GMC Holding spins out cold motor sale tale 2006-02-14 11:04 ET - Street Wire by Lee M. Webb GMC Holding Corp., a non-reporting issuer trading on the scandal-plagued pink sheets, has retooled its perpetual motion promotion, spinning out a tale about the pending sale of its "cold motor" technology. The Florida-based pinky claims the deal could be worth as much as $500-million. (All amounts are in U.S. dollars.) GMC, an acronym for Global Managed Concepts, says it has opened "negotiations with multiple corporate entities who wish to acquire the exclusive rights of its REMAT(TM) 'cold motor' technology." For the uninitiated, the company explains that "'cold motor' is defined as motors that run at 140 degrees Fahrenheit or less at full load." At the heart of GMC's ballyhooed cold motor technology is REMAT, an acronym for the company's esoteric Rare Earth Magnetic Amplification Technology. "Because of the sensitive nature of the technology, negotiations and participants, GMCC (the company's ticker symbol) is not at liberty to provide details at this time," GMC claims in its Feb. 8 news release. "GMCC can confirm the entities include S&P 500 corporations," the Feb. 8 announcement teasingly continues. While it is not at all clear who initiated the negotiations with the unidentified "multiple corporate entities," including "S&P 500 corporations," or how far those negotiations have advanced, GMC apparently thinks that its REMAT cold motor technology is a hot property. "Preliminary negotiations indicate a transaction in the $350-$500 million range," the pink sheet company claims. If the secret, sensitive negotiations lead to such a lucrative deal, it could result in a rather handsome windfall for GMC investors inasmuch as the company says that it intends to dole out 96 per cent of the money from the pending sale to shareholders. Given that GMC claims to have 60 million shares outstanding, a transaction in the touted range of $350-million to $500-million could result in a hefty distribution of $5.60 per share to $8 per share to the pink sheet company's shareholders. If the pending sale and proposed distribution ever materialize, it would result in a significant bonus for lucky investors who picked up shares while the stock price was languishing below 40 cents per share for several months before the Feb. 8 announcement. Indeed, a cash distribution in the range of $5.60 to $8 per share would even represent a substantial bonus for investors who piled into the stock at prices nudging $3 per share as the obscure pink sheet company ramped up a perpetual motion promotion last year. GMC has a history of promotional puffery and collapsed deals, so whether the pending cold motor technology sale will materialize remains very much an open question. There goes Grandma GMC began its corporate life in 1982 as Florida-incorporated Here Comes Grandma Inc. Exactly what Here Comes Grandma did for the next 15 years may be lost in the dustbin of history. In any event, Grandma's passing was announced in a June 30, 1998, filing with the U.S. Securities and Exchange Commission (SEC) disclosing that the company had changed its name to GMC on Dec. 10, 1997. The 1998 SEC filing, which marked the company's first and only report to the U.S. regulator, indicated that penniless GMC, headed by G. Michael Khoury, was set to enter the multibillion dollar television home shopping industry. Just what became of the home shopping venture is something of a mystery, but it apparently slipped away even more quietly than Grandma. There goes Asia In June of 2000, Mr. Khoury announced the acquisition of a new venture, AsiaWorld Online, a company reportedly "poised to take advantage of the growing Asian Internet market." The purportedly poised Internet player was a private company incorporated in the secretive offshore enclave of the British Virgin Islands and headquartered in an unspecified location in the Philippines. The proposed cashless acquisition comprised a reverse takeover in which AsiaWorld shareholders would end up with 92 per cent of GMC's stock. That deal never materialized. In February of 2001, GMC reported that AsiaWorld terminated the agreement because unspecified "conditions precedent" could not be met by GMC within the time specified by the BVI company. There goes Prepaid On Feb. 7, 2001, Mr. Khoury announced that GMC had signed a letter of intent to acquire Florida-incorporated Prepaid ISP Inc., a company providing "telephony backbone for distributors of prepaid calling cards." That proposed deal involved another stock swap in which Prepaid would gain majority control of GMC. According to a subsequent news release, GMC and Prepaid entered into a definitive agreement on March 15, 2001. Definitive contract or not, that deal apparently collapsed, too, since nothing more was heard about Prepaid. There goes Mr. Khoury GMC was quiet until March of 2002 when the company provided something of a corporate update. Among other things, in a March 1, 2002, news release, the company announced a 1-for-3 forward stock split. The company also reported that a couple of other obscure transactions, one involving a company called Live Capsule and another involving Rupari Banditos, had been scrapped. GMC also disclosed that it had entered into a letter of intent to form a joint venture under the trade name Ionetics Corp. with a view to marketing a swimming pool water cleaning system using "copper ionization