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To: Seconds Out who wrote (6695)	7/11/1999 8:53:00 AM
From: John Madarasz	Read Replies (2) \| Respond to of 10081

re: S-3... A fairly comprehensive post here taken from the GMGC investors club... clubs.yahoo.com "good to hear from you, friend. don't be a stranger.... although i continue remain critical of the manner in which the nasdaq issue was communicated by GMGC to us shareholders, further fact-finding, study and reflection have led me to adopt a more optimistic view. (see footnote) first, i have received an e-mail from GMGC explaining that the delisting concerns were predicated upon the manner in which nasdaq treats, for accounting purposes, the series c and d preferred shares. specifically, i was advised that these shares are treated as liabilities upon the books of GMGC despite the fact that there is no right of redemption which the preferreds have to demand a return of their capital. the person i comunicated with characerized the nasdaq concerns as "just a technicality actually...." second, in rereading the amended s-3, it would appear reasonable to presume that GMGC's response to nasdaq "demonstrating our compliance as of may 7, 1999..." was written somewhere in the vicinity of that may 7 date. if this presumption holds water, then the "financing transaction currently under negotiation" was in the process of being negotiated at that time -- and presumably GMGC felt fairly confident that the deal would be consummated since it specifically identified it as a means for maintaining nasdaq compliance through december 31, 1999. third, we now know that on or before july 30 GMGC should conclude this "financing transaction...." fourth, we know that excite invested $6MM in GMGC on or about june 21, 1999, and we also know that no 8-K explaining the terms of this unusual "non-voting, non-redeemable" deal has been filed to date. given the past pattern of the timing and content of the 8-K filings for the series c and d deals, one naturally wonders why the terms of the excite deal remain shrouded in mystery...... fifth, in the TWST interview which was published shortly after the excite investment, dr. markman -- clearly cognizant at the time of the nasdaq delisting possibility -- stressed that "money is nice," but the company was "focusing our attention more on strategic partnerships. ...we'd really like to have someone who has a presence in different markets, a strong customer support and marketing organization, who can supplement what we do and get us there much, much faster and provide the capital to accomplish some of these things. that's what we are focused on right now in terms of looking for additional funding." sixth, during that same TWST interview, dr. markman stated that the company's share price was "terribly undervalued for what we provide." he also referred to the voice-enabling market as "the next hot market." seventh, dr. markman was extremely positive about GMGC's future in the TWST interview. this certainly suggests that the nasdaq delisting issue -- which was certainly known to markman at the time of the interview -- was not perceived by him as a truly significant concern (or even a concern at all). whether an equity partnership deal involving excite/ATHM (or someone else) is on the horizon remains to be seen, of course. no one can totally exclude either the possibility of another convertible deal or the possibility that the "financing transaction currently under negotiation" will fail to close. however, FWIW, i regard the former scenario as more likely than the latter, and hence my cash will stay parked in GMGC. This Is a Reply to: Msg 8747 by floridahockeyman View Replies to this Message " These are the times that truly test the courage of our convictions! Best wishes, John P.S. A follow up post in regards to the first point made above... " The preferreds actually have a bond until the conversion takes place: I think that is accurate that the preferred bond is actually carried as a short or long term liability until the conversion. Then an accounting adjustment moves the converted bond/stock to a paid-in-capital account and out of the liability account. If you notice the time line for the dates: March 31 - GMGC announces the Series D deal. At this time some of Series B, and C are still outstanding. Add Series D to a liability account. April 15 - Letter from Nasdaq. April 19 - Series B is completely converted (from 10Q) May 3-5 - Remainder of Series C is converted.(from 10Q) May 7 - GMGC notifies Nasdaq. July 1 - Nasdaq notifies GMGC of compliance July 9 - S-3/A amendment filed. This Is a Reply to: Msg 8746 by mole4x4 View Replies to this Message

To: Seconds Out who wrote (6695)	7/12/1999 2:26:00 AM
From: Mark Oliver	Read Replies (1) \| Respond to of 10081

I suppose this is obvious, but assuming the convertible shareholders have hedged their investment with short sales, they will at some point be obligated to return the borrowed shares. Often, a short sale requires the seller to go to market and buy shares to return to the lender, but in this case the convertible shareholders will get their shares without buying from the market, and therefore won't stimulate buying activity. Sad as many times the purchase of shares by short sellers, especially in a short squeeze, will drive the share price higher. In this case, the return of shares will be a non-event for us shareholders. Unfortunately, the effect of their starting a short position does have a great negative impact. Oh well. On the bright side, many speculate the convertible shareholders have conspired to drive the shareprice down and may have actually created larger short positions than their converted shares will cover. Maybe they will have satisfied their short strategy once they have achieved their conversion goals and now we will see the stock trade more naturally. I certainly hope so. I am tired of seeing great news being squashed by so much selling. Maybe there are genuine concerns, but at least this damn conspiracy, if it exists, will soon be behind us. Good luck to all longs. I hope we can see a new period begin. Regards, Mark