Repost: Zeev, regarding Pinnacle Oil's SFD technology and patents:
Regarding your questions, first management control. Yes, George Liszicasz, CEO and inventor of the SFD, and Dirk Stinson, President, own 70% of the company. That is 8 million shares. 5 for George, 3 for Dirk. SFD Investment, LLC (which is basically Jack Stephens) bought 1 million shares (800K convert. plus 200K warrents), and the float is 4 million. There are 1 million employee options of which about half have been granted. Add it up and you get 8+1+4+1=14 million shares. Unlike NAMX, Pinnacle is a fully reporting company with the SEC. At least I could not get any info on NAMX at EDGAR. Therefore, PSFD has lots of filed documents. Of course the best one is Pinnacle's form 10-12 which is the filing application to get on NASDAQ (they meet all the requirements and the application is pending.) I am keeping my fingers crossed for NASDAQ in 2 months or earlier. You can get the form 10-12 at:
sec.gov. (Got this link right off their wed site at www.pinnacleoil.com)
The numbers are all audited by Coopers, so nothing funny vs. so many other BB stocks. Hopefully NASDAQ listing will be soon. This form 10-12 basically opens the whole kimono for one to look into the company. A must read.
Prior to becoming a fully reporting company though I did speak to their small auditing firm they were using, the Nevada Dept. of Corp. (incorporated in Nevada), as well as their transfer agent, N.J. Transfer and Trust. I even checked on on the transfer agent with the SEC. Everything squeaky clean.
The 8-K you refer to regarding Momentum and Pinnacle is in the form 10-12 I mention above. Pretty dry stuff though so allow me to summarize. Basically the SFD technology has other applications. Pinnacle only has the exclusive rights to the SFD as it relates to finding hydrocarbon deposits. Therefore, in order to never lose control of the technology, Dirk and George formed Momentum (owned 50/50 by the two of them) to hold the SFD technology. Momentum will get 1% of "prospect profits" through Dec 31, 2000, after which point it increases to 5%. There are also bonus options given to Momentum when Pinnacle's barrel production exceeds some minimum. Since Momentum owns the technology, Momentum pays for all sensors and any improvements to the SFD. It does not come out of our pockets. That is why the payments to Momentum, because they pick up all SFD costs and R&D. Dirk and George have their interests completely aligned with Pinnacle shareholders since they own 70% of PSFD and all Momentum payments are based off of production. If Pinnacle wins, so does Momentum. Anyway, the Stephens people, when doing their due diligence, went through the Momentum contract with a fine tooth comb, made them change a little bit, and bought in big as Pinnacle shareholders. I have no worries.
The convertible issue. Cut and dry. 800K series A convertible into one share common each. 200K warrents, two years, convert. at $7.50 I believe. That was where the series A was also purchased and happened to be the offer price of PSFD on the day the deal was struck.
NAMX contracts.... well maybe. I don't know too much about NAMX. However, if my memory serves me correctly, and I may be wrong, didn't NAMX basically have to "pay to play." Didn't they get a 1/2 to 1.5% working interest where they have to put up money and take risk? Look at Pinnacle instead. PSFD gets to choose what it wants: and 8% gross override (no money up, 8% off of revenues, no expenses) or a 45% working interest (pay 45% for 45%). Quite a difference between PSFD and NAMX. I would venture to bet there has NEVER, EVER been another company who has received contracts like Pinnacle has in the history of the oil business. Seismic companies do not get a piece of the action. Have you ever heard of a service firm getting 8% gross override? Amazing. Why would these partners gladly sign these contracts? Oh, and the partners also pick up the tab on Pinnacle's exploration costs (the airplane). Must be something valuable there...
The SFD broadly defined: go to the form 10-12 and it is all there. If you can not get it I will extract the relevant sections for you. Let me know.
Patents. None. They went to some fancy patent attorneys early on and were told not to do it. By revealing the technology in a patent you are dead. There is no way Pinnacle would ever know if Exxon, Shell, me, you were using the devise. Like I said, I would build one tommorrow if I knew how. They figure there is going to be billions poured into figuring out what they are doing when this is revealed. However, when speaking with one of the geologists at one of the partners, he said that this is going to be really tough to figure out. Without boring you too much here, he basically said that the field the SFD is measuring while he and George are in the plane is "dynamic". At the same time the sensor is "dynamic." You have two dynamic fields interacting with each and according to him, how in the hell do you figure that one out in the lab.
My feeling is maybe they have a 5 year lead. However, imagine if Exxon figures it out. Do you think they are going to let this into the public domain? No way. Even if there are 4 companies with the SFD, split the world up four ways. That is enough for us.
-Dilution
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