Investment Deadline
Dear Family and Friends,
Welcome to this week's "Thoughtlet."
These words are my personal diary and a weekly review of ideas,
beliefs, thoughts, or words that will hopefully be of some
benefit to you: my children, my family, and my friends.
"To make things happen in business there needs to be a deadline.
In the previous Thoughtlets (0525.html) I quoted an e-mail from
Fred Strong, who has become an investor in my friend Christian
Singfield work with scanning of cuttings and cores. Christian
has come to Houston twice, both at my recommendation. He has
stayed with friends for months each trip, and both times he
has had to go home completely broke. The first time he signed
an agreement with CDX, a coal-bed methane exploration company
in Dallas that I introduced him to through my friend and former
partner in China Cattle Corporation, Chuck Edwards. Chuck is
wonderful, and in my opinion the principals at CDX (../0050.html,
../0204.html, ../0207.html, ../0209.html, ../0211.html,
../0214.html, ../0216.html, 0217.html, 0333.html, and 0505.html)
are the ones who acted like crooks. From what little I know as
an outsider, I believe they have also taken advantage of Chuck.
People with money do that of people with good hearts. This
trip to Houston Christian made great connections with Pemex
through Luis, who is GDC's Mexican representative. However,
Dave did not give Christian the time of day and did not follow-up
on implied statements saying he would help Christian. Christian
left Houston facing bankruptcy and convinced the principals at
GDC are in the same type of people as the principles at CDX.
Christian went from Houston to Montreal, where his brother had
set up meetings with some financial people, including Fred Strong.
Fred and his partner Dacia seem to be giving Christian good
advice. Fred has helped get a couple of companies started which
have been quite successful. Fred's father has been involved in
many oil and gas breakthroughs. Fred's first question to me
was why I had not invested in Christian's work if I think it
is a viable technology. I explained my poor financial investment
history, and he seemed to understand. Still he guided Christian
to set an investment deadline to show whether those of us that
say we believe in Christian's technology are willing to put
effort behind our belief. The deadline was for Friday, 24 June
2005. And the theme of my week became this investment deadline.
Monday I went to a POPS luncheon where the speaker was Robert E.
McKee, III, who retired from Conoco after 36 years and who went
to Iraq to help get the oil industry back on track. A couple
of notes from this talk seem appropriate to share:
<![CDATA[ `Iraq is twice as big as Idaho. Oil was first discovered there
in the 1920's. There are 25 million Iraqi's and 5 million of
them live in Iraq. He worked with Haliburton and stayed in
one of the Palaces. Kellogg, Brown & Root feeds 160,000 troops
and 30,000 civilians. Iraq has the second largest oil reserves
behind Iraq, and they have a huge exploration potential. There
was little damage done during the war. Most of the damage was
done by looting after the war. When he arrived they were
flaring 2 billion cubic-feet of natural gas per day, and when
he left they were flaring 500 million cubic feet of natural gas
per day. They directionally drilled underneath the Tigress to
replace 9 pipelines that kept getting hit by terrorists. It
is his opinion that the media misreports what is going on and is
focused on an effort to get George Bush. Most of the antiquities
that were stolen have been recovered. Iraq has 100 million
barrels of oil and 100 trillion cubic-feet of gas proven reserves.
Iraq requires $15-30 billion worth of infrastructure improvements.
The oil revenue is covering the costs of the new government, and
investment is needed to rebuild the infrastructure which Sadaam's
government let fall apart.']]>
Monday night Andrea was burned out. She had jury duty. It
was a case of child molestation, and partly as push back from
the Michael Jackson acquittal, they could not seat an impartial
jury from a panel of 60. It was what is called a busted jury,
and the judge said it was only the second time in her career
that she has seen this happen. She wanted to go to a movie
when I got home, and so our Family Home Evening was to go see
Batman Returns. I thought it was a very well done movie. It
is too violent for little kids, and they are still going to be
exposed to this kind of violence. However, relative to most
of the movies around these days, it is pretty good. It shows
how a flawed person can do good, and maybe that is what I
associated with.
As far as work at GDC goes, it seems like everything is focused
on getting these 27 Tile books out by the end of September.
I am now managing this whole operation, and it is a struggle
to get people to communicate, to work together, to meet the
timetables they say they will meet, and to have fun doing it.
Oh well! Hopefully management will be satisfied with my efforts.
I know I have been very tired when I get home, and this usually
means I am working pretty intensely and usually this means I am
enjoying what I am doing.
Friday there were a couple of e-mail's that came in, I think are
worth sharing. First from Rhonda Duey, Exploration Technology
Editor at Hart's E&P (Exploration and Production):
<![CDATA[ `Hi, Roice -- I'm planning a feature on exploration software in
our August issue, and I had an article fall through at the last
minute. Have you written something, or could you write something,
to fill that slot? I need about 1,300 words with 2-3 images as
soon as humanly possible. Let me know
...
Thanks,
Rhonda']]>
I had been working on getting approval from Anadarko Management
to publish the article we gave at the Spotfire Energy Conference
(0509.html). They came through, and this has been passed onto
Rhonda since receiving this e-mail. The e-mail second came from
Ajay Kalsi in India (../0320.html, ../0321.html, ../0323.html,
../0324.html, ../0325.html, ../0334.html, and ../0401.html):
<![CDATA[ `Date: Fri, 24 Jun 2005 12:13:50 -0400
From: 'Ajay Kalsi'
Subject: India calling
Thank you for your time in listening to what I had to say about
the gas from our basin and to see if there can be any comparison
with the silty reservoirs found in Jonah or other such basins in
the USA.
