GMC Holding discloses continuing SEC investigation
2006-04-10 20:35 ET - Street Wire
Also Street Wire (U-*SEC) U.S. Securities and Exchange Commission
by Lee M. Webb
GMC Holding Corp., a retooled perpetual motion promotion that had its stock registration yanked by the U.S. Securities and Exchange Commission (SEC) on April 5, has disclosed that it is still being investigated by the U.S. regulator. Notwithstanding the revocation and continuing SEC probe, the company says it is business as usual.
As previously reported by Stockwatch, the U.S. regulator launched an administrative proceeding against GMC Holding one month after the pink sheet promotion spun out a nebulous tale about the pending sale of the rights to its ballyhooed "cold motor" technology.
The company's touted "cold motor" technology as well as its former perpetual motion promotion is reportedly underpinned by REMAT, an acronym for GMC Holding's esoteric Rare Earth Magnetic Amplification Technology.
In a fluffy Feb. 8 news release that waved vaguely at negotiations with unidentified "multiple corporate entities," GMC Holding suggested that the purported cold motor deal could be worth as much as $500-million, 96 per cent of which the company said it planned to allocate directly to shareholders. (All amounts are in U.S. dollars.)
On March 8, the SEC issued a 10-day trading suspension against GMC Holding because of questions regarding the accuracy and adequacy of the company's claims about the proposed sale, among other things.
At the same time, the U.S. regulator initiated an administrative proceeding against the company to determine whether it would be in the public interest to revoke GMC Holding's stock registration for not filing required periodic reports since 1998.
In response to the administrative proceedings, GMC Holding quietly submitted an offer of settlement, effectively yielding to the revocation of its stock registration.
On April 5, after reviewing and accepting the settlement offer, the SEC issued an order finding that GMC Holding had not filed any annual reports or any periodic or quarterly reports since 1998.
The U.S. regulator also found it "necessary and appropriate for the protection of investors" to revoke the registration of GMC Holding's securities.
Continuing investigation
On April 7, GMC Holding posted a shareholder update on its website, offering its spin on recent developments under the guise of a so-called "press release" that does not appear to have been distributed by any wire service or otherwise picked up by the media.
Among other things, the April 7 update indicates that the SEC is still investigating the company's management, financial reporting and touted technology.
"We are fully complying with the Securities and Exchange Commission in the attempt to assist them with this investigation to accelerate a conclusion," the company's postrevocation update states. "We are confident that our complete disclosure of all information regarding our business practices, financial condition and current R&D progress will facilitate this result."
Strange protection
In a rather peculiar claim of protecting its investors, the Florida-based company appears to take some credit for the revocation of the registration of its securities.
"In order to protect our shareholders, we requested an expedited delisting at this juncture," the company claims in its April 7 update.
Given that GMC Holding has only been quoted on the lowly pink sheets and has never been listed on any exchange, the so-called "expedited delisting" presumably refers to the SEC sanction of revoking the company's stock registration.
While the SEC invokes the protection of investors generally in revoking the registration of companies that are securities violators, GMC Holding does not explain just how the company's existing shareholders in particular are protected by the revocation that effectively wipes out the market value of their shares.
Business as usual
"We wish to assure our stockholders that even though we are not trading, it is business as usual for the company," the GMC Holding's management adds in the curious update.
Given that the company's business practices led to it running afoul of regulators and having its stock registration revoked, it is not clear just how much comfort, if any at all, investors stuck with GMC Holding shares should take from that "business as usual" claim.
"Business as usual" at the Florida-based company has resulted in a situation in which investors were left in the dark about GMC Holding's financial condition because the former pink sheet outfit did not bother filing any financial statements or any other periodic reports.
Among other things, the public record indicates that GMC Holding's "business as usual" has consisted of a great deal of promotional puffery including claims about a "'great than unity performance' device," otherwise known as a perpetual motion machine.
A review of the company's promotional news releases also indicates that "business as usual" includes touted initiatives about which little or nothing is subsequently heard.
