Friday, December 13, 2002 7:58:59 PM
FOR IMMEDIATE RELEASE
Rocky Mountain Energy Corporation ........................
12/13/2002 Shareholder Letter .....
Rocky Mountain Energy Corporation Announces
Shareholder Letter
Houston, Texas - December 13, 2002 - Dear Shareholder: This week we saw some good activity in our stock. After having been controlled by the shorters, with price declining, our stock reversed itself. I am glad to see our story is getting out there. During the decline in price many of you contacted me via e-mail and phone. I believe it appropriate to address some of the more common questions at this time:
What is a naked short? A naked short occurs when someone sells stock that he does not own betting on it going down in value. He then will buy in at a lower level to fill the order that he sold, thus keeping the spread. An example of how it should work is as follows: 1. Assume the stock is selling at $0.15. 2. A naked shorter decided to sell 50,000 shares he does not own at $0.15, betting it goes down. 3. If it goes down to let's say $0.13 he buys back in at $0.13 and then keep the $0.02 spread. Conversely if it goes up, he will lose on the transaction. The problem is that this is not how it is working in actuality. In fact, naked shorters have sold millions of shares on us to hold the price down artificially. For example, if it was selling at $0.15 they could offer shares for sale at $0.14 to pull it down. In my opinion, this is not shorting; this is manipulation of our markets. An example of what went on last week during our price decline was that shares were being purchased with very little selling, yet the "ask" kept being pulled back down by market makers on buying. The naked shorters would sell enough shares that they do not own into the market to insure that, absent a great deal of buying, the price would go down. If one is controlling the price going down then "betting" on it is not such a risk. The problem is that I believe these folks are breaking the law.
"Ameritrade will not let me buy stock," and "Ameritrade will not provide me with a stock certificate." As of today the stock is now being traded by Ameritrade. Ameritrade was hurt in the "GMXX" matter and wanted to steer clear of us for similar, if not the same, reasons. GMXX was getting shorted to death. They knew that if they went off of DTC (in other words not trading electronically, but with paper certificates only) it was impossible to short the stock. Accordingly, GMXX went to paper certificates. Ameritrade was caught in a large short position and was forced to cover (i.e., buy shares in the open market to provide the actual certificates). Of course, this caused a "short squeeze" and the share price shot up significantly.
Ergo, when Ameritrade heard we wanted to see certificates in order to issue the dividend, Ameritrade ceased allowing buy orders in the stock "to protect our clients and insure delivery of the shares." Their letter to me further stated that they had already encountered a few difficulties in delivering shares. As of December 12, 2002 Ameritrade is allowing buying of the stock, but they did slow our buying down and helped short positions as a result. Ameritrade then automatically credited the dividend to the accounts prior to our settlement date. This eliminated any incentive for people to demand the certificates, and in my opinion, they dodged a bullet. If you have an account at Ameritrade I would urge you to help us by insisting on a certificate. One of our shareholders, a Mr. Bruce "B" e-mailed the following instructions to get a certificate: (a) go to Ameritrade web page, (b) click to account services, (c) scroll down page to click on request stock certificate, and (d) the cost is $40. Those in with other Broker houses holding stock in street name , we also urge to call for certificates.
"CUSIP Number Change" We still plan to do that. It will force the naked shorters to cover at that time. This is not a "cure all" however, as it will only hold them off for a few weeks and they will just come back at a higher stock price and do the same again.
"Go to Paper Certificates Like GMXX?" We could do so, but it kills our liquidity because every trade has to be matched to a certificate at the time of sale. This would be a last resort, not one that we want to accept at this time.
My Commentary We will beat the naked shorters on a permanent basis by simply following our business plan. It is disconcerting to see the price decline. No one wants to see that. My family has 5.5 million shares (Section 144 restricted), so we want to see it go up as well, as our shares are restricted, and not available for sale until 2004. That should put to rest any doubts as to my long-term objectives. Who among us however believes our price will increase every single day? Our stock is one that is built on a business plan that lends itself to a long-term hold, not daily fluctuation trading.