and free oxygen" to eliminate the need for using chlorine. The company went on to bring investors up to speed on some internal corporate changes that had taken place 10 months earlier. Among other things, GMC reported that "by written consent of a majority of the shareholders," Mr. Khoury had been given the boot and all of the other directors had resigned in May of 2001. After Mr. Khoury was given the heave-ho, Richard Brace, a former stockbroker, took over as president of GMC in November of 2001. There goes ACsports Under Mr. Brace's direction, GMC ended up with full ownership of Ionetics in 2002. According to an SEC filing by Certified Water Systems Inc., another penniless company that can trace its lineage to GMC, Ionetics was subsequently spun off by GMC. It is not clear that much ever came of the water purification outfit. In any event, GMC lapsed into another quiet period until March of 2003 when it announced a 1-for-40 share consolidation, which reduced its outstanding total to less than 1.5 million shares. After giving effect to the reverse split in April of 2003, GMC announced the acquisition of privately owned ACsports Inc., a company reportedly involved in the multibillion-dollar Internet gaming industry. "This marks the beginning of a new era of professional sports for Internet participants and ACsports will be leading the way," GMC declared on May 7, 2003. "This acquisition will allow GMC Holding Corp. to step to the forefront of this large market." Alas, that step was never taken. The ACsports deal collapsed four months later. There goes Jan Stephenson A month after the ACsports deal was scrapped, GMC was touting another acquisition. On Oct. 9, 2003, GMC announced a deal to acquire Jan Stephenson Inc., a privately held Florida company involved in the golf industry with products including golf club design, course management, ladies sportswear and golf academies. Under the proposed deal, Jan Stephenson was slated to become the majority owner of GMC. According to the announcement, GMC planned to raise cash through international stock offerings to acquire golf properties to be developed with money raised by way of registered partnership offerings. "This marks the beginning of revolutionary funding for the entire golf course design and development industry," the company proclaimed. "This acquisition will enable GMC to penetrate and capture international market share in an abbreviated time period of its original intention." Alas, nothing came of that deal, either. Indeed, a subsequent mention of Jan Stephenson has been removed from the news releases available on GMC's website. More deals In March of 2004, GMC trotted out a couple of new deals, leading off with the announcement that the company had acquired a 10-per-cent stake in Aquaplus Technologies, a manufacturer of portable water filtration systems. While GMC did not bother disclosing the terms of the deal, it touted Aquaplus's revenue potential. "It is presently engaged in designing, building and delivering a patented prototype unit for acceptance by the U.S. Military and Homeland Security," GMC stated on March 9, 2004. "Initial order quantities for the first year could be as high as 500,000 generating revenues of over $150 million." Whether Aquaplus, which uses a postal box in Bundall, Australia, as a corporate address, has generated any revenue is far from clear. In the same March 9, 2004, news release, GMC announced that it had entered into an agreement to purchase a 10-per-cent interest in Nevada-incorporated Enhanced Technologies International (ETI). According to GMC, ETI had spent "12 years developing high-efficiency electro-magnetic pulse motors" that generated mechanical power "while needing very limited or negligible amounts of electrical energy input." Oddly, ETI, the company that GMC claimed spent 12 years developing the remarkable motors, was incorporated just 12 months before the acquisition was announced. ETI has been in default with the Nevada Secretary of State since April of last year. A perpetual motion promotion is born In July of 2004, GMC increased its stake in ETI to 51-per-cent, with an option to increase its ownership to 80 per cent within 60 days. As with most of its other deals, GMC did not bother to disclose the specific details of the acquisition. It was not long, however, before the company was ramping up a promotion. On Nov. 17, 2004, eschewing any attempt at modesty or even reasonable moderation, GMC grandly announced that after 12 years of research, it had "achieved a major revolutionary breakthrough in solving the world's energy needs." "The technology provides substantial mechanical power and/or electricity without the use of fossil fuels, hydrogen or hydrogen fuel cells, substantial batteries or any other outside recharging source (independent of the grid system)," the company proclaimed. According to GMC, the remarkable technology could eliminate as much as 50 per cent of the energy consumption in the U.S., reducing fossil fuel consumption and helping to alleviate the world's dependence on oil. "The overall market value is expected to exceed a trillion dollars over the next 10 years and these estimates are more than likely to be low," GMC declared. At the time of its grand announcement, GMC was changing hands for approximately 30 cents per share. Within a week, the stock managed to tip the $2 mark, but it soon began to slide again. With only modest