I am enclosing the mud log which showed the sudden and dramatic
increase in formation gas at 3696 meters with all the C1 and C2
and C3 and C4 components. At this depth of 3696 x 3.281 = 12,125
feet we are drilling in late Jurrasic and early Cretaceous and we
don't know how big this column is as we stopped drilling at
4133 meters.
I am also enclosing the wire line logs done by Schlumberger in
las format and also in the Schlumberger PDS format which you can
freely download the viewer to see from
http://www.oilfield.slb.com/content/resources/software/pdsview.asp
A photograph to show that the gas was real and we did burn it.
And more general information can be seen from our website at
www.phoenixhydrocarbons.com
Would very much like your comments as to what I should do next in
view of the traditionalists in India who have never seen basin gas.
Eagerly wait to hear from you
Kind regards
Ajay Kalsi
Managing Director']]>
My response will probably seem harsh to some:
<![CDATA[ `Date: Sat, 25 Jun 2005 22:24:45 -0500 (CDT)
From: 'Roice Nelson'
Subject: Re: India calling
Ajay,
Nice to hear from you, and especially to learn that your shoe
business has officially become secondary to your gas exploration
business.
I have been thinking about your e-mail since I received it
yesterday, and spent a little time today using some of the new
technologies available to me to data mine and display the gas
results and the LAS file you sent. I attached the results for
your review. As you know I am not a petrophysicist, and yet
from what experience I have, it looks to me like you will soon
be a tycoon, if you are not already.
I recently read a book, which has two chapters relating directly
to your question about what to do next. The book is "The Oil
Finders: A Collection of Stories About Exploration" compiled and
edited by Allen G. Hatley, ISBN: 0-9649416-0-0. The Chapters
are: Pakistan: First Oil in the Sind, by Herb Young; and Western
Canada: Miracles at Elmworth, by John A. Masters. I expect John
Masters, who even though he is 20 years my senior is a friend of
mine, will prove to be a particularly good resource for you.
There is an entire book published by the AAPG about Elmworth,
which would be a good place for you to start finding out what to
do next. The difference between John's story and yours is that
there were several hundred wells that drilled through the
productive sands that form Elmworth before they made the discovery.
The important thing to you is that they learned how to produce this
low resistivity basin gas, and made billions of dollars for
Canadian Hunter.
As I was mowing the lawn this morning, I was contemplating the
fact I can not afford to hire someone to mow my lawn, and yet
I'm surrounded by successful people like you, Jude Amaefule in
Nigeria, etc. I can be of great service to you guys, and yet I
always end up working for free, or doing a lot of work for free,
and don't seem to find a way to capture some of the upside. I
do know, based on my past work for you and folks like Jude, I
will not offer any more specific advice than is included above,
nor do any significant consulting work, nor recommend my friends
do anything for you. At least not until after I have a signed
retainer agreement with enough upfront cash for me to know you
are going to listen to my advice, and, if my advice is heeded,
know there is a defined upside for me and my family.
And since this is not the way you choose to work, I wish you
the best in your efforts to exploit your discovery.
Best Regards,
Roice']]>
It is nice to have friends, especially friends who are rich,
and it even nicer to have friends who treat you the way they
would like to be treated, not always striving to take advantage
of you. I remember as a youth hearing a story, which has often
come to mind over the last few years as I talk with and work
with people who are very rich and who like to get me to work
for them for free. The story went something like this:
<![CDATA[ `Once there was a poor Mexican man that worked for a rich American.
The poor Mexican man had many problems at home. His wife was
very sick and was always having to go to the hospital Some of
his kids would go out and chug alcohol with their friends and
were causing heartache for him and his wife. His in-laws lived
with him, and they had many health and financial challenges.
Yet he was a very devout member of the church, always attending
his Sacrament and Priesthood meetings, always doing his Home
Teaching, and always striving to be of assistance to others in
need. His rich boss knew about all of his problems an his faith.
The boss took him duck hunting one day, and they were talking
about all of the Poor Mexican's problems. His boss said,
`I do not understand why you keep going to that church of
yours and especially paying tithing when you can not afford
it with all of the problems you are facing. You should just
focus on paying your bills and not spend so much time doing
your church work. Look at me. I don't go to church. I don't
really believe in God. I don't really believe in the devil.
And yet I do not have any of the problems that face you and
your family. Why do you waste so much time and effort on
that church of yours? If there was a devil, why doesn't he
spend more time making my life as miserable as yours is?
Just then a flock of ducks flew overhead, the rich boss fired
and downed three of the ducks. Two of them were only winged,
and the boss directed the hunting dogs to go after the ones
that were wounded and to leave retrieving the ones that were
dead until later. After the excitement and after the ducks
were retrieved, the Mexican turned to his boss and said, `There
is a devil, and just like you didn't have the dogs go after
the dead duck, the devil doesn't go after you. Rather the
devil goes after me because he is trying to make sure sure I
do not return to my Heavenly Father.']]>
It seems to me that one of the ways out of the box the Mexican
found himself in is to make some worthwhile investments, and
find some financial independence. Of course, it can be argued
that this just leads to other ways of Satan binding and
controlling us. And I'll save that discussion for another time.
Let me just quote 15 e-mail's that went back and forth this week
regarding Christian Singfield's investment deadline:
<![CDATA[ `> ------------- Begin Forwarded Message 1 -------------
>
> Delivered-To: 'Roice Nelson'
> Date: Mon, 20 Jun 2005 06:21:23 -0500 (CDT)
> From: 'Roice Nelson'
> Subject: Investment Opportunity
> To: 'Roice Nelson III', 'Ben Nelson', 'Paul Nelson',
> 'Melanie Wright'
> Cc: 'Roice Nelson'
>
> Dear Roice, Ben, Paul, and Melanie,
>
> As discussed on the phone, I am sending you this e-mail as a
> business opportunity to invest in something I believe has a
> phenomenal upside. As family and friends you know most of my
> investments have not turned out to be successful yet, and as
> discussed with you in the phone conversation, there is
> considerable risk with this investment. However, given the
> state of the technology, the value of the service being
> proposed, and the character and integrity of the individual,
> Christian Singfield, who is heading this project up, I
> personally want to invest in it. Because of past poor
> investments, the only way I can see of making such an
> investment at this time, without going further into debt,
> is by sharing the opportunity with family and friends.
