Just an update on this. Two more pieces released in the last two days.
8/14
Form 10QSB for GS CARBON CORP
Quarterly Report
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
BUSINESS RISK FACTORS
There are many important factors that have affected, and in the future could affect, GS Carbon's business, including but not limited to the factors discussed below, which should be reviewed carefully together with other information contained in this report. Some of the factors are beyond our control and future trends are difficult to predict.
There is substantial doubt concerning our ability to continue as a going concern.
GS Carbon had approximately $7,736 in cash at June 30, 2007 and had current liabilities totaling $7,287,150. These matters raise substantial doubt about GS Carbon's ability to continue as a going concern. Management's plans include raising additional proceeds from debt and equity transactions and completing strategic acquisitions.
The issuance of shares under our agreements with Candent and Cornell/Highgate could increase their holding to over 80% of the total common shares outstanding.
While Candent and Cornell/Highgate are subject to restrictions on conversion of their respective debentures limiting their ownership to 4.9% of our common stock at any given time, upon default the Cornell and Highgate Debentures, along with the outstanding options and warrants, could be converted into approximately 3,716,116,322 shares at the market price on June 30, 2007. The issuance of these shares would dilute the interest of our current shareholders and provide Cornell/Highgate with over 80% of the common shares outstanding. Such issuances would reduce the percentage of ownership of our existing common stockholders and could, among other things, depress the price of our common stock. This result could detrimentally affect our ability to raise additional equity capital. In addition, the sale of these additional shares of common stock may cause the market price of our stock to decrease.
We may be unable to satisfy our current debts.
Our total liabilities as of June 30, 2007 were $9,861,568. We cannot afford to pay these amounts out of our operating cash flows and our ability to operate will be significantly impaired if we cannot reduce the Cornell and Highgate debt with registered stock.
We are liable for approximately $498,000 in previously unreported debt.
In its Annual Report on Form 10-KSB for the year ended December 31, 2006 GS Carbon disclosed in Note 13 to the Financial Statements the following:
A subsidiary of GS Carbon that was spun-off from GS Carbon in 2006 issued debt instruments in the principal amount of $498,074 several years ago. We recently were presented with evidence that GS Carbon may be liable for payment of the debts. Management is actively investigating the facts and circumstances with respect to the debts, and is not able to determine at this time if GS Carbon has liability for the debts.
On July 26, 2007, the Company determined it was liable for approximately $498,000 of convertible debt along with approximately $59,000 of related derivative liabilities at the acquisition date and that it existed at December 31, 2006 and March 31, 2007. The Company will restate its December 31, 2006 and March 31, 2007 financial statement as a result of these omissions.
ITEM 1. DESCRIPTION OF BUSINESS (continued)
BUSINESS RISK FACTORS (continued)
As of July 1, 2007 Seaway Capital, Inc. can exert control over us and may not make decisions that further the best interests of all stockholders.
As of July 1, 2007 Seaway Capital, Inc. controls 100% of our outstanding Series B preferred stock after completing the purchase from GreenShift Corporation.. The preferred shares are convertible into 85% of our Common Stock. As a result, Seaway Capital, Inc. exerts a significant degree of influence over our management and affairs and over matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. In addition, this concentration of ownership may delay or prevent a change in control of us and might affect the market price of our common stock, even when a change in control may be in the best interest of all stockholders. Furthermore, the interests of this concentration of ownership may not always coincide with our interests or the interests of other stockholders and accordingly, they could cause us to enter into transactions or agreements which we would not otherwise consider.
GS Carbon is not likely to hold annual shareholder meetings in the next few years.
Delaware corporation law provides that members of the board of directors retain authority to act until they are removed or replaced at a meeting of the shareholders. A shareholder may petition the Delaware Court of Chancery to direct that a shareholders meeting be held. But absent such a legal action, the board has no obligation to call a shareholders meeting. Unless a shareholders meeting is held, the existing directors elect directors to fill any vacancy that occurs on the board of directors. The shareholders, therefore, have no control over the constitution of the board
ITEM 1. DESCRIPTION OF BUSINESS (continued)
BUSINESS RISK FACTORS (continued)
of directors, unless a shareholders meeting is held. Management does not expect to hold annual meetings of shareholders in the next few years, due to the expense involved. Thomas Scozzafava, who is currently the sole director of GS Carbon, was appointed to that position by the previous directors. If other directors are added to the Board in the future, it is likely that Mr. Scozzafava will appoint them. As a result, the shareholders of GS Carbon will have no effective means of exercising control over the operations of GS Carbon.
Investing in our stock is highly speculative and you could lose some or all of your investment.
