[meteorite-list] The Trials and Tribulations in Dealing withLando wners

[JoshuaTreeMuseum]

OK, fair enough.
 So anyway you get Paloma Picasso to design some matching sets of necklaces, 
bracelets, earrings, tiaras, rings with shooting star themes. Then have the 
writers think up some kind of plot device to get Lindsay Lohan on the show. 
Maybe have her waltz into Tiffanny's while Paloma is showing her pallidot 
jewelry. Then LiLo could shoplift the necklace and viola, a free media 
advertising blitz. It's a win-win situation. Next thing you know  50-Cent 
will have a pallidot set in his front tooth. Phil Mickelson will give his 
wife a pallidot encrusted tiara for their anniversary. There will have to be 
movie tie-ins like "Diamonds are a Girl's Best Friend."  Liz Taylor will 
wear the world's largest faceted pallidot pendant. Baguette cut engagement 
rings will become all the rage........

------------------------------------------------
Phil Whitmer
------------------------------------------------




Hello List,

Wow, what an outpouring of comments today.

Let me bring all of you up to speed on this.

Five years ago, I partnered with around 10 or so friends and they combined 
some money, and I offered up some time and we started hunting for meteorites 
together.  We choose to go to a certain location in Kansas where pallasites 
had been found in the past.

We chose this location after I had my success locating some pallasite 
meteorites at the Brenham strewnfield.
We got land leases to hunt, without any promise of any big money, no talk of 
Millions, or thousands or even hundreds of dollars to anyone.  We just 
started hunting and we started finding meteorites.  Some of my friends, at 
least 8 of us in the group, were very connected meteorite dealers and we 
decided to try to sell some of our finds, we tried and we tried and we 
tried, and we sold one meteorite.  We contacted virtually all the 
institutions with notable meteorite collections and none of them wanted to 
either buy or to trade for any of our specimens.  The one sale was made, and 
the land owner from where this meteorite came from got his contracted 
percentage royalty, and he was VERY pleased.  It was truly money from heaven 
for him.

The meteorites from this particular location have the reputation of being 
the worst rusting meteorites known to man.  Far worse than Campo, Nantan, 
Brenham or any other "ruster" one can think of.  So we could understand why 
no one wanted to buy any more of this meteorite. It was just too big of a 
risk for people to take.

As we kept finding more and more meteorites, we were challenged with the 
supply and demand issue.  Much supply, virtually no demand.  Not a good 
outlook.

Then one of the dealers in the group reminded us of the high quality 
gemstones that had been faceted from the peridot in this meteorite.  So we 
took the specimen in the worst condition out of our inventory and practiced 
trying to free up some of the olivine that was in it, and sure enough, there 
were some amazing gemstones produced.

A year and a half ago, we went to all the land owners where we had found 
meteorites and told them that if we would liquidate all the meteorites we 
found, we probably would only get $0.10 or $0.15 per gram.   But we felt 
that as gemstones, we could make more money for everyone.

We decided to incorporate our partnership as Palladot Inc, a Kansas 
corporation, that focused on selling meteorites, mostly in gemstone format.
I am the President, and Jason Phillips is our C.E.O..  We hired Charles 
Ellias, who is a graduate gemologist with 25 years of experience in the 
color gemstone market, to manage our operations, including overseeing the 
faceting, grading and pricing and marketing of the gemstones.

Our original contract only promised the landowners that they would earn 
their royalty on the "wholesale" sale of the meteorites.  We told all the 
land owners we wanted to pursue the gemstone market as there was very little 
demand in the meteorite world for the specimens as meteorites.  It was one 
of the landowners that actually suggested "pooling" all of the royalties 
together, so we wouldn't have to melt down every meteorite, and this way all 
the landowners could still share proportionately by their contribution in 
the profits.

It was at that point, that in the spirit of full discloser, we explained how 
the gemstone market gave us the best up-side potential for earnings. If a 
market could be built for these most amazing and rare gemstones with a 
fascinating story, then we would have the supply to fill the demand created. 
And yes, IF there would be millions of dollars of demand created, we would 
have millions of dollars of gems.

All of the land owners, except for one, agreed to pool their royalty 
interest together and join us in the gem market.
The one landowner that didn't want to go to the gem business with us, was 
happy to take his portion "in kind" and we gave him his meteorites.  All the 
others signed a new agreement that pooled their royalties together.

One year ago this month, we started selling Palldot Pallasitic Peridot 
gemstones at the Tucson show (specificially at the Pueblo Show at the 
Executive Inn.)  It seems we chose the worst year, economically speaking, 
since the Great Depression to start a business...not to mention, a business 
in the luxury jewelry market.
But we still made some sales, and our business is growing.

Now, back a year and a half ago, the deal we made was that we would share 
the royalty to the landowners based on the retail profits rather than on the 
wholesale sales.  The landowner who was featured in this local TV story we 
are all talking about, actually had his attorney look over the new pooling 
agreement.  In fact, his attorney made some suggestions to alter it, and we 
agreed to his suggested changes.

There NEVER was any promise of "getting rich quick."  Never.  Getting rich 
over time...maybe, if we played our cards right.

But we did state that the sale of just a few gemstones could yield more 
money than the whole meteorite could fetch on its own.

So, for the last several months, this one landowner has been trying to get 
Jason and me to "alter his contract."  If it were just a matter of making 
him happy, there wouldn't be a problem.  BUT there are ALL the other 
landowners that we are in binding contracts with.  We would make the others 
very mad if we gave into this one man's demands at their expense.

Of course, if we were in breach of contract, there would be legal remedies 
this man could take.  But we aren't in breach of the contract so he chose to 
threaten us with going to the investigative reporter at a TV station with 
his story.   We discussed some options that we could offer him, and still 
keep the other land owners happy, but they were not what he wanted, so he 
went to the reporter anyway.

At the start, I think the reporter thought there was this huge story, but I 
spent nearly two hours of interviews with her, and when she heard my side, 
the only thing she had left for her story was that this one landowner was 
"not happy" that he hadn't seen any profits yet.

Well, I am "not happy" that we haven't seen any profits either!

But we are doing the best we can.

We are making sales, and when there are profits, the stockholders will get 
dividends and the landowners will get royalties.

We have invested over $100,000 and somewhere north of 3,000 man hours into 
this one project.  This landowner has invested zero dollars, and zero hours. 
There are a lot of other people that have far more invested, and we ALL want 
to see a return.   He will be entitled to his share when profits are 
generated just as he agreed to a year and a half ago.

Now, let me also remind you that news reporters don't care about telling the 
whole story.  They only had a few minutes for the segment, and while I share 
all of this with the reporter, she (and her editors) decided to run the 
story for ratings purposes.  Because, everyone I have talked to said this 
really is a "non-story."   Millions of people everyday are not happy with 
contracts they entered into in the past.  It isn't news.   Nowhere in the 
contract does it say that each landowner "has to be happy."  In fact, that 
is why you have contracts, because, inevitably, people often become less 
than happy with the deals they struck over time.

Meanwhile, we have an obligation to our shareholders, and to the landowners 
to press on and do our best to make all of us as much money as we can.  It 
might be sad if what we are doing was hurting science, but to be honest, if 
there wasn't the potential for profit with the gemstones, we would have quit 
hunting a long time ago, and a lot of these rocks would still be underground 
rusting away anyway.

I know this explanation won't make everyone happy, but I have learned a long 
time ago that it isn't my job to make everyone happy.

I just do the best I can with the hand I am dealt.

Feel free to contact me off the list if you have any further questions.

Steve Arnold
President, Palladot Inc
Co-Host Meteorite Men
ArnoldMeteorites.com