>
> This e-mail is for information purposes only, and is not an
> offering for sale of any securities of Walden 3-D, Inc. (W3D),
> nor an offering for sale of any securities of Full Spectral
> Imaging Ltd (FSI). It is for your confidential use only and
> may not be reproduced, sold, or redistributed without prior
> written approval of Walden 3-D, Inc. Any action contrary to
> these restrictions may place you and the issuer hereof in
> violation of the Texas Securities Act.
>
> The Opportunity:
>
> In early 2001, John Pohlman, an exploration and development
> technology watchdog, suggested Christian Singfield contact
> me to see if I was interested in a new technology he had
> developed for scanning core sections (rock cylinders cut when
> drilling oil and gas wells), or cuttings (the material a drill
> bit breaks loose when drilling oil and gas wells).
>
> My first Correspondence from Christian Singfield was 4 years
> ago and is copied below for your reference:
>
>> Delivered-To: 'Roice Nelson'
>> From: 'Christian Singfield'
>> To: 'Roice Nelson'
>> Subject: For Starters
>> Date: Sat, 30 Jun 2001 09:33:18 +1000
>>
>> Roice,
>> Here is an Overview Document of the DMT system I was
>> talking to you about.
>>
>> Cheers
>>
>> Christian Singfield
>> General Manager
>> Sautec Pty Ltd
>
> Over the last four years I have become intimately involved in
> Christian Singfield's life work of digital imaging of well
> derived rock data. My conclusion is that this is the single
> most important oil field technology since the development of
> 3-D seismic. To provide a financial context to this statement,
> in the recent book "Power to the People," by Vijay V.
> Vaitheeswaran, in the chapter titled Rocket Science Saves the
> Oil Industry," on page 270, are the words:
>
> "By McKinsey's reckoning, the net benefit to the global oil
> industry from 3-D seismic imaging (through reduced drilling
> costs, additional reserves exploited, and so on) is about
> $11 billion a year."
>
> As you know Landmark Graphics Corporation was very successful
> in helping to develop 3-D seismic technology and ended up
> being sold to Haliburton for $560 million a few years ago. I
> did not know how to invest the money I made with Landmark stock,
> and, as you also know, ended up loosing all of my earnings
> though my HyperMedia investment. I learned a lot and plan to
> do a better job if given another opportunity. In my mind FSI
> currently has the highest probability of being this other
> opportunity.
>
> Christian Singfield is trained as a metallurgist, and spent
> his career working with well cores and cuttings from lead,
> zinc, copper, gold, silver, and other precious mineral mines.
> He also worked for several years for GSI (Geophysical Services
> Inc.), the original U.S. seismic acquisition service contractor.
> He has combined these backgrounds to develop new ways to
> digitize rock data from wells; both cuttings and cores. He
> uses tri-linear CCD Arrays, which are basically like a fax
> machine, to scan the cores and cuttings. This scan has a
> calibrated light source, lighting the area being scanned at
> exactly 45 degrees from both sides of the scanning device.
> The scanning process is repeatable, exact, scientific, and
> generates images with 30-X to 50-X magnification. It also
> creates terabytes (10**12) and pedabytes (10**15) of image
> files. Christian has built, prototyped, and demonstrated the
> data capture, data handling, data distribution, and data
> achieving technologies to handle these sizes of image files.
> With Christian's prototype acquisition system and Patented
> Sample Cards, company geologists can review microscope quality
> images of cuttings posted on a secure Internet portal within
> minutes of reaching a target depth. Two National Oil Companies
> (Pemex in Mexico and Pertimena in Malaysia) have verbally
> committed to test this technology within the next 18 months.
> After his first experience seeking investors in Texas, there
> was some question about technology ownership. Christian has
> spent the last 18 months cleaning up all of these issues.
>
> This technology, like 3-D seismic, is disruptive in that it will
> remove the need for up to half of the well logging runs that are
> currently done when drilling oil and gas wells. This technology
> is going to transform the oil exploration and production industry
> by providing a significant improvement in understanding what the
> drill bit actually encounters in the subsurface. Well logs are
> a measurement of rock geophysical properties (resistivity,
> density, sonic travel time, etc.). FSI provides actual images
> of the rocks drilled through, and this is the only ground truth
> in exploration and production. Replacing 50% of Schlumberger
> and Halliburton's current business is a significant business
> opportunity. The only competitor, Core Labs, is in financial
> and technical disarray, having had a major failure to implement
> a digital rock imaging system for Pemex and others. Their core
> images are based on mounted cameras, and the lens distortion
> and lighting make each photo unique and non-repeatable. Core Labs
> attempted to grow by acquisition and diversification, and
> recently had to sell off their geophysical service acquisition
> companies to Paradigm Geophysical.
