kevin and all,
As we approach the 1Billion OS mark I thought it was an appropriate time to discuss a few items so we are all on the same page. The dollars we are using to grow GTEL is coming from investors who in turn were issued preferred shares. These monies are not all sitting in a bank account, cash is being issued from different sources at different intervals. The 3rd qtr. filing showed approx. $3.5MM received from the sale of preferred class. A, B, C and D. All of this is fine and investors that pony up that kind of cash are due the protection of the preferred class shares.
What everyone needs to understand is that GTEL MUST keep enough shares available at all times to cover the conversion of the preferred into common.(see paragraph g below which applies to all preferred classes). If they go over the 1.51B that are authorized, they will take corporate action to increase the authorized shares.
Without going through each holder of preferred, here is a hypothetical example:
GTEL OS are at 1B, we have one preferred holder who can convert next month into common. The conversion equals 500MM. That would mean GTEL is at the limit(1.5B) and cannot issue more shares for any reason.
Last quarter if you remember we only had a small increase in OS which looked great for a change..lol In reality we are selling preferred to finance the business which eventually translates into large amounts of common shares, exactly what we saw yesterday in the S-8 where approx. 140MM came bouncing in from Preferred A shares being converted(see kevins post)..
The outstanding shares are always an important part of investing and it doesn't hurt to follow what is transpiring. Management is well aware and will have to make some decisions in 6-9 months or sooner, imo, unless they have a "cash cow" showing up on the financials..
I think quite a bit on how they plan on dealing with the share issue so this post isn't meant to scare anyone, just to inform everyone so you can think about it and discuss also...thanks...rock
re: outstanding and authorized shares per S-8 filed 12/15/04
We have authorized capital stock of 1.51 billion shares, of which 1.5 billion shares are designated as common stock, $0.00001 par value and 10 million shares are designated as preferred stock, $0.001 par value. The Preferred Stock is a so-called "blank check" preferred, meaning that its terms such as dividends, liquidation and other preferences, are to be fixed by our Board of Directors at the time of issuance.
As of the date of this prospectus, we have 921,296,419 shares of common stock issued and approximately 21,000 shareholders. We have also issued four (4) types of Preferred Stock, each convertible into shares of Common Stock.
(g) Reservation of Shares of Common Stock. The Corporation shall at all times reserve and keep available out of its authorized and unissued Common Stock solely for the purpose of issuance upon conversion of Series B Preferred Stock as herein provided, free from preemptive rights or any other actual contingent purchase rights of persons other than the holders of Series B Preferred Stock, such number of shares of Common Stock as shall be issuable upon the conversion of the outstanding Series B Preferred Stock. If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all outstanding Series B Preferred Stock, the Corporation will take such corporate action necessary to increase its authorized shares of Common Stock to such number as shall be sufficient for such purpose. All shares of Common Stock that shall be so issuable shall, upon issue, be duly and validly authorized, issued and fully paid and nonassessable.
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