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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Druss who wrote (18281)	7/10/1999 10:03:00 AM
From: BDR	Read Replies (2) \| Respond to of 18691

Druss- That is my understanding of how these things usually work. But perhaps a $1 million debenture did not have enough leverage to drop the value of the stock when the market cap is $50+ million? I would be more concerned, if I was long, about the $6 million convertible and the cumulative effect of all the new shares mentioned in the S-3 from the various conversion vehicles and private placements. The longs seem confidant that the $4.5 that is claimed to have been raised from private placements and conversion of the $1 million debenture is all the company will ever need. The company was reporting at the end of last quarter that they had about $1.6 million in cash, revenues of about $200,000 for the quarter and expenses of about $2 million (not counting depreciation). Unless they can cut expenses or significantly grow revenues it looks to my admittedly non-financial mind that they will be needing cash again in a couple of quarters. Now they are, of course, touting that the auctionchannel.com is going to turn the situation around. I am wondering, if this is such a cash cow, why did its management sell to BDE for BDE shares when BDE is a money losing microcap with expenses 10X revenues? Couldn't they have found a better buyer? I take it auctionchannel is either a foreign corporation, privately held, or both, as I cannot find any financial information about the company. I don't doubt that the newly reconstituted company will continue to lose money. I don't doubt that they will raise more money from the sale of shares than they will from the sale of their product for the foreseeable future. What does concern me is that they may be able to parlay the dot.com image into a higher share price as a result of internet mania. Comments?