>
> Christian and I have talked, on average, twice a month for the
> last four years about his technology. Many of these conversations
> have been over an hour in length. He came to Houston to meet
> potential investors I introduced him two twice, and stayed for
> extended times each trip. This last trip he also met Roice, at
> least over the phone, and Christian has had several conversations
> with Roice about contract programming support. I have placed
> three of Christian's documents on the web at
> http://www.walden3d.com/dynamic/NetWork if you are interested in
> reviewing the technology in more detail about his technology:
> 1. 394,752 bytes Nov 17 2003 Digital_Rocks_LLC.doc
> 2. 214,016 bytes Apr 12 2005 FSI_Systems_Intro_Ver05.doc
> 3. 214,016 bytes Apr 07 2005 050407_FSI_Invitation_Invest_v2.doc
> 4. http://www.fullspectralimaging.com is his web site
>
> I believe we have not successfully attracted the right kind of
> investment yet because the technology is disruptive and
> transformative. Through Christian's brother in Montreal, he
> has met some folks who have put together a plan for raising the
> investment moneys needed to make this project reality. I spent
> 2 hours on the phone with Fred Strong on Thursday, and believe
> he has the potential to build a financial basis for this project
> to become successful.
>
> Christian has kindly provided an opportunity for three folks who
> have acted as mentors to receive $0.05/share founders shares.
> As the other two Founders, John Pohlman and Mike Dowen, do not
> have the resources to purchase their allotted shares, I have the
> unique opportunity to purchase all or any subset of the 975,000
> Founders Shares. The one requirement is that I transfer $5,000.
> to the FSI account for the first 100,000 shares by this Friday,
> June 24th. The other shares will be available on a first come
> first serve basis. Andrea and I do not have $5,000 unless we
> are willing to go into more debt. As described in the phone
> call, this letter is to give you an opportunity to participate
> in this investment opportunity
>
> The Financial Commitment
>
> After typing this letter and discussing it with Andrea, we are
> in agreement to make this offer to my children who have graduated
> from college and that I talked to about this last night.
> Depending on your reaction, this opportunity will be shared with
> other family and friends. We hope there will be other
> opportunities we can later provide to our other children, whom
> we know do not have resources to make a risky investment at this
> time. Except for this paragraph, and the paragraph mentioning
> Roice's conversations with Christian this letter is written as
> though it were being sent to other family and friends.
>
> The Investor financial commitment is to invest between $500. and
> $97,500. in Walden 3-D, Inc. as a 0% interest loan. Walden will
> reinvest 50% of this loan as Founders Shares in FSI. The 50% of
> the loan not invested as collateral for the loan is the first
> part of a two part promote for W3D. This first promote will
> allow Walden 3-D, Inc. to retire debt, or invest in FSI Founders
> Shares itself. Of the purchased shares, 50% will be collateral
> for the loan and 50% will be the second part of W3D's promote.
> When FSI goes public or sells the company, W3D will retire the
> loan by transferring the collateral shares to the Investor, or
> by selling the collateral shares and passing the sales price,
> less any selling costs, to the Investor. The option of transfer
> or sell is the Investor's choice. Again, the non-collateral
> 50% of the purchased shares are the second part of the promote
> for W3D. If FSI collapses, W3D will take on responsibility of
> returning the original Investment to the Investor.
>
> The large two part promote for W3D is based on:
> 1. 4 years of mentoring and working with Christian Singfield.
> 2. W3D taking 100% of the risk for returning the original
> Investment to the Investors if FSI collapses.
> 3. Taking a business approach to build value in W3D.
>
> The following examples show anticipated return for a $500., a
> $2,000., or a $5,000. investment. A different or a larger
> investment would be proportional to these three examples.
>
> $500. Investment Walk Through:
> 1. Investor sends $500. to W3D.
> 2. W3D purchases $250. worth of FSI shares at $0.05/share
> 3. FSI distributes 5,000 shares to W3D.
> 4. W3D uses the other $250. as a promote, and this money
> is used for retiring debt or other company purposes.
> 5. W3D provides a monthly status on FSI to the Investor.
>
> If FSI goes public or is purchased before June 21, 2010:
> A. W3D sells the 5,000 shares and pays half all proceeds
> to the investor. I.E. @$5/share, return is $12,500., or
> @$10/share, return to investor is $25,000.
> B. This means W3D's total promote is $250. + 50% of the
> actual stock sale price.
>
> If FSI becomes insolvent or is otherwise not successful
> before June 21, 2010:
> C. W3D will return the original $500. investment, and
> only the to the original $500. investment to the
> investor. Note failure of FSI's to go public or to sell
> the company results in a 0.0% interest loan to W3D.
> Timing of this financial return will be defined when
> FSI collapses.
>
> $2,000. Investment Walk Through:
> 1. Investor sends $2,000. to W3D.
> 2. W3D purchases $1,000. worth of FSI shares at $0.05/share
> 3. FSI distributes 20,000 shares to W3D.
> 4. W3D uses the other $1,000. as a promote, and this money
> is used for retiring debt and other company purposes.
> 5. W3D provides a monthly status on FSI to the Investor.
>
> If FSI goes public or is purchased before June 21, 2010:
> A. W3D sells the 20,000 shares and pays half all proceeds
> to the investor. I.E. @$5/share, return is $50,000., or
> @$10/share, return to investor is $100,000.
> B. This means W3D's total promote is $1,000. + 50% of the
> actual stock sale price.
>
> If FSI becomes insolvent or is otherwise not successful
> before June 21, 2010:
> C. W3D will return the original $2,000. investment, and
> only the to the original $2,000. investment to the
> investor. Note failure of FSI's to go public or to sell
> the company results in a 0.0% interest loan to W3D.
> Timing of this financial return will be defined when
> FSI collapses.
>
> $5,000. Investment Walk Through:
> 1. Investor sends $5,000. to W3D.
> 2. W3D purchases $2,500. worth of FSI shares at $0.05/share
> 3. FSI distributes 50,000 shares to W3D.
> 4. W3D uses the other $2,500. as a promote, and this money
> is used for retiring debt and other company purposes.
> 5. W3D provides a monthly status on FSI to the Investor.
>
> If FSI goes public or is purchased before June 21, 2010:
> A. W3D sells the 5,000 shares and pays half all proceeds
> to the investor. I.E. @$5/share, return is $125,000., or
> @$10/share, return to investor is $250,000.
