Please, please, don't for one minute think that 10,500,000 shares of preferred isn't counted, converted or not converted. The man owns 35% period of the company and no one, absolutely, no one knew that until he flowed the RS proposal. This non sense of the Bitter's clan getting a hair cut, as well. The Bitter's clan owns 35-40%+ of the company, as they should, just not the shady way it came about.
Do it upfront, so everyone knows what they are getting into. We all got into this only to be surprise by the instant devaluation of 1/3. Maybe I wouldn't have invested so much had I known that there were 750 million shares issued and outstanding (pre-split), not 500 million.
He set the preferred up that way for two distinct reasons. First, for liquidation rights ahead of common stock shareholders. If the company was liquidated, he would get his loan back ahead of any proceeds to common shareholders.
Secondly, for the magical RS. His shares were spared the hair cut. This is common for start ups, as VC's protect their investment from future dilution.
So, if you are doing the math, count the preferred, for fully diluted considerations.
The Preferred shares sits outside future RS's, as well, if he so desires. Why convert until you have to?
I am no oil guy and I appreciate your expertise. Let me say this. He had the 3D seismic studies which I believe he paid $65,000 for, covering 2500 acres. He was excited in what he saw when I met with he and Joe. He called it, "a needle in a hay stack."
That data showed him exactly where to drill. Plus, he was drilling existing properties where his biggest producer existed. He drilled 1000-1500 feet from his biggest producer, as I remember. Pretty good odds wouldn't you say? But there is more. The company confirmed their success with, at least, two announcments.
The AENP announcements on September 2006 and June 2007, supports my theory. The company was proud of what they found, at least enough to make announcements. Plus all the hardware we saw on the pictures in December 2007, leads me to believe these are not dry holes.
Finally, we now know that MN #1 in hooked up and on line.
I think you are wrong in this case, says AENP.
