Lightbeam and I go way back. He and I know this stock inside and out. KK and Tommy Boy too. Everyone needs to be careful of the boiler room gang that P&D's with this one. It can be easy to get caught up in the hype. But that is all it is. Hype.
I read the 30 SEP 2009 Quarterly report, filed 24 NOV 2009. This appears to be the most recent. I see more of the same.
I am not sure where you are coming from when you say the company can not R/S at these levels. I believe they can, and actually may have to if they can not sell enough stock to bag holders at these levels (as the boiler room gang is working to acheive IMO).
DO NOT BE A BAG HOLDER!!! Trade, but do not invest in this stock. If you do not have a broker account where you can get in and out the same day, have real time L2, and know how to use these tools, you are fish food here. Eat or be eaten.
From the 30 SEP 2009 10-Q -
From Section 3) located on Page 11;
3 GOING CONCERN
The Company had a working capital deficit of $66,705,102 at September 30, 2009, which includes convertible debentures and line of credit totaling $30,219,765, accrued interest payable of $8,626,962, related party debt of $51,500, related party convertible debentures of $5,219,438, and $3,979,437 in purchase obligations. The Company's working capital deficit net of these amounts is $18,608,000.
Despite their classification as current liabilities, current convertible debentures, line of credit and accrued interest ($38,846,727) are not serviceable out of the Company's cash flows (the terms of the convertible debt require repayment in shares of either GreenShift Corporation or GS AgriFuels Corporation common stock). The purchase obligations ($3,979,437), to the extent due, are tied to the earnings of the Company's equipment sales business and can only be serviced after the Company's senior secured debt has been serviced.
Management intends to raise capital from debt and equity transactions to fund operations, to increase revenue and to cut expenses to reduce the loss from operations. There can be no assurances that the Company will be able to eliminate both its working capital deficit and its operating losses. The accompanying financial statements do not contain any adjustments which may be required as a result of this uncertainty.
What does this tell you? This tells me KK has suficiently separated his company from his stock holders. He is making payrol and paying bills to tread water at the expense of his stock holders.
FYI, "Management intends to raise capital from debt and equity transactions" = DILUTION
From section 5) located on Page 13 -
COMMON STOCK
The Company issued 623,077,763 shares of common stock upon the conversion of an aggregate of $1,643,167 in debt during the nine months ended September 30, 2009, consisting of: 149,955,247 common shares issued to YA Global Investments, LP ("YAGI") upon its conversion of debt and accrued interest in the amount of $395,461; 296,532,508 common shares issued to Minority Interest Fund (II), LLC ("MIF") upon its conversion of debt in the amount of $877,479; 134,631,965 common shares issued to RAKJ Holdings, Inc. ("RAKJ") upon its conversion of debt in the amount of $315,000; and, 41,958,043 common shares issued to Mammoth Corporation upon its conversion of debt in the amount of $50,000. In addition, 527,400 common shares issued to an employee upon conversion of vested shares of Series B Preferred Stock.
The only conditions under which the Company would be required to redeem its convertible preferred stock for cash would be in the event of a liquidation of the Company or in the event of a cash-out merger of the Company.
This further describes how KK has separated stockholders from company value. FYI; This means that the company increasing revenue does not mean the PPS will go up.
From Section 7 located on page 15 -
7 LINES OF CREDIT
Revolving Line of Credit for Construction of Corn Oil Extraction Facilities
On January 25, 2008, GS COES (Yorkville I), LLC, a subsidiary of the Company, closed on the terms of a Credit Agreement with YA Global Investments, LP ("YAGI"). On July 1, 2008, the Credit Agreement was amended to extend the commencement of payments to YAGI to October 1, 2008 and to extend all performance timelines to December 31, 2008. On December 11, 2008, the Credit Agreement was amended to extend the maturity date to January 31, 2011, to increase the revolving availability to $13,750,000, and to restructure the repayment provisions such that amounts advanced by YAGI would be repaid on the closing of financing from CleanBioenergy Partners, LLC, an affiliate of GE Energy Financial Services. The Credit Agreement was issued for the purpose of constructing and installing corn oil extraction facilities based on the Company's patented and patent-pending corn oil extraction technologies. While the revolving availability under the line of credit was increased to $13,750,000 in the December 11, 2008 amendment, and the Company was otherwise in compliance with the amended terms, the Company was unable to access the additional availability. The principal balance on the line of credit was $10,000,000 as of December 31, 2008, interest is accruing at the rate of 20% per annum, and the line and accrued interest is payable at the maturity date. The December 11, 2008 amendment also added a term allowing YAGI to convert interest and principal into common stock of the Company at a conversion price equal to the lesser of (a) $1.25 or (b) 90% of the lowest daily volume weighted average price for the twenty trading days preceding conversion. The Company is currently in discussions with YAGI to restructure this line of credit since the CleanBioenergy financing failed to close as expected.
The Company accounted for the YAGI line of credit dated January 25, 2008 in accordance with ASC 480, Distinguishing Liabilities from Equity, as the conversion feature embedded in the YAGI line of credit could result in the principal being converted to a variable number of the Company's common shares. The carrying amount of the line has been restated for the prior year (please see Note 16 Restatements, below). The Company determined the value of the YAGI line of credit at issuance to be $11,044,838 which represented the face value of the principal plus the present value of the conversion feature. The liability for the conversion feature shall increase from its present value of $1,044,838 at issuance to its estimated settlement value of $1,111,111 at December 31, 2010. For the nine months ended September 30, 2009, an expense of $66,273 has been recorded as interest expense for the accretion of the present value discount on the line of credit, thereby increasing the carrying value of the YAGI line of credit to its estimated settlement value of $11,111,111 at September 30, 2009.
The Company issued six million shares of its common stock to YAGI valued at $1,080,000, and GS COES paid structuring fees of $210,000, legal fees of $150,000, monitoring fees of $175,000, due diligence fees of $35,000 as well as prepaid interest of $250,000 in connection with the issuance of the revolving line of credit described above. The balance of deferred financing fees was $0 at September 30, 2009. The Company does not have any ratios or covenants in conjunction with the YAGI debt. The Company is currently in default on the agreements due to the failure of the GE transaction. <TABLE>
KK calls it revolving lines of credit, but this is his piggy bank. The stockholders are his piggy bank. I described how YA/Yorkville/YAGI/Cornell work and how they are never bag holders themselves in a previous post.
I have bolded one of the most signaficant lines in this section, and the one that may force KK to R/S again, and soon. HE HAS TO KEEP HIS PIGGY BANK OPERATING.
The Company is currently in default on the (YAGI) agreements due to the failure of the GE transaction.
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