> B. This means W3D's total promote is $2,500. + 50% of the
> actual stock sale price.
>
> If FSI becomes insolvent or is otherwise not successful
> before June 21, 2010:
> B. W3D will return the original $5,000. investment, and
> only the to the original $5,000. investment to the
> investor. Note failure of FSI's to go public or to sell
> the company results in a 0.0% interest loan to W3D.
> Timing of this financial return will be defined when
> FSI collapses.
>
> Based on past experience, this financial commitment should not
> be made unless you are able to write off the investment in your
> mind as a complete loss when you make the Investment. Then if
> I am killed in an airplane crash, and FSI collapses, you will
> not be as disappointed. However, if FSI is anywhere near as
> successful as I anticipate, then you have a tremendous upside.
> This opportunity will dissolve and any moneys received will be
> returned if there is not at least $10,000. Investment transferred
> to W3D's bank account by the close of business Wednesday, 22 June
> 2005. Call for wiring instructions, if interested.
>
> Thanks for reviewing this letter. We look forward to your
> comments.
>
> Best Regards,
>
> H. Roice Nelson, Jr.
> President
> Walden 3-D, Inc.
> 713.542.2207
>
> ------------- End Forwarded Message 1 -------------
>
> ------------- Begin Forwarded Message 2 -------------
>
> From: 'Ben Nelson'
> To: 'Roice Nelson'
> Subject: Re: Investment Opportunity
> Date: Mon, 20 Jun 2005 11:39:38
> Cc: 'Roice Nelson III'
>
>
> I was wondering if there was any room for negotiation. If not, l
> let me know and don't worry about reading the rest. Otherwise,
> please continue. Note, I cc'd Roice as we had briefly discussedd
> this earlier.
>
> I am not necessarily as concerned with the preservation of my
> investment if it can increase the upside potential, so I thought
> I would throw something out there.
>
> My proposal would be to negate the requirement for W3d to
> reimburse the original investment if things don't work out and
> in return, one of the promotes would be negated or significantly
> reduced.
>
> I assume you have one of two reasons for the first promote -
> 1) you want to pay down debt immediately, or
> 2) you want to use the first promote money to invest in FSI
> outside of this agreement.
>
> The second promote is obviously to benefit from the upside
> potential.
>
> If the first promote was negated, it would add to the ease of
> raising the required funds and still provide access to the
> upside potential. It would not, however, aid in any attempt
> to reduce debt.
>
> If the second promote was negated, it would allow flexibility
> in deciding whether to pay down debt, invest in FSI, or both.
>
> Under the current scenario (assuming the first promote was used
> to invest in FSI) you would garner 75% of all proceeds after
> exit. Whilee I understand that the opportunity would not be
> available to us if you were not offering it to us, I would
> suggest that removing one of the promotes (which would still
> give you 50% of all proceeds after exit) in exchange for the
> removal of the reimbursement requirement seems to me to be,
> at a minimum, an even exchange.
>
> Let me know your thoughts,
>
> Ben
>
> ------------- End Forwarded Message 2 -------------
>
> ------------- Begin Forwarded Message 3 -------------
>
> From: 'Roice Nelson'
> Subject: Re: Investment Opportunity
> To: 'Ben Nelson'
> Cc: 'Roice Nelson III', 'Paul Nelson', 'Melanie Wright'
>
> Ben,
>
> Thanks for your note.
>
> In my experience, when someone makes an offer like the one I
> made there is always room to negotiate. I love the idea of
> not having the risk of returning the initial investment.
> Since I don't expect any of you to have very much to invest
> towards the $5,000 I need to come up with by Friday, my
> preference would be to take the promote on the back end.
>
> Roice called and asked some good questions. John Pohlman
> originally committed for $5,000. and backed down because he
> has to pull it out of a retirement account and can not do it
> in two weeks. Mike Dowen spent six months working for FSI
> for free in Malaysia and has no money left to invest. This
> means there are $48,750 founders shares available, and until
> Friday I have first right of refusal on these shares. Chuck
> Edwards, who is on the Board of FSI and whom I introduced to
> Christian has committed to put in $10,000 by Friday, if there
> are shares available. The two Canadian investors are going
> to each put in $5,000 of $0.05 stock. If I put in $5,000 -
> which I have committed to do - this takes up $25,000 of the
> $48,750 founders shares. Roice's question was whether the
> other Founders could come back and buy some of the remaining
> $23,750 worth of shares.
>
> I just talked to Christian and to Fred Strong, one of the
> Canadian investors, and they say that Chuck and I will have
> proportional first right of refusal access to the remaining
> $23,750 worth of founders shares, i.e. Chuck would have 2/3rds
> and I would have rights to 1/3. So if Pohlman comes back and
> wants to put in $23,750 I would be given a 5 day window to buy
> my 1/3rd of these shares and Chuck would be given the same to
> buy his 2/3rds of the shares. So the answer to Roice's question
> is yes, but only if Chuck and I don't come up with our
> proportional additional shares.
>
> Roice's second question is whether I can loose the founders
> shares if no other money is raised. The answer is no. They
> might only be good for wallpaper, but once the shares are
> purchased by Walden 3-D, they belong to Walden 3-D. Proportional
> ownership can be deleted by subsequent offerings. But the shares
> remain with W3D.
>
> Roice's third question was what about Pemex. The answer is that
> Pemex has committed to use the technology, but all funds have
> been frozen because of the Presidential election next year. We
> hope the funds get released for the proof-of-concept study by
> this fall.
>
> Roice's fourth question was, "Do you expect to raise $5,000 from
> the four of us?" No. Andrea was uncomfortable with me sending
> this to Audrey or Heather, and wanted to see how you four
> reacted. Specifically she says my letter reads like a ponzi
> scheme and it is using our kids to pay off Walden 3-D debts.
