. My gut tells me this will happen. Thats why I'm here.
Concerning the coming reverse split, my take is that it will be next year sometime after we find out what is going on with Wyoming and Ohio. And it will likely be 1 new share for every 1000 old ones, reducing 140 billion shares down to 140 million shares. By then we should have seen two or more spikes on news for all you short term types.
Final point is that I haven't seen my new shares show up in my E-trade account yet, but it is encouraging that the one poster saw 35 shares show up in his Fidelity account. Hopefully we'll all get our new dividend shares soon. Since they will be restricted, we probably won't be able to trade them for another 6 months to one year, but the original shares should continue to be tradeable now. So I don't think there will be much of an incentive to hold the original shares, even though some folks may do that.
Good luck to all and I am hoping for a spike to $.0004 or $.0005 on news sometime this summer.
Cropduster
AI
