The closing price of GMGC's stock on May 7 was $1.25.
I can only think of one of two scenarios for GMGC to give Revere an approximately 20 % discount price to the closing price of $1.25 (based on the fact that Revere purchased 1,301,723 shares of the Company's Common Stock for an aggregate purchase
price of $1,301,723 - ie $1 per share):
1. Rose, CFO, is incompetent (the 60 day deal with Revere adds to this theory); or
2. GMGC is really hurting for cash with no sign of revenue or relief in sight.
Per the 10Q, as of April 26, GMGC had sold an aggregate of 6,606,177 shares which only leaves 3,393,823 shares left of the 10 million shares registered in the ELOC agreement in 1999.
A maximum of 3,348,502 shares is what I believe Revere was authorized for their $2 million agreement with GMGC based on the 8K dated April 3, 2001. There appears to be just be about 45,000 shares left over from the ELOC deal.
The question is, "Does this latest round include the total shares authorized in the April 3 Revere deal?"
If the answer is yes then:
1. 3,348,502 - 1,301,723 = 2,046,799 shares left for Revere.
2. Since Revere can acquire as much as 2,046,799 shares they will want to get as low a price as possible.
3. They will get a discount on their shares equaling 91% of the closing price for each day in the 60 day period unless they cash out earlier (if my memory serves me correctly).
4. To get the optimum number of shares, Revere needs to have an average closing price of $1.1246148352 (multiply that number by .91 then multiply again by $2 mil and you will get 2,046,799 shares).
I am not sure if the warrants are included in the total number of shares that Revere can acquire from GMGC or whether or not these warrants comprise additional shares not mentioned in the total number of shares that Revere is authorized to purchase.
It will be interesting to see how close Revere is able to get to this average closing price of $1.12 for them to get their maximum number of possible shares.
If the answer is no then I believe:
1. GMGC will register more shares to cover the deficit in the shares needed at the end of the 60 day period.
2. Revere will push the price even lower since they can still acquire 3,348,502 shares at an average closing price of $1.83 (if my math is correct).
I hope I didn't bore everyone with these figures. I really wonder if the institutions that bought shares in the mid $1 range, and $2 and above, etc are ticked off. They have not had a great return on their investment so far. I sincerely hope that GMGC hasn't burned all of its bridges as it appears as each financing agreement is weaker and weaker in terms of the stock price at which these institutions acquire shares.
Take care,
Kurt
PS A possible wildcard is the preferreds. Although they just recently reset their conversion price at a ridiculously low price, they may either feel that they want the price to only go up from here (ie content) or they may be in their greedy and manipulative mood and want to get an even better price and push the price down the first ten days of July (which by the way is the closing days of the Revere deal).
PSS This whole problem could be resolved if the sales and marketing executives decided to start selling GMGC's product. |
