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Re: DewDiligence post# 955

Monday, 10/02/2006 9:07:06 PM

Monday, October 02, 2006 9:07:06 PM

Post# of 19309
"giving up 20% of the company on a post-transaction basis"

I'm not savvy when it comes to these deals, and I haven't had time to listen to the CC yet. To clarify, how many new shares is GTCB planning on creating to sell to LFB (ie. what will the effective share count for valuation purposes be following the execution of this deal)? It sounds like the first installment will be 5M shares of existing preferred stock (no dilution), but the second installment will be 9.6M shares of newly issued preferred stock, and the third 3.6M shares of newly issued common stock, but the PR didn't spell this out clearly enough for me to understand.

At any rate, it looks like LFB is getting quite a deal since they aren't really giving anything to GTCB (the $25M is an investment, not a fee) aside from sharing the product development costs (and profits). This suggests to me that GTCB felt they needed to entice a partnership. Hopefully, this deal will make GTCB stronger and more secure, which should allow them to negotiate more agressively in future licensing agreements.

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