Golden Gate Partners Inc. (fka GNGT)

[Brick]

JKAK, my assessment

I've reviewed the recent filing by JKAK. Normally, a reverse stock split is not viewed favorable by shareholders. However, in this case, the company's management has indicated that it will be doing this in good faith. Many times, we see companies reverse split, only to fully dilute the company, and issue another reverse split and start the process all over again. Hence, this is where we hear the term, "Rinse, repeat."

By good faith, I mean that the company will be looking at entering several things into the equation with the reverse split:

First, the company's beneficial shareholders (96.6%) will be returning post-split 3,257,858 shares (equivalent to 114,025,030 of their 123,210,688 pre-split shares) to the company's treasury.

Second, the company has indicated that they will be raising $687,500 by issuing 1,926,000 post-split shares for "seed" money, which probably means an institutional investor or equivalent. I believe that this relationship is probably a done deal, since the stated (odd) number of shares and money has been disclosed.

Third, the company has indicated that it will be issuing "3,921,000 post-split shares of Common Stock to key employees, consultants and persons with whom the Company may enter into contractual relationships." And the company went on to say that these shares will not "vest" until stated goals or provision of services are completed over a period of time. So, equity is used instead of cash for services to be rendered, and the shares (possibly warrants?) will not be in the initial float due to some type of restriction, as in not vested.

To sum this up, the share structure before and after are as follows:

Before split
O/S 127,697,956
Beneficial ownership 123,210,688
Float 4,487,268

After split
O/S 6,237,722
New investor(s) 1,926,000
Restricted 3,921,000
Beneficial ownership 262,447**
Float (O/S minus restricted & Ben. Ownership & new investor) 128,275
Possible float (remove new investor) 2,054,275


Now the big question... Where do we go from here? I am very curious about this company. As many of you know, I do have a position in this company. From the items discussed above and the forward looking details disclosed in the filing, I think the company not only plans to do some big things, they evidently have several things in place.

Also, notice the filing is called a PRE14A Proxy Statement that not only outlines the split and share structure, but also include future plans post split. I find the Proxy Statement a pleasant surprise because the company did not have to "ask" the shareholders to do anything. The new beneficial owners, these same people who own 96.6% could have made a decision to do whatever they wanted over a cup of coffee at McDonald's. The fact that they chose to disclose this information beforehand gives me great confidence that the company wishes to include all shareholders in the future of the company.

As a result of my discussion above, not only will I continue to hold, I will be looking to add to my position.

This post is in my opinion.