volumes recorded, frequently fewer than 10,000 shares changing hands, GMC closed out 2004 at $1.20 per share. GMC dressed up the promotion in June of 2005, coining the acronym REMAT for the "proprietary technology" underpinning its remarkable "high-efficiency electromagnetic pulse motor-generator." "GMC's aim is to utilize the REMAT(TM) system to minimize the world's reliance upon nuclear and fossil fuels for the production of energy," the company claimed in it June 27, 2005, announcement. In describing the REMAT system in its news release, GMC edged closer to acknowledging the perpetual motion promotion. "The REMAT(TM) system contains proprietary circuitry that captures a significant amount of back EMF (electromagnetic flux) that is produced during the motor's operation," GMC explained. "By harnessing this otherwise wasted energy, the captured EMF is reintroduced back into the system, thereby providing sufficient power to operate the motor," the news release continued, stopping short of characterizing it as a perpetual motion machine. In the same news release, GMC announced that Bruce McKenzie had joined the management team as the company's new president, leaving Mr. Brace with the title of chief executive officer. Perhaps of more popular interest, Dan York joined the company's advisory board. Mr. York is well known to followers of another company, Urban Casavant's pink sheet woofer CMKM Diamonds Inc., which had its registration yanked by the SEC last October. Known by his Internet alias, "Drymouth," Mr. York was a leading figure and administrator on a chat site where hundreds of CMKM's cult-like followers congregated to swap fantasies about the subpenny pink sheet dog that they believed would make them decadently rich. Indeed, many of CMKM's naive and gullible followers still cling to that dream, in spite of the fact that its stock registration has been revoked and the penniless company is winding up its affairs. In any event, more than a few CMKM followers piled into GMC in the wake of the June 27, 2005, announcement, driving the stock price up to $2.85 per share the following day. Some of those investors are still holding their GMC shares. On July 1, 2005, GMC announced the results of "internal testing and independent verification" of its remarkable motor, again stopping short of describing it as a perpetual motion machine. The company called upon Eugene Augustin, a professional engineer from Orlando, Fla., to "to opine on the performance tests of GMC'S REMAT technology." According to GMC, Mr. Augustin indicated "that the first test, measuring input/output power ratio, produced about 140-per-cent efficiency" and in "following tests, using a capacitor bank with a resistive load, the observed efficiency was 150 per cent." "These observations were demonstrating a 'greater than unity performance' device, which I thought that I would never see in my lifetime," GMC quoted Mr. Augustin as saying. "In my 50 years of professional experience that includes patents on several inventions, teaching AC/DC machinery, including electric motors and generators, numerous designs in the field of microwave radiation and propagation and professional consulting in these fields, I believed that 'greater than unity devices' were an impossibility," the professional engineer added. "I am now convinced that REMAT devices need to be explored, researched and tested so that this unique technology can be utilized for all the world," Mr. Augustin reportedly said. A copy of a June 23, 2005, four-paragraph letter from Mr. Augustin containing those observations was subsequently published on one of GMC's companion Internet sites. Interestingly, a more detailed two-page June 23, 2005, letter from Mr. Augustin regarding the REMAT tests later surfaced. In the more detailed report, Mr. Augustin noted that he had been observing performance tests of GMC's effort to demonstrate efficiencies "nearly equal to or great than unity" for some time. "At first face, this could be thought of as some kind of perpetual motion device," the report noted. "However, the GMC approach does not consider this, but views it as a recapture of the energy put into the motor that is not used to produce output, with an amplification of that energy by magnetic means not fully understood at this time." According to the more detailed report, the greater-than-unity phenomenon was observed on June 15, 2005, while tests were being conducted on a new synchronized switch for GMC's motor-generator combination. "I observed at three different times when output power, equal to the product of voltage times current for the load on the device, was greater than the input power to the device," the report states. "The first was an unanticipated happening wherein we read the meters and the ratio of output power to input power was greater than unity," the longer report continues. "This phenomenon only lasted a few seconds. Then the efficiency slowly dropped to about 70 per cent." An attempt was made to repeat the result by manually adjusting the synchronization between the input controller switch and the output switch. "After one such adjustment, I observed that as the motor was accelerating to running speed, the output power was greater than the input power with a ratio of about 1.4 (140-per-cent efficiency)," the report states. "In all cases, the output voltage was greater than the input voltage. As the motor attained running speed, the