The value of our common stock may decline and may be affected by numerous market conditions, which could result in the loss of some or the entire amount invested in our stock. The securities markets frequently experience extreme price and volume fluctuations that affect market prices for securities of companies generally and very small capitalization companies such as us in particular.
The volatility of the market for GS Carbon common stock may prevent a shareholder from obtaining a fair price for his shares.
The common stock of GS Carbon is quoted on the OTC Bulletin Board. It is impossible to say that the market price on any given day reflects the fair value of GS Carbon, since the price sometimes moves up or down by 50% or more in a week's time. A shareholder in GS Carbon who wants to sell his shares, therefore, runs the risk that at the time he wants to sell, the market price may be much less than the price he would consider to be fair.
Our common stock qualifies as a "penny stock" under SEC rules which may make it more difficult for our stockholders to resell their shares of our common stock.
Our common stock trades on the OTC Bulletin Board. As a result, the holders of our common stock may find it more difficult to obtain accurate quotations concerning the market value of the stock. Stockholders also may experience greater difficulties in attempting to sell the stock than if it were listed on a stock exchange or quoted on the NASDAQ National Market or the NASDAQ Small-Cap Market. Because our common stock does not trade on a stock exchange or on the NASDAQ National Market or the NASDAQ Small-Cap Market, and the market price of the common stock is less than $5.00 per share, the common stock qualifies as a "penny stock." SEC Rule 15g-9 under the Securities Exchange Act of 1934 imposes additional sales practice requirements on broker-dealers that recommend the purchase or sale of penny stocks to persons other than those who qualify as an "established customer" or an "accredited investor." This includes the requirement that a broker-dealer must make a determination on the appropriateness of investments in penny stocks for the customer and must make special disclosures to the customer concerning the risks of penny stocks. Application of the penny stock rules to our common stock affects the market liquidity of the shares, which in turn may affect the ability of holders of our common stock to resell the stock.
Only a small portion of the investment community will purchase "penny stocks" such as our common stock.
GS Carbon common stock is defined by the SEC as a "penny stock" because it trades at a price less than $5.00 per share. GS Carbon common stock also meets most common definitions of a "penny stock," since it trades for less than $1.00 per share. Many brokerage firms will discourage their customers from purchasing penny stocks, and even more brokerage firms will not recommend a penny stock to their customers. Most institutional investors will not invest in penny stocks. In addition, many individual investors will not consider a purchase of a penny stock due, among other things, to the negative reputation that attends the penny stock market. As a result of this widespread disdain for penny stocks, there will be a limited market for GS Carbon common stock as long as it remains a "penny stock." This situation may limit the liquidity of your shares.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
FORWARD LOOKING STATEMENTS
In addition to historical information, this Quarterly Report contains forward-looking statements, which are generally identifiable by use of the words "believes," "expects," "intends," "anticipates," "plans to," "estimates," "projects," or similar expressions. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in these forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in the section entitled "Business Risk Factors." Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's opinions only as of the date hereof. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements.
OVERVIEW
GS Carbon Corporation ("we," "our," "us," "GS Carbon," or the "Company") is a development stage company that is controlled by Seaway Capital, Inc.,a money management, venture capital and leveraged buyout company formed in 2002 as "Seaway Capital Partners, LLC." As a result of the controlling stake acquisition, the Company's new business model is to invest in majority and minority equity stakes and to enter into mezzanine debt agreements with various operating companies. Returns are intended to be in the form of the eventual share appreciation and dispossession of those equity stakes and income from loans made to businesses.
The Company intends to make equity, equity-related, and debt investments in companies that require expansion capital and in companies pursuing acquisition strategies. The Company also seeks investments in leveraged buyouts and restructurings. The Company will consider investment opportunities in a number of different industries, including retail, restaurants, media, business services, and manufacturing, and the Company will also consider select technology investments.
Effective August 16, 2007, the Company shall be renamed "Seaway Valley Capital Corporation."
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS FOR SIX MONTHS ENDED JUNE 30, 2007
Revenues
Total revenues were $18,900 for the six months ended June 30, 2007, and $18,900 for the three months ended June 30, 2007.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the six months ended ended June 30, 2007 were $751,163 and for the three months ended June 30, 2007 were $394,234 which amount was primarily attributable to the operating activities of our research and development unit, General Ultransonics Corporation.
Interest Expense and Financing Costs
Interest expenses and financing costs for the six months ended June 30, 2007 were $443,680 and was primarily attributable to our existing financing agreements with Cornell Capital Partners, LLP and Highgate House Funds, Ltd. Interest expense and financing costs for the three months ended June 30, 2007 were $263,607.
