ctb, I have talked to both CB and JC last week and this week again, regarding some posts with the misconception that JB's $2 mm note still has a stock conversion feature. It does not.
Verification included a double check with the bookeeper for additional wording in the filings.
The only problem is that their is no wording for something that does not exist anymore in the 10Q and 10K filings historically since the note was assigned to Bend Arch. The stock conversion feature language just 'drops out' when the note and it's assets (lease and equipment assets as collateral) is totally transfered to Bend Arch, which does not have any stock to issue in the first place.
Joe Christopher and I were on the computer at the same time, and walked back through the Edgar Online SEC filings to the 10K period ending Dec/31/'04 and filed on 4/15/'05, when AMEP had to assign the note and assets to Bend Arch per BDC rules:
6. LONG-TERM DEBT
Our long-term debt at December 31, 2004 and 2003 consisted of the following:
Convertible Note Payable
$2,000,000 Convertible Note Payable, dated February 20, 2003, bearing interest at 6% per annum and due July 25, 2007.
(No conversion to stock feature - cash settlement only)
(Further down under 6. Long Term Debt, the following 'history')
On February 20, 2003, the Company executed a $2,000,000 convertible note payable accruing interest at 6% with a company controlled by the brother of the Company’s sole officer and director. The maturity date was July 25, 2007. The convertible note payable was payable at maturity in preferred stock of the Company at $1.00 per share and. the preferred stock was convertible into common stock at $1.00 per share.
Additionally, at the option of the holder, the debt may be settled for cash. The note is secured by a deed of trust and a lien against the leases and the wells and other liens against the same leases and wells of $25,000.
On January 5, 2004, the $2,000,000 convertible note payable was exchanged for a convertible debenture for the same amount and due January 1, 2007. The terms of the convertible debentures include an interest rate of 8% per annum and convertible at any time at the option of the holder or the Company into common shares of the Company at a price equal to fifty percent (50%) of the closing bid price of the common stock on the date written notice is received by the Company of the election to convert. In accordance with EITF Issue 98-5 and 00-27, the Company has evaluated that the convertible debenture has a beneficial conversion feature as the exercise price is less than the fair value of the Company’s common stock on the measurement date. Accordingly, the Company has recognized this beneficial conversion feature by charging the
statement of operations $2,000,000 for interest expense and $2,000,000 for additional paid-in capital. The conversion feature inherent in the convertible debentures was fully recognized as of June 30, 2004 since it was disposed of through assignment to Bend Arch, the Company’s investee (see below)
On June 15, 2004, the Company assigned the oil and gas properties secured by the $2,000,000 convertible debenture to its majority-owned affiliate Bend Arch. Accordingly, the $2,000,000 convertible debenture along with $77,589 of accrued interest was transferred to Bend Arch on June 15, 2004.
---end Dec/31/'04 10KSB copy---
Note "disposed of": "The conversion feature inherent in the convertible debentures was fully recognized as of June 30, 2004 since it was disposed of through assignment to Bend Arch, the Company’s investee (see below)"
Again, the company is 'positive' that the note, which is still assigned to Bend Arch does not contain a stock conversion feature. They said anyone with doubts can call the company for their own verification.
GL longs,
...greeneyedhawk
AI