efficiency dropped to about 70 per cent." In a third attempt, the capacitor bank was allowed to charge fully before the load was applied. "In this attempt, the efficiency on connecting the load to the capacitor bank was about 150 per cent," the report says. "It slowly degraded over a period of about five minutes to unity, and then on down to 70 per cent." The output switch reportedly malfunctioned after an adjustment for the next test, bringing the testing to a halt. Mr. Augustin closed out his longer report by recommending "much more investigation into the device." On Aug. 2, 2005, GMC issued another corporate update, announcing that the non-reporting pinky had hired an accounting firm "to complete its audits and reviews to facilitate compliance for application to one of the national exchanges." The company also reported that an unidentified "prominent New York legal firm" would "shortly complete multiple patent filings of the company's 'REMAT(TM)' technology." The news release also disclosed GMC's share structure, reported as 47.6 million shares outstanding, of which 39.1 million shares were restricted. "We are dedicated to providing shareholders necessary information for making stock purchasing decisions," GMC president Mr. McKenzie said upon revealing the share structure. "GMCC realizes that its REMAT(TM) technology is revolutionary," the news release went on. "Our stockholders must be aware that the only reliable source of information regarding GMC Holding Corp. and our technology is from official press releases or directly from the company." Technology underpinning a "greater than unity device," a term interchangeable with "perpetual motion device," would indeed be revolutionary. In fact, it would defy accepted thermodynamics and require a significant rewriting of modern physics. Changing promotional gears On Sept. 8, 2005, the company announced that technical evaluation by an independent lab was underway on its "first high RPM titanium REMAT motor." "This specific motor has multiple applications to compete with electric and fuel powered motors of ten horsepower or less," GMC reported. "Our first target market will be the golf cart and utility vehicle manufacturers." The Sept. 8, 2005, news release made no mention of a greater than unity device, but introduced the description of its REMAT motors as qualifying as "cold motor technology." The company reported that a mobile lab was being constructed to demonstrate the REMAT motors to "qualified licensees and the public." The company also disclosed that it had fired several unidentified independent consultants as part of a "major internal reorganization." Five days later, GMC announced that Mr. York, well known among devoted CMKM followers, had signed on as the company's interim investor relations representative. "I am pleased to accept this position in order to help the investing public understand the importance of this innovative approach to the need for reliable cheap energy," Mr. York remarked upon his appointment. "I can see the day when every motor and power source are replaced by this scalable fuel-less and environmentally friendly technology." The Sept. 13, 2005, news release went on to report that the previously announced golf cart and utility vehicle markets for the remarkable motor were by no means the only markets to consider. "We can scale these motors to be as small as a heart pacemaker and large enough to power a city," GMC declared. "They can be constructed as small fractional horsepower motors to thousands of horsepower. We have identified hundreds of markets for licensing worldwide." GMC's next news release came five months later when the company announced the pending sale of its cold motor technology with the suggested price in the range of $350-million to $500-million on Feb. 8. Stockwatch contacted Mr. McKenzie to ask some questions about the pending sale and other matters on Feb. 13. Among other things, Stockwatch asked Mr. McKenzie how the negotiations were initiated and how they were progressing. "They are in negotiations right now and we've been assisted by, let's say, positioned people in high power," Mr. McKenzie replied. "That's the best way I can describe it to you. "We are in current negotiations and they might go on for another five to eight weeks." Mr. McKenzie was then asked about the $350-million to 500-million price tag suggested in the news release. "We've had verbal evaluations on our technology and now we're actually going to have meetings in the next two days for written validation and confirmation of those numbers," GMC's president replied. Turning to some earlier news releases, Mr. McKenzie was asked about the status of the company's audit, which was announced last August. "Well, that auditing firm has been tied up with a lot of other large business firms here and we are in negotiations with them to pass it off to another firm that can give it more time," Mr. McKenzie explained. "We're trying to accelerate that picture more than we are to dead-end the picture. "We've interviewed two other firms already and we're thinking about transferring the work to these other two firms. "Hopefully we'll have all our auditing done in the next three to four weeks." GMC's president was asked what had become of the mobile lab that the company claimed was being constructed and equipped to demonstrate the REMAT motors last September. "Actually, that was not necessary because