1st NRG Corp (FNRC)

[cropduster08]

Good question and I think the answer is yes. No one in their right mind would provide $2.5 million in financing that eventually converts to common shares if they didn't think the original $2.5 million would be worth more, maybe way more, later. So if FNRC gets the financing, it would be a good indication to me that things will likely be looking up in the near future. At least the investor of the $2.5 million would have been convinced of this likelihood, it seems to me.

Keep in mind that the $2.5 million, or 1 million series B shares, has the same specifications as the dividend shares that we just received. They both convert to 100,000 shares of the old common per original share in 6 to 12 months. Of course, everything is being restructured by a factor of 1 for 20,000 due to the reverse split, so the 100,000 share ratio would go to 5, best I can tell.

Bottom line is that we probably will have a float of 250,000 to possibly 1 million shares immediately after the conversion, with the float possibly going to 7 million in 6 to 12 months with the addition of the dividend shares and the series B conversion, as I explained in my earlier post.

When you think about it, this puts us in a window of about 6 to 12 months where we have a low share count and the possibility of good news coming any time now.

For example, if you assume that FNRC is valued at $14 million, which is the amount of restricted cash that it has, and that the float will soon be 1 million shares, you come up with a possible share price of $14. Not bad, considering we will likely start out at $2. Best I can tell, $14 would have been about $.0007 before the reverse split and the dividend shares. So if we go to $14, I will probably sell my original shares and hold the dividend shares for next year.

It is all very complicated. I believe it is designed to be that way in order to make the creative financing work. If FNRC gets the big well in Ohio, then hopefully Mr. Norris will clean everything up financially.

Cropduster