> I disagree. Oh well! I only talked to Sara Ellyn's answering
> machine, and so I don't know if she has any interest. I thought
> I would call Aunt Sara, and gave Andrea the option to call her
> brothers. And there are a couple of friends I'd like to talk
> to, depending on Andrea's thoughts.
>
> Melanie and Paul, this is probably more detail than you want to
> know. And yet I think it is good to have this kind of due
> diligence and conversation before committing to any kind of
> investment. And none of you should consider an investment if
> (1) your spouses are not 100% behind the idea, or (2) you do
> not have the cash and can not afford to loose the cash.
>
> I will e-mail wiring instructions to any interested once I know
> there is a critical mass justifying going forward.
>
> Love,
>
> Dad
>
> cc: Roice, Paul, and Melanie
>
> ------------- End Forwarded Message 3 -------------
>
> ------------- Begin Forwarded Message 4 -------------
>
>> From: 'Ben Nelson'
>> To: 'Roice Nelson'
>> Subject: Re: Investment Opportunity
>> Date: Tue, 21 Jun 2005 08:01:33
>> Cc: 'Sarah Nelson', 'Roice Nelson III'
>>
>> To continue in your walk through:
>>
>> I invest $1500 and W3D buys 30,000 founders shares. Assuming
>> an exit price of $5, W3d would keep 50% of the $150k proceeds
>> and distribute the remainder to me less any transactions costs.
>> Assuming the investment goes south, neither of us would have any
>> commitment to the other.
>>
>> If this sounds accurate, Sarah and I would like to put $1500
>> into the pot. Send me wiring instructions today and I will
>> go during lunch to wire the money tomorrow. Should we have
>> any sort of documentary proof of the transaction?
>>
>> My understanding is Roice is looking to add $1000 and Melanie
>> $500. This would leave $2000 between you and Paul (and anyone
>> else this is forwarded to) to meet the deadline by Friday.
>>
>> Given that the front end promote would be negated, I would
>> imagine this should be doable.
>>
>> Ben
>
> ------------- End Forwarded Message 4 -------------
>
> ------------- Begin Forwarded Message 5 -------------
>
> Date: Tue, 21 Jun 2005 21:40:25 -0500 (CDT)
> From: 'Roice Nelson'
> Subject: Re: Investment Opportunity
> To: 'Ben Nelson'
> Cc: 'Roice Nelson III', 'Paul Nelson', Melanie Wright'
>
> Ben,
>
> Your first paragraph is my understanding. I will prepare a
> simple statement to this effect acknowledging receipt of funds
> and with my signature on it and forward it to you once the
> transaction is complete.
>
> Wiring Instructions are:
>
> Bank: CHASE MANHATTAN BANK
> Address: 712 Main, Houston, TX 77002
> ABA#: xxx xxx xxx
> Account: xxxxxxxxxxx
> Beneficiary: Walden 3-D, Inc.
> SWIFT: xxxxxxxx
>
> Had an interesting conversation with Christian today. Fred
> Strong is hopeful the Founders will not buy much of the $0.05
> stock as he and his partner want to purchase all we don't
> purchase. Oh well! They have started to bring some first class
> investors to the party. Christian is psyched. And it could
> still go south. I will keep you and Sara posted on who else
> commits and if I'm able to raise additional money to invest.
>
> I'm copying your siblings who received the first e-mail for
> their information only. This is a time of transition in each
> of your lives, and hopefully I will be able to provide other
> investment opportunities when things are not so tight.
>
> Love,
>
> Dad
>
> cc: Roice, Paul, and Melanie
>
> ------------- End Forwarded Message 5 -------------
>
> ------------- Begin Forwarded Message 6 -------------
>
> From: 'Roice Nelson'
> To: 'Dad'
> Cc: 'Roice Nelson, 'Sarah Nemec'
> Subject: Re: Investment Opportunity
> Date: Tue, 21 Jun 2005 22:51:04 -0500
>
> Dad,
>
> Just wanted to let you know we'll be wiring $1000 in the morning.
> We'd like to set it up exactly the same as with Ben. Thanks for
> including us.
>
> love,
>
> Roice
>
> ------------- End Forwarded Message 6 -------------
>
> ------------- Begin Forwarded Message 7 -------------
>
> Date: Wed, 22 Jun 2005 06:58:26 -0700 (PDT)
> From: 'Roice Nelson'
> Subject: Re: Investment Opportunity
> To: 'Dad'
>
> Dad,
>
> If you were going to have trouble raising 5000 or if
> you just wanted to buy more than that (because it
> looks like the founders shares won't be available
> later), I wanted to let you know I have a few good
> friends I would feel comfortable approaching with the
> same offer.
>
> It does not matter to me at all one way or the other,
> but maybe it would for you. If you were interested,
> let me know soon to limit how rushed it would be for
> them. Otherwise, I hope you week is going well...
>
> cya,
>
> Roice
>
> ------------- End Forwarded Message 7 -------------
>
> ------------- Begin Forwarded Message 8 -------------
>
> Date: Wed, 22 Jun 2005 09:02:49 -0500
> From: 'Paul Nelson'
> To: Roice Nelson <rnelson@walden3d.com>
> Subject: Re: Investment Opportunity
> Cc: 'Ben Nelson', 'Roice Nelson III', 'Melanie Wright'
>
> All,
>
> Kate and I talked a lot about the investment opportunity and
> after talking with Dad this morning we would like to propose
> an additional investment option. The two current options are
> as follows:
>
> 1.) The original investment opportunity has the promoter of
> the investment (Dad) assuming 100% of the risk with two
> promotes taking effect. The first promote is only half your
> investment applies to share purchases and the second is that
> 50% of the investment profits minus transaction fees will be
> returned to each investor.