the people showed so much interest that we didn't have to put a road show on the road to go pursue our end buyers," Mr. McKenzie said. "We have three or four people to the table right now that are interested," he continued. "They've flown in, they've brought their engineers in and we're negotiating now with one of those buyers." Mr. McKenzie was asked whether GMC had produced or sold any of the motors. "We're an R and D firm and we're preparing to license a few entities that have the infrastructures to take our technology to the marketplace, if they desire," Mr. McKenzie said. "We're discussing licensing here, not manufacturing," he added. "We haven't signed up with anyone, yet," Mr. McKenzie replied when asked whether the company had any licensees. When asked about the company's earler claims about the greater than unity observations, Mr. McKenzie attempted to put some distance between GMC's current focus and that topic. "The greater than unity tests were all visual," Mr. McKenzie said. "They were not double-blinded or triple-blind studied by engineers." GMC's president said the phenomenon was observed and the company has to take responsibility for the news release; nonetheless, he was clearly not comfortable with those claims. "The world we're in is not truly trying to be over unity and those words -- perpetual motion, over unity -- those are not the claims I would like to see the company's direction," Mr. McKenzie said. "That's why you haven't seen any more of that. "Richard Brace is the CEO and I'm the president and we've got more reality from engineering groups that have educated some of the marketing people around here." According to Mr. McKenzie, part of that education involved making clear that claims about the technology had to be run by "an educated source" before news releases were issued. "It was lax on our part with some engineers that interpreted (the test observations) and there was a marketing guy standing around -- he's no longer with us -- and he took it and ran with it before anybody could control it," Mr. McKenzie said. According to Mr. McKenzie, the company plans to issue a series of properly vetted news releases soon, but investors will not hear anything about over unity devices from him. Turning back to a discussion of the company's current focus, the esoteric field of rare earth magnets, GMC's president says that General Electric is working in the same area. "This is R and D of almost a black magic, but it's more than black magic -- it has been here forever," Mr. McKenzie said. "That sun generating on this earth is throwing all kinds of magnetism and energy forces in here and we're trying to deal with some of those forces using rare earth magnets with highly technical coils and centre cores." Returning to the subject of the Feb. 8 announcement, Mr. McKenzie was asked whether he thought he could close the pending sale within the next two months, as he had suggested earlier in the interview. "We feel pretty confident here, as we speak," Mr. McKenzie replied. "We'll know more in the next two weeks." GMC's president said the company will provide an update after the "first official roundtable of negotiations." "We haven't reported anything to our stockholder base, so we decided to go ahead and report some good news," Mr. McKenzie said, a reference to the Feb. 8 announcement. "We've been through an R and D process in the last seven months that has been phenomenal and we've gained a lot of ground in the areas we're working on, so I think our picture is only enhanced from a technological standpoint," he continued. "We got some real serious players now knocking on the door that this technology can be moved to the next level -- the next generation, if you would," Mr. McKenzie told Stockwatch. "I would be thrilled if it was someone that was really backed like GE that could take it and run with it and do marvelous things with it for the United States and for the globe," he said. "It would be phenomenal." Mr. McKenzie volunteered that the company was not highly capitalized, but he would not disclose its financial condition. Indeed, he was apparently taken aback when the question was put to him. "Well, I can't disclose that," Mr. McKenzie said when asked how much money the company had. "I'm a publicly held company. I'm surprised you even asked that question." Stockwatch agreed that GMC is indeed a public company and pointed out that investors might like to know its financial condition. "Well, they sure would; but I'll be the one to tell them, not you," Mr. McKenzie said amiably enough. A short time later Mr. McKenzie was called to a meeting. The announcement of the pending sale in the suggested range of $350-million to $500-million and the company's stated plan to parcel out 96 per cent of that money to investors stirred some market excitement. GMC notched a record volume of 506,275 shares and climbed from 32 cents per share to $1 per share in the wake of the Feb. 8 news release. That record was smashed the following day as more investors piled in and drove the price to $1.50 per share before the stock lost some ground to close at $1.05 as 700,352 shares changed hands. The volume has since tapered off, but the share price is still hovering above $1. With 72,286 shares changing hands, GMC closed at $1.12 on Feb. 13. Comments regarding this article may be sent to lwebb@stockwatch.com. | 
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