Very simple to figure out how much debt is outstanding. Just look at the balance sheet in filed 10Q and annual 10K. Also review the income/loss statement to see how things have changed during the reporting period. You can review the company’s report, in the same filing, of debt conversion, etc. It’s all there, staring you in the face. The company will be filing with the SEC its report for operations in the 1st Q of 2023 on Monday tomorrow (the legal deadline).
How much of GTCH’s debt is toxic? Since no institutional lender will touch a sub-penny company like GTCH, you can assume all of GTCH’s debt has some level of toxicity. Basically, toxic debt holders can convert their debt (principal and accrued interest) to stock at any time at a price that is a discount to existing stock price. So, if average stock price is .0005, the debt holder can convert at, say 0.00035. Then the lender dumps the shares (could be 500,000,000) onto the market, hoping to sell all at an uptick from 0.00035. Toxic debt conversion is, in my mind, the number one cause of the massive dilution going on at the moment. It is bad in the sense that it forces pps down by grossly increasing the number of outstanding shares.
But, assuming this orgy of dilution doesn’t sink GTCH, it can be a good thing in the long run. The conversion of toxic debt to equity can cleanse the balance sheet of toxic debt (if GTCH can break the habit of relying in toxic debt to finance operations). And, the fact that GTCH’s stock can bottom out and perhaps rise again after such massive dilution bespeaks long term optimism (or actionable delusion!) by many shareholders. They hope that if GTCH hits it big with one of its patents, all this dilution—so incredibly painful and dispiriting for shareholders at current minuscule share valuations—will in a brighter future look like mere chicken feed.
I am long on GTCH. I consider the stock a huge gamble, fraught with risk, susceptible to manipulation by toxic debt holders (who can flood the market with new shares), etc. But I also see GTCH as a company that might power through these shackles and rise above the muck of sub-penny status if a few right things happened. But I also realize that if I, as a mere common stock shareholder, am to make a decent gain, I will have to sit back and watch the toxic debt lenders make their killing first. That is the law of the penny stock jungle. I think the toxic lenders are having their feast right now. Once they are done, perhaps we will see what value there remains for us shareholders.
AI