Last week I received e-mails and phone calls of "do something," and "put out a press release, help the stock" etc. Although I understand the sentiment, I cannot agree with the strategy. We must go forward with our business plan and put out press releases as appropriate. We do not "play" the stock on a "day by day" or "hour by hour" basis. We are building a business and the share price will take care of itself. We are building a business founded on sound fundamentals. We are getting our story out to potential shareholders and generating interest. As such, as we progress, the value we add should be reflected in our share price. In keeping with the building of the company we purchased the controlling interest in the Raton Basin properties we had alluded to last week. The acreage position is in excess of 16,800 acres located in the prolific Trinity gas field of southern Colorado and northern New Mexico. Proved undeveloped reserves are estimated at 200 billion cubic feet of gas. Taken with Wyoming, this is 250+ billion cubic feet of gas total. These reserves have yet to be developed, but present us with immense cash flow potential in the future. We are continuing to negotiate some high cash flow properties as we alluded to in our last few letters. So far, we have lived up to what we have said we would be doing. We hope to continue. If we are successful in negotiating the purchase of these assets, as I have every expectation that we will, then the naked shorters will be buried. They cannot fight assets with cash flow and further upside cash flow potential. This acquisition will be different from the previous acquisitions because this acquisition will generate immediate cash flow and earnings, and does not have to await development as the above. Of course, there is no guarantee that we can close the transaction involved, but we believe we are on the right track. That is what you want to build a company upon, not maneuvers to beat shorters for a time, but delivering value to shareholders, which knocks out any such shorting. This is not done in a day or a week. We have to think and plan long term, and we hope our shareholders share that vision. We thank you for your continued support and hope to have some news soon.
About Rocky Mountain Energy Corporation
Rocky Mountain Energy Corporation, based in Houston, Texas, is an emerging developer of proven oil and natural gas reserves with assets in the resource rich area of the Rocky Mountains. Rocky Mountain Energy's diversified production mix allows us the opportunity of high cash flow with predictable production. Rocky Mountain Energy's strategy includes a property mix of producing and non-producing assets. The producing properties provide immediate net income and cash flow while non-producing assets will provide Rocky Mountain Energy with future development opportunities, and ultimately, reserves at a reduced cost. With a management team that has over 100+ years in the oil and gas industry, Rocky Mountain Energy knows how to increase production, expand profit margins and maximize field potential. Its team of highly qualified technical professionals can examine old wells and find indications of producing zones that have never been produced, as well as develop the known proved undeveloped reserves which are the basis of any acquisition.
Company Website: http://www.rockymountain.cc
Rocky Mountain Energy Corporation
John Ehrman
President / CEO
email: Jehrman@rmec.org
voice: 281 448-6500
Rocky Mountain Energy Corporation ........................
12/13/2002 Shareholder Letter .....
Rocky Mountain Energy Corporation Announces
Shareholder Letter
Houston, Texas - December 13, 2002 - Dear Shareholder: This week we saw some good activity in our stock. After having been controlled by the shorters, with price declining, our stock reversed itself. I am glad to see our story is getting out there. During the decline in price many of you contacted me via e-mail and phone. I believe it appropriate to address some of the more common questions at this time:
What is a naked short? A naked short occurs when someone sells stock that he does not own betting on it going down in value. He then will buy in at a lower level to fill the order that he sold, thus keeping the spread. An example of how it should work is as follows: 1. Assume the stock is selling at $0.15. 2. A naked shorter decided to sell 50,000 shares he does not own at $0.15, betting it goes down. 3. If it goes down to let's say $0.13 he buys back in at $0.13 and then keep the $0.02 spread. Conversely if it goes up, he will lose on the transaction. The problem is that this is not how it is working in actuality. In fact, naked shorters have sold millions of shares on us to hold the price down artificially. For example, if it was selling at $0.15 they could offer shares for sale at $0.14 to pull it down. In my opinion, this is not shorting; this is manipulation of our markets. An example of what went on last week during our price decline was that shares were being purchased with very little selling, yet the "ask" kept being pulled back down by market makers on buying. The naked shorters would sell enough shares that they do not own into the market to insure that, absent a great deal of buying, the price would go down. If one is controlling the price going down then "betting" on it is not such a risk. The problem is that I believe these folks are breaking the law.
"Ameritrade will not let me buy stock," and "Ameritrade will not provide me with a stock certificate." As of today the stock is now being traded by Ameritrade. Ameritrade was hurt in the "GMXX" matter and wanted to steer clear of us for similar, if not the same, reasons. GMXX was getting shorted to death. They knew that if they went off of DTC (in other words not trading electronically, but with paper certificates only) it was impossible to short the stock. Accordingly, GMXX went to paper certificates. Ameritrade was caught in a large short position and was forced to cover (i.e., buy shares in the open market to provide the actual certificates). Of course, this caused a "short squeeze" and the share price shot up significantly.
