Zen lunatic420...I prefer the original terms.....
"Potse, I'm not extremely pleased with these new terms either, but they're much more reasonable than the original Promisory Note terms. There's a percentage ownership limit of 4.99% on both the note holders, so they'll never be able to convert the note to more than 9.98% of the equity in the company.....and with 100M authorized shares....will never convert to more than 10M."
I guess I view the terms and attractiveness of this note very differently from how others see it. The percentage ownership limit is just kind of a side feature of the note that prevents the note holders from converting the note all at one time (you see this feature installed in many non-toxic and toxic financing deals). For example, anytime the note holders reach the specific ownership limit the only way they can convert more of the note is by selling some of their existing shares or waiting for some event that increases GNZR's outstanding share count.
The addition of the percentage ownership limit feature has no effect on the total number of shares that can be issued. That number is the same in this new note deal as it was in the original (11.7M shares). And that is where the problem lies, because there is a huge dilutive difference between 11.7M shares pre-reverse split and 11.7M shares post-reverse split.
As a result of GNZR agreeing not to adjust the conversion price of the note higher along with the reverse split, they have effectively increased the fully-diluted valuation of the shell by about 40x (negative dilution). Using my average pre-split cost basis of .017 cents, GNZR has gone from a fully-diluted, pre-split valuation of about $500k to a fully-diluted, post-split valuation of about $20M. A 30M share shell at .017 is significantly more attractive on a purely fundamental basis versus a 11.8M share shell at $1.70.