>
> 2.) Ben's negotiated investment opportunity has the investor
> assuming 100% risk in exchange for the elimination of the
> initial promote, thus applying the entire investment to the
> purchase of shares; the second promote remains in tact.
>
> Kate and I have just moved to St. Louis and purchased a new
> home. We have not sold our condo in Provo, UT yet and so for
> the near future will have two mortgages to cover. This
> transitional time puts us in a bad cash flow position for
> investment opportunities and thus we brainstormed and have
> the following proposal to make regarding the investment
> opportunity:
>
> Option #3 - Paul's Plan:
> Each investor (Dad, Roice, Ben, and Melanie) contribute $500
> to a fund for purchasing shares on behalf of Paul and Kate
> Nelson. This would total $2000.00 for the purchase of shares
> on our behalf. We would follow Ben's negotiated investment
> plan where each of you assume 100% of the investment risk on
> our behalf thus purchasing 40,000 shares for Paul and Kate
> Nelson.
>
> At this point you might be wondering what you get in return
> for this small investment risk. Well, this is the deal of a
> lifetime. In exchange for your investment on our behalf we
> will send you an Official Proclamation of Everlasting Friendship
> (OPEF). You no longer will need to stay up nights guessing as
> to whether or not Paul and Kate Nelson really like you and if
> we consider you to be friends. The OPEF will be delivered via
> the most reliable and inexpensive mailing service to you by
> June 21, 2010, thus minimizing postal charges which would also
> be covered by each individual investor. The OPEF will arrive
> in a handsome dollar store pine picture frame for you to
> proudly display with other trophies, college diplomas, etc.
> An example of the OPEF is attached for reference, but the
> actual OPEF will include hand written signatures and optional
> color oil masterpieces hand drawn by Grant and Ella Nelson.
>
> I understand that each of you will want to invest more than
> the $500.00 to purchase additional OPEFs for your friends, but
> at this time 4 OPEFs is all that we are able to provide;
> please understand as our resources are limited at this time.
> Additional OPEFs may become available and at such time and
> additional offering of OPEFs will be made.
>
> As the money needs to be wired to Dad by the close of business
> today, the 22nd of June, 2005, you will only have until 2:00pm
> to act on this offer. My new cell phone number is 314-322-2654
> if you have any questions or would like to discuss this third
> investment opportunity in more detail; money may be directly
> wired to Dad on our behalf.
>
> Of course this is all a joke. I spoke with Dad this morning
> and this was just too funny to not do. In truth, we are
> really tight on money having just moved. It seems to be a
> good investment opportunity and we wish the timing was not so
> bad so we could participate. Good luck to you all.
>
> Love,
>
> Paul, Kate, Grant, and Ella Nelson
>
> ------------- End Forwarded Message 9 -------------
>
> ------------- Begin Forwarded Message 10 -------------
>
> From: 'Ben Nelson'
> To: 'Roice Nelson', 'Roice Nelson III', 'Melanie Wright',
> 'Paul Nelson'
> Subject: Re: Investment Opportunity
> Date: Wed, 22 Jun 2005 07:48:14
> Cc: 'Sarah Nelson'
>
> Good stuff. The email itself is almost worth $500.
>
> ------------- End Forwarded Message 10 -------------
>
> ------------- Begin Forwarded Message 11 -------------
>
> From: 'Ben Nelson'
> To: 'Roice Nelson'
> Subject: Re: Investment Opportunity
> Date: Wed, 22 Jun 2005 07:52:48
>
> I will forward the money today at lunch. I'm not sure if
> time zones will cause a problem with getting it through today,
> but I'll email the logistics when I am back from the bank.
>
> It's unfortunate that it looks like you will have to forgoe
> your option on the additional shares. If this had happened a
> few months earlier or early next year, we would have wanted to
> invest more. But, alas, we spent too much on the move and I
> don't like having debt.
>
> Thanks again for the opportunity.
>
> Ben, Sarah, Ethan (Tex)
>
> ------------- End Forwarded Message 11 -------------
>
> ------------- Begin Forwarded Message 12 -------------
>
> From: 'Ben Nelson'
> To: 'Roice Nelson'
> Subject: Re: Investment Opportunity
> Date: Wed, 22 Jun 2005 12:28:47
> The wire has been issued and should clear today. Let me know
> if it doesn't come through.
>
> Ben
> ------------- End Forwarded Message 12 -------------
>
> ------------- End Forwarded Message 13 -------------
>
> Date: Wed, 22 Jun 2005 12:44:52 -0700 (PDT)
> From: 'Melanie Wright'
> Subject: Re: Investment Opportunity
> To: 'Roice Nelson'
>
> Dad,
>
> I'm sorry that we have not written to you sooner. We have had
> a lot of discussions this week about everything and it has
> taken us quite a while to figure out if we wanted to invest
> anything at all and if so, how much. We would like to invest
> $1000 with the same understanding/agreement as Roice and Ben.
> Assuming the investment does not work out, you would have no
> commitment to us. Jared's brother might be interested in
> investing in this as well. If you are still in need of some
> funds and want me to, I will talk to him. Otherwise, I will
> not mention it.
>
> Love ya,
> Melanie
>
> ------------- End Forwarded Message 13 -------------
>
> ------------- Begin Forwarded Message 14 -------------
>
> From: "Chris Singfield FSI"
> To: 'John C. Pohlman', 'Roice Nelson Jr.', 'Chuck Edwards',
> 'Michael J. Heagney', 'Mike Dowen', 'Paul Morris',
> 'Dacia Rohleher', 'Fred Strong'
> Date: Wed, 22 Jun 2005 21:25:11 -0400
>
> Please find attached the first share offering status report.
