American Green Group, Inc. (AMNE)

[Millenium323]

Why did it drop from .90 to .26?

They had 45,000,000 shares outstanding

1) At .90 they had a market cap of $38 million
(.90 x 45,000,000 shares)

2) At .26 they have a market cap of $12 million
(.26 x 45,000,000 shares)

Their goal is to have 300 (BOPM) Barrels of oil per month by summer.

300 BOPM = 100 bopd

100 bopd x $60 oil = $6000 in revenues per day

$6000 revenues per day x 365 days = $2 million in revenues per year.

So if they average 300 bopm for the year they would bring in about $2 million a year in revenues. Add in an extra $1 million to be generous. So lets assume $3 million in 2007 revenues for them.

$38 million market cap / $3 million revenues = a price to sales ratio of 10.

$12 million market cap / $3 million in revenues = a price/sales ratio of 4.

The stock was too pricey. The average price/sales ratio for a microcap high growth oil is probably about 5-7.

That is why the stocked dropped from .90. It got way too far ahead of itself even assuming they reach $3 million in revenues per year. A price/sales of 10 is a bit high.

Now the stock is at .26 which gives it a price/sales ratio of 4. That is more in line. But even that is looking forward and assuming they will get to $3 million in revenues which is a big assumption.

Do I think they will get to $3 million in revenues? Probably not. Probably a little over $2 million imo. So calculating price to sales ratio and assuming future 2007 revenues of $2 million =

$38 million mkt cap/ $2 million revenues = price to sales ratio of 19.

$12 million mkt cap/ $2 million revenues = price to sales ratio of 6.