For example, last August GMC Holding rather grandly announced that it had engaged an accounting firm "to complete its audits and reviews to facilitate compliance for application to one of the national exchanges."
Nothing more was heard about the touted audit, let alone an application to a national exchange, until Stockwatch asked GMC Holding president Bruce McKenzie about the status of the audit in February of this year.
"Well, that auditing firm has been tied up with a lot of other large business firms here and we are in negotiations with them to pass it off to another firm that can give it more time," Mr. McKenzie, who is not heading a large business firm, said on Feb. 13.
"We're trying to accelerate that picture more than we are to dead-end the picture," Mr. McKenzie told Stockwatch. "We've interviewed two other firms already and we're thinking about transferring the work to these other two firms.
"Hopefully we'll have all our auditing done in the next three to four weeks."
Under the company's "business as usual" approach, the auditing clearly was not completed within three to four weeks of Feb. 13; nor has the company offered any indication that the auditing will ever be completed.
In a similar "business as usual" vein, on Aug. 2, 2005, GMC Holding announced that "a prominent New York legal firm will shortly complete multiple patent filings of the company's 'REMAT(TM)' technology."
That announcement was made more than eight months ago, but nothing further has been heard of the "multiple patent filings" that were to be shortly completed.
"We are dedicated to providing shareholders necessary information for making stock purchasing decisions," Mr. McKenzie proclaimed last August.
"This is important to meet the company's immediate goal in becoming fully reporting and moving to a national exchange," GMC Holding's president went on to add in that fluffy news release last summer.
Given that the company is still under an SEC investigation and its shares cannot even be traded on the lowly pink sheets any longer, some investors might well wonder whether GMC Holding's "business as usual" approach is such a prudent strategy.
In any event, "business as usual" is GMC Holding's declared and demonstrated approach in its April 7 website update masquerading as a press release.
"We continue our efforts to improve our Cold Motor and other complimentary (sic) technologies," the company claims. "Negotiations continue with parties interested in purchasing a portion, or all of our technology.
"Once we have reached a resolution with the Securities and Exchange Commission, we have identified plans to move the company forward assuring that our bona fide stockholders will benefit and share in any sale of our REMAT technologies."
While it is far from clear whether GMC Holding is attempting to draw a distinction between "bona fide stockholders" and some other type of stockholders, there is little doubt that investors who paid as much as $2.30 per share before the SEC yanked the company's stock registration would welcome some benefit from what understandably appears to be a dud investment.
GMC Holding registered its last pink sheet trade on April 3 when 1,500 shares changed hands in a matched trade at $1.75 per share.
Comments regarding this article may be sent to lwebb@stockwatch.com.
(More information regarding GMC Holding Corp. is available in a Stockwatch article published on Feb. 14; March 8; and April 7, 2006.)
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Reader Comments - Comments are open and unmoderated, although libelous remarks may be deleted. Opinions expressed do not necessarily reflect the views of Stockwatch.
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Looks like we were played the fools. BUT THE FAT LADY HASNT SANG YET!!!!! YOU CROOKS
Posted by silent investor @ 2006-04-10 21:06
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stick a fork in this one Lee; She's cooked!
Posted by mythbuster @ 2006-04-10 21:34
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Once again Lee Webb, you show your colorful hatchet job feathers. I can't wait until the moment you are plucked clean and fried in a nice batter!
This company is going to make your head spin .....endlessly!
lmfao......
still freddo.....still cazzo......
Posted by Freddo Cazzo @ 2006-04-10 21:41
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silent investor, the fat lady has sung and left the building. All that is left is to see how far law enforcement will go. The crooks are the people selling paper dreams for cash.
35 years later, it still rings true
"The percentage you're paying is too high-priced While you're living beyond all your means And the man in the suit has just bought a new car From the profit he's made on your dreams"
Posted by Penny Gruber @ 2006-04-11 04:59
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