>
> Cheers
>
> Chris Singfield
>
> FSI International
>
> (Full Spectral Imaging International Corp. Limited)
> PO Box 207
> Sandgate Qld
> Australia 4017
>
> ------------- End Forwarded Message 14 -------------
> ------------- Message 15 -------------
>
> Joshua,
>
> This e-mail is what Audrey warned you about by phone.
>
> The 14 e-mail messages below [above] summarize the conversation
> I started Monday morning with my married kids. Andrea was
> uncomfortable with my proposal, and since I had a bad experience
> when I brought friends and family into an investment back in
> 1994, I did not push sending this to you and Audrey. Neither
> Andrea nor I feel we know you all that well, nor that you know
> us all that well, and investments are something normally
> discussed between people who know each other pretty good. As
> I hope you will find out, I am very open, and because of the
> thousands of pages of thoughtlets I have posted
> (http://www.walden3d.com/thoughtlets), you can get to know me
> better than you probably want to, by just reading. I expect to
> get to know you as we spend time together over the coming decades.
>
> Anyway, in case you didn't know, I'm somewhat of an entrepreneur.
> I have an opportunity I'm excited about, and I do not have the
> cash to invest without borrowing, which we are trying not to do.
> So I am offering my married kids a chance to invest, if they
> want a high risk investment. Three our of four of the married
> kids chose to invest, and the fourth would have, were it not for
> having two mortgage payments right now. I think the e-mails are
> self explainatory. Please feel free to call with questions. DO
> NOT FEEL ANY OBLIGATION TO PARTICIPATE. I have attached a
> spread-sheet that was received today from FSI, along with a
> PowerPoint file received from my son Paul that goes with his
> letter, message 9 below [above].
>
> With love,
>
> Roice
> cell 713.542.2207
>
> ------------- End Message 15 -------------']]>
The bottom line is that Ben and Sarah invested $1,500., Roice
and Sarah invested $1,000., Melanie and Jared invested $1,000.,
Roice's Friend Charles C. Nevill invested $1,000., and Melanie's
in-laws, Jackie and Glenda Wright invested $1,000. With this
money Walden 3-D, Inc. purchased 100,000 shares of stock, which
are distributed as shown on the chart below. Joshua only
invests when he has a prospectus, which I think is very wise,
and Christian does not have a prospectus yet. I'm sure the
numbers showing the value of FSI stock seem totally outrageous.
Time will tell. The money was transferred on Friday the 24th of
June. I'm finishing writhing this Thoughtlet on Tuesday the 19th
of July. I still have not got a simple agreement to everyone
with my signature on it. Christian still doesn't have the
stock certificates to me. His attorney in Brisbane, Australia
and his Banker in the Caribbean have both been on vacation for
the last several weeks. He assures me that there will be a
document with specific share numbers sent to me by the end
of the month, which information I have passed on to my investors.
Yesterday Christian gave me a detailed status report. He has
been working on the Prospectus for the next round of funding.
All of the unissued $0.05 shares were put back into the treasury.
The next round is $0.50 shares, and they have sold the first
$5,000. worth of these shares. My 80,000 options, which I
thought were at $2.50 per spare are actually at $0.50 per share.
They plan to raise $50,000. selling these $0.50 shares. This
money will be used to finish and to market the prospectus.
Through Fred and Dacia Christian has met with three venture
capital groups. Each of these groups only invests a minimum
of $10 million at a time. All three are interested. Part of
the use of funds Christian is projecting in the Prospectus
he has been working on is to do $1.5 million worth of free
work for Pemex over the next six months. His projections,
based on the time he spent with Pemex, is that they will be
doing over US$150 million worth of work with FSI by the end
of 2006. There are strong technical reasons why this could be
right. The key is whether Christian is able to put together
the management and marketing team necessary to introduce a new
and disruptive technology into a very conservative marketplace.
The other thing Christian told me is that he has gone to his
Board of Directors and has requested and received tentative
approval for those $0.05 Founders Shares which were not purchased
to be made available to the three Founders as $0.05 options,
which have to be exercised within the next three years. He
knew I was struggling to meet my $5,000. commitment, and as
described above the other two Founders were facing similar
troubles. I think this news justifies the trust I've developed
in Christian over the last few years, as well as my
recommendation those I love participate.
The key thing to me from this experience was - thanks to the
family working together - I was able to help a friend demonstrate
that people believe in him and his technology, help him keep from
going back to Australia to declare bankruptcy, and meet his
investment deadline."
Since the 38th week of 1996 I have written a weekly "Thoughtlet"
(little statements of big thoughts which mean a lot to me).
Until the 43rd week of 2004 I sent these out as an e-mail. They
were intended to be big thoughts which mean a lot to me.
Over time the process evolved into a personal diary. These notes
were shared with my family because I know how important the
written word can be. Concerned about how easy it is to drift and
forget our roots and our potential among all of distractions of
daily life, I thought this was a good way to reach those I love.
It no longer feels right to send out an e-mail and "force" my kids
and my family to be aware of my life and struggles.
Everyone has their own life to lead, and their own struggles to
work through. I will continue this effort, and will continue to
make my notes publicly accessible (unless I learn of
misuse by someone who finds out about them, and then will
aggressively
pursue a legal remedy to copyright infringement and I will put the Thoughtlets
behind a password).
The index to download any of these Thoughtlets is at
http://www.walden3d.com/thoughtlets,
or you can e-mail me with
questions or requests at
rnelson@walden3d.com
(note if you are not on my e-mail "whitelist" you must send 2 e-mails
within 24 hours of each other in order for your e-mail to not be trashed).
With all my love,
Dad
(H. Roice Nelson, Jr.)