@crookedneck,
Thank you for the information. I am familiar with securities lending in general; it was simply the lending of securities in the context of this financing agreement that perplexed me. To be candid, although I get the alternative reasons that the article you pasted indicated why individuals/entities may enter into such agremeements, the examples they gave wouldn't seem to apply here, and I still struggle with coming up with a scenario that would apply.
But, as you and many others here have astutely pointed out, the terms of the key documents (i.e. the Share Lending Agreements and the Subscription Agreements) are still TBD, and so until they are agreed upon, finalized, and made known, we may simply be kicking up dust only to complain that we cannot see.
At this point, all we can say is that:
(1)
There is the possibility for GEM to borrow shares. That's it. Everything beyond this is an assumption for which each individual is free to form and act upon his/her own theory.
What we don't know is who/what initiates it and what the triggers are to qualify it to take place. Whether it is Urbanksi or GEM. Whether it is for hedging/shorting purposes or for other creative financing purposes that can be of benefit to SCRC is unknown.
So investors should simply know that the lending possibility exists. Beyond that, to each his own as to how he/she wants to assess the risk of this type of event.
(2)
The primary Subscription Agreement terms are unknown. That's it for this piece of the financing agreement as well.
Whether it plays out like a traditional private placement or becomes an intricate creative placement with multiple complex terms is TBD, and each Subscription could vary from the next. As such, investors need to assess for themselves the scenarios and potential risks (if any) that may come from subscription prices that are above market, at market, or below market. By way of reference, if it is at market, then based upon today's closing price of .30, then the full $2M would result in almost 6.7M shares, which represents almost 50% of the current float of ~13M shares (I know estimates vary but that seems to be the average consensus from the multiple sites I checked). Obviously, above market prices would result in less shares added to float and below market prices would result in more shares added to float.
All we can do is keep our eyes peeled for future K's/Q's, PR's and other filings to try to glean additional nuggets of details as to if/when borrowing does commence and at what terms. Hopefully, mgmt will disclose such events when they occur. At that time, the tape will tell the tale of what became of the borrowed shares as well as what became of the shares acquired via the Subscription Agreements.
Differing opinions is what makes a market. It would suck if everyone believed the same thing -- the market would be illiquid as we would all be stuck at the same bid/ask prices!
GLTA...
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