2006-03-08 20:32 ET - Street Wire /Also Street Wire (U-*SEC) U.S. Securities and Exchange Commission

by Lee M. Webb

GMC Holding Corp., a retooled perpetual motion promotion trading on the scandal-plagued pink sheets, has drawn a temporary suspension from the U.S. Securities and Exchange Commission (SEC). The SEC issued the 10-day suspension against the non-reporting, Florida-based pink sheet promotion on March 8.

According to the U.S. regulator, it appears that there is a lack of current and accurate information regarding GMC because it is delinquent in its periodic filings.

That may be a bit of an understatement. Indeed, as previously reported by Stockwatch, GMC has not made any regulatory filings since June 30, 1998.

The SEC also has questions "regarding the accuracy of GMC's assertions to investors in company press releases and on the Internet" about the proposed sale of the company's REMAT technology and other matters.

"REMAT" is an acronym for GMC's esoteric Rare Earth Magnetic Amplification Technology, the ballyhooed centerpiece of the company's promotion.

As previously reported by Stockwatch, GMC, which has a history of promotional puffery, spun out a tale about the pending sale of its REMAT-based "cold motor" technology on Feb. 8, claiming that the deal could be worth as much as $500-million. (All amounts are in U.S. dollars.)

"Preliminary negotiations indicate a transaction in the $350-$500 million range," the pink sheet company claimed in its Feb. 8 news release.

GMC went on to claim that it planned to distribute 96 per cent of the money from the pending sale to its shareholders.

Given that GMC claims to have 60 million shares outstanding, a transaction in the touted range of $350-million to $500-million would result in a hefty distribution of $5.60 per share to $8 per share to the pink sheet company's shareholders.

Stockwatch contacted GMC's president Bruce McKenzie with some questions about the touted deal and other matters on Feb. 13.

Among other things, Stockwatch asked Mr. McKenzie some questions about the company's earlier perpetual motion promotion, which was ramped up last summer.

Mr. McKenzie attempted to put some distance between the company's new focus and the perpetual motion promotion, suggesting that "a marketing guy" who is no longer with the company was present when some peculiar over unity observations were made and "ran with it before anybody could control it."

While Mr. McKenzie did not identify the "marketing guy" who ran with the promotion last July, GMC's enthusiastic spokesman at the time was William J. Windsor. Mr. Windsor, an ex-convict and securities fraudster, is no longer with the company.

Texan Dan York, whose eclectic experience ranges from acting as the selling agent for a purported $20-million Rubens, briefly on sale through e-Bay, to previously running an Internet chat site devoted to a now-revoked outrageous pink sheet promotion, CMKM Diamonds Inc., currently acts as GMC's investor relations spokesman.

In any event, Mr. McKenzie went on to say that investors would not be hearing any perpetual motion or over unity claims from him.

While that may very well be, those claims still appear on a least one of GMC's companion websites and the company has not officially backed away from the earlier claims in subsequent news releases.

Moreover, some of GMC's Internet followers, including investors who claim to have seen the REMAT motor in operation, are convinced that the company has a greater than unity device that runs without external power.

Turning to some other matters, Stockwatch also asked Mr. McKenzie about GMC's current financial condition, a subject that is also of concern to the SEC, but the company's president seemed taken aback by the question and declined to comment.

When asked about the status of an audit that was announced last August, Mr. McKenzie said that the accounting firm reportedly hired last year was tied up with other large businesses and GMC was in the process of transferring the work to two other firms.

"Hopefully we'll have all our auditing done in the next three to four weeks," Mr. McKenzie told Stockwatch more than three weeks ago.

Stockwatch also asked Mr. McKenzie some questions about the company's most recent promotion, the touted sale of its REMAT-based cold motor technology.

Among other things, Stockwatch asked Mr. McKenzie just how the reported negotiations with unidentified "multiple corporate entities" including "S&P 500 corporations" had been 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 rather vaguely. "That's the best way I can describe it to you."

Mr. McKenzie was also a bit vague when asked about how the company had come up with the $350-million to $500-million price tag touted 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 told Stockwatch on Feb. 13.

A week after the Stockwatch interview, GMC announced that it had "finalized a short list of the industry's most formidable corporate valuators" to provide an independent valuation of the company's "cold motor/coil technology" and planned to make a final decision by the end of the month.

Nothing more was heard about that until March 7 when the company announced that it had hired a New York law firm "to assist in the negotiations regarding the asset sale of its REMAT cold motor/coil technology" and was "in the final stages of engaging the independent corporate valuator for the purpose of valuating its cold motor/coil technology."

It remains to be seen just how much light, if any, the SEC investigation will shed upon GMC's esoteric alternative energy technology, touted $500-million deal, share structure, financial condition and other matters.

It also remains to be seen whether the SEC will follow up the 10-day suspension with an administrative proceeding against the pink sheet company.

Meanwhile GMC shareholders, including investors who piled into the stock at prices as high as $2.30 per share over the past few weeks as the company spun out its retooled promotion, will be left cooling their heels until at least March 24 when trading resumes after the temporary suspension.

In the likely event the company does not satisfy the U.S. regulator's concerns before the suspension ends, GMC will be relegated to the "grey market" and, if the usual pattern is followed, the rush to the exits when trading resumes may be fast and furious.

GMC last traded on March 7, closing at $1.33 ahead of the 10-day SEC suspension.

Comments regarding this article may be sent to lwebb@stockwatch.com.

(More information regarding GMC Holding Corp. is available in a Stockwatch article published on Feb. 14, 2006.)

Source:StockWatch_News