Ergo, when Ameritrade heard we wanted to see certificates in order to issue the dividend, Ameritrade ceased allowing buy orders in the stock "to protect our clients and insure delivery of the shares." Their letter to me further stated that they had already encountered a few difficulties in delivering shares. As of December 12, 2002 Ameritrade is allowing buying of the stock, but they did slow our buying down and helped short positions as a result. Ameritrade then automatically credited the dividend to the accounts prior to our settlement date. This eliminated any incentive for people to demand the certificates, and in my opinion, they dodged a bullet. If you have an account at Ameritrade I would urge you to help us by insisting on a certificate. One of our shareholders, a Mr. Bruce "B" e-mailed the following instructions to get a certificate: (a) go to Ameritrade web page, (b) click to account services, (c) scroll down page to click on request stock certificate, and (d) the cost is $40. Those in with other Broker houses holding stock in street name , we also urge to call for certificates.
"CUSIP Number Change" We still plan to do that. It will force the naked shorters to cover at that time. This is not a "cure all" however, as it will only hold them off for a few weeks and they will just come back at a higher stock price and do the same again.
"Go to Paper Certificates Like GMXX?" We could do so, but it kills our liquidity because every trade has to be matched to a certificate at the time of sale. This would be a last resort, not one that we want to accept at this time.
My Commentary We will beat the naked shorters on a permanent basis by simply following our business plan. It is disconcerting to see the price decline. No one wants to see that. My family has 5.5 million shares (Section 144 restricted), so we want to see it go up as well, as our shares are restricted, and not available for sale until 2004. That should put to rest any doubts as to my long-term objectives. Who among us however believes our price will increase every single day? Our stock is one that is built on a business plan that lends itself to a long-term hold, not daily fluctuation trading.
Last week I received e-mails and phone calls of "do something," and "put out a press release, help the stock" etc. Although I understand the sentiment, I cannot agree with the strategy. We must go forward with our business plan and put out press releases as appropriate. We do not "play" the stock on a "day by day" or "hour by hour" basis. We are building a business and the share price will take care of itself. We are building a business founded on sound fundamentals. We are getting our story out to potential shareholders and generating interest. As such, as we progress, the value we add should be reflected in our share price. In keeping with the building of the company we purchased the controlling interest in the Raton Basin properties we had alluded to last week. The acreage position is in excess of 16,800 acres located in the prolific Trinity gas field of southern Colorado and northern New Mexico. Proved undeveloped reserves are estimated at 200 billion cubic feet of gas. Taken with Wyoming, this is 250+ billion cubic feet of gas total. These reserves have yet to be developed, but present us with immense cash flow potential in the future. We are continuing to negotiate some high cash flow properties as we alluded to in our last few letters. So far, we have lived up to what we have said we would be doing. We hope to continue. If we are successful in negotiating the purchase of these assets, as I have every expectation that we will, then the naked shorters will be buried. They cannot fight assets with cash flow and further upside cash flow potential. This acquisition will be different from the previous acquisitions because this acquisition will generate immediate cash flow and earnings, and does not have to await development as the above. Of course, there is no guarantee that we can close the transaction involved, but we believe we are on the right track. That is what you want to build a company upon, not maneuvers to beat shorters for a time, but delivering value to shareholders, which knocks out any such shorting. This is not done in a day or a week. We have to think and plan long term, and we hope our shareholders share that vision. We thank you for your continued support and hope to have some news soon.
About Rocky Mountain Energy Corporation
Rocky Mountain Energy Corporation, based in Houston, Texas, is an emerging developer of proven oil and natural gas reserves with assets in the resource rich area of the Rocky Mountains. Rocky Mountain Energy's diversified production mix allows us the opportunity of high cash flow with predictable production. Rocky Mountain Energy's strategy includes a property mix of producing and non-producing assets. The producing properties provide immediate net income and cash flow while non-producing assets will provide Rocky Mountain Energy with future development opportunities, and ultimately, reserves at a reduced cost. With a management team that has over 100+ years in the oil and gas industry, Rocky Mountain Energy knows how to increase production, expand profit margins and maximize field potential. Its team of highly qualified technical professionals can examine old wells and find indications of producing zones that have never been produced, as well as develop the known proved undeveloped reserves which are the basis of any acquisition.
Company Website: http://www.rockymountain.cc
Rocky Mountain Energy Corporation
John Ehrman
President / CEO
email: Jehrman@rmec.org
voice: 281 448-6500
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