NOTE 7 - SERIES AA PREFERRED STOCK

12 Months Ended

Dec. 31, 2015

Disclosure Text Block Supplement [Abstract]

Preferred Stock [Text Block]

NOTE 7 - SERIES AA PREFERRED STOCK

In April 1992, Royale Energy's Board of Directors authorized the sale of 147,500 shares of Series AA Convertible Preferred Stock.  Holders of Series AA Convertible Preferred Stock have dividend, conversion and preference rights identical to Series A Convertible Preferred Stockholders.  The Series AA Convertible Preferred Stock has a stated value of $4 per share and provides shareholders with a one-time dividend payable equal to forty cents ($0.40) per share of Series AA Convertible Preferred Stock within thirty days after the expiration of one year from the date of purchase.  The dividend has been paid on all outstanding shares as of December 31, 1994.

The Series AA Convertible Preferred Stock is convertible any time at the basic conversion rate of one share of common stock for two shares of Series AA Convertible Preferred Stock, subject to adjustment. Royale Energy has the option to call, at any time after six months from the issuance, the Series AA Convertible Preferred Stock at either the issue price of $4 per share plus 10%, if called within one year after issuance, or $4 per share thereafter. (Subject to the holders' conversion rights outlined above). The Series AA Convertible Preferred Stock has a liquidation preference to the common stock equal to $4 per share plus accrued dividends. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of the shares of the Series AA Convertible Preferred Stock shall be entitled to be paid out of the assets of the Corporation available for distribution to its shareholders before any payment shall be made in respect of the Corporation’s common stock, but only after payment to its creditors, an amount equal to $4.40 per share, if called within one year after issuance, or $4 per share thereafter. Holders of Series AA Convertible Preferred Stock shall have voting rights equal to the number of shares of common stock into which the Series AA Convertible Preferred Stock may be converted.

The Series AA Convertible Preferred Stock does not have the right of redemption at the stockholders' option.  The preferred stock is not registered under the Securities Exchange Act of 1934, and no market exists for the preferred stock.  The shares of Series AA Preferred stock are convertible into shares of Royale Energy's common stock at the option of the security holder, at the rate of two shares of convertible preferred stock for each share of common stock.  During the year ending December 31, 2014, there was a conversion of 6,122 Series AA Preferred shares, with a book value of $17,865, for 3,061 common shares.  There were no such conversions during 2015.   As of December 31, 2015 and 2014, and there were 46,662 and 46,662 shares, respectively of Series AA Preferred stock issued and outstanding.