So the 8k for preferred stock. Someone tell me if i'm reading this correctly - they created this preferred stock, convertible to common stock, and gave Neal 51 shares. So, it's essentially worth 51 shares of common stock, or really, not worth much of anything in terms of financial value.
However, this preferred stock has voting rights, and they essentially gave Neal 51% of the voting rights by doing this according to their rough equation below.
This would be significant if (and I don't know if this is true, so perhaps someone can help out?) no preferred stock existed previously. This is because they (being DNRG management) would need to hold 51% of the stock to maintain control of the company and not have someone buy up the stock and take it over. If they were not willing/able to purchase more stock as more stock is authorized/sold, they would run the risk of someone purchasing a larger portion than them and taking over the company. So, this preferred stock is really just a way for him to maintain control of the company, be able to authorize more shares, and not need to continue to purchase to keep a majority of the stock.
Which, could mean continued dilution (bearish interpretation), without them wanting/able to buy more stock themselves!
Of course, the other side (Bullish interpretation) to this would be that they were concerned someone may actually want to take over the company, so they used this to protect themselves. Though I think that's less likely given the environment here.