Unrealized Loss on Derivative Instruments
For the six and three months ended June 30, 2007 we incurred a $6,135,369 and $3,745,664 unrealized loss on derivative instruments. We have determined that the conversion feature of our convertible debentures represents an embedded derivative since the debentures are convertible into a variable number of shares upon conversion. The unrealized loss on derivative instruments represents the change in the fair value of our derivative liability from December 31, 2006. The unrealized loss increased during the period due to the decrease in our market price of our stock that results in more potential issuable shares to be converted.
Net Loss
Our net loss for the six and three month periods ended June 30, 2007 were $9,442,204 and $4,715,921 respectively. The net loss incurred was due to the expenses and other factors described above.
Liquidity and Capital Resources
The Company had $561,417 in accounts payable and accrued expenses at June 30, 2007. GS Carbon intends to satisfy these amounts predominantly out of cash flows from its operations and financing activities. The Company had negative working capital of $7,279,414 at June 30, 2007, of which $6,725,733 related to convertible debentures due to Highgate and Cornell.
--------------------------------------------------------------------------------------
8/15
Seaway Valley Capital Corporation Releases Shareholder Letter
Dear Shareholders:
I would like to reiterate the basic terms of the transaction Seaway Capital, Inc. structured with GreenShift Corporation when it acquired GreenShift's majority stake in Seaway Valley Capital Corporation. With the exception of certain convertible debentures, all of the operating assets and liabilities of the Company reported as of June 30, 2007 were acquired by and transferred to GS CleanTech Corporation, an affiliate of GreenShift. The convertible debentures that remained at the company totaled approximately $1.52 million, including those of Highgate in the amount of $1.23 million. Seaway's records indicate that at least two thirds of the Highgate debentures have been satisfied to date. To mitigate the total impact of the additional common shares issued as a result of these convertible debenture conversions, Seaway Capital, Inc. reduced the number of common shares outstanding by over 322 million shares.
On the business end and as previously reported, the Company has executed a number of share purchase agreements with shareholders of WiseBuys that represent an aggregate of 60% of the ownership and voting interest of WiseBuys Stores, Inc. In addition, we have finalized the terms to acquire an additional 15%, bringing the total ownership to 75% when executed. Seaway shall make additional offers to acquire up to 100% of WiseBuys' shares over the following weeks, although we cannot predict the response of these shareholders. Seaway's goal is to acquire approximately 80-85% of WiseBuys.
These agreements shall become effective upon completion of audited financials of WiseBuys Stores, Inc. As WiseBuys' CFO, I can report that we have engaged Dannible & McKee, LLP, and these audits commenced in July 2007. I have been given a rough timetable of late August for the completion of WiseBuys' audits.
WiseBuys Stores, Inc. also recently announced the execution of agreements to acquire 100% of the stock of Hacketts, one of the nation's oldest retailers. The acquisition agreement is subject to securing acquisition financing, which WiseBuys has received Term Sheets for and for which we hope to execute definitive agreements. Hacketts owns and operates five retail stores that are somewhat similar to WiseBuys. As stated previously, if the transaction is consummated, WiseBuys stores will be converted to "Hacketts" stores and run similarly to Hacketts.
I am pleased to be able to update you on these significant events that have transpired since Seaway Capital, Inc. acquired the Company on July 1st. I shall continue to update you with further developments.
About Seaway Valley Capital Corporation
Seaway Valley Capital Corporation was formed in 2002 (as "Seaway Capital Partners, LLC") and makes equity, equity-related, and debt investments in companies that require expansion capital and in companies pursuing acquisition strategies. Seaway Valley Capital Corporation also seeks investments in leveraged buyouts and restructurings. Seaway Valley Capital Corporation will consider investment opportunities in a number of different industries, including retail, restaurants, media, business services, and manufacturing, and the Company will also consider select technology investments.
Safe Harbor Statement
This press release contains statements that may constitute "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. Those statements include statements regarding the intent, belief or current expectations of the Company, and members of their management as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Important factors currently known to management that could cause actual results to differ materially from those in forward-statements include fluctuation of operating results, the ability to compete successfully and the ability to complete before-mentioned transactions. The company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results.
Contact:
Seaway Capital Corporation
Email:
contact@seawaycapital.com
Web:
www.seawaycapital.com
or
Investor Relations
CEOcast, Inc.
Andrew Hellman, 212-732-4300
Although...the chart looks pretty good.
SWVC (formerly GSCR) - Seaway Valley Capital Corporation (SWVC.OB)
Linear Mode
