Well, I would agree, but she looked at PLNI on her own, and really issued an invitation for us to beat PLNI. Her openmindedness, and your post, inspired me to send one more note to her....to see if we could get such a fair review that she did with PLNI.
Selena,
I sent you an e-mail last night regarding the request for you to take a look at Labwire (LBWR.pk). It has been suggested that the Motley Fool could not, or would not take a fair look at Labwire. I disagree. Your openmindness and willingness to sweep aside heavy prejudice, and at least take a look at PLNI tells me that it's possible. It has been suggested that the problem would lie in a lack of understanding of how things world in the pinksheet market. Without insulting your intelligence, please allow me to demonstrate that we aren't just insane gamblers....well...at least all of us aren't!
So, the question is....Why would a company come to the pinksheets anyway? Well, true enough, like in years former, the pinksheets are about 95% full of corporations that are either a bad idea for a company, a bad execution of a business plan, or an outright scam....with the latter probably most prevalent! However, there is a valid reason for a company to decide to begin on the pinksheets instead of the OTC. Why? Money, of course.
The money issue is two fold. First of all, the governance requirements of Sarbanes Oxley ( Message 21976653 ) meant that it would be much more costly and time consuming for a start-up business to go to the OTC. Secondly, when a company incorporates on the pinksheets, then they are able to tap into the 1 million dollars in free trading shares that can be sold under the Exeption 504. The 504 exemption allows a company to sell up to 1 million dollars worth of shares in a 12 month period.
Rule 504
Rule 504 provides an exemption for the offer and sale of up to $1,000,000 of securities in a 12-month period. Your company may use this exemption so long as it is not a blank check company and is not subject to Exchange Act reporting requirements. Like the other Regulation D exemptions, in general you may not use public solicitation or advertising to market the securities and purchasers receive "restricted" securities, meaning that they may not sell the securities without registration or an applicable exemption. However, you can use this exemption for a public offering of your securities and investors will receive freely tradable securities under the following circumstances:
You register the offering exclusively in one or more states that require a publicly filed registration statement and delivery of a substantive disclosure document to investors;
You register and sell in a state that requires registration and disclosure delivery and also sell in a state without those requirements, so long as you deliver the disclosure documents mandated by the state in which you registered to all purchasers; or,
You sell exclusively according to state law exemptions that permit general solicitation and advertising, so long as you sell only to "accredited investors," a term we describe in more detail below in connection with Rule 505 and Rule 506 offerings.
Even if you make a private sale where there are no specific disclosure delivery requirements, you should take care to provide sufficient information to investors to avoid violating the antifraud provisions of the securities laws. This means that any information you provide to investors must be free from false or misleading statements. Similarly, you should not exclude any information if the omission makes what you do provide investors false or misleading.
Message 21974111
So, it is possible that a legit business will come to the pinksheets in order to get the 1 mil, and avoid the costs for audits, lawyers, etc in regards to the Sarbane Oxley requirements.
What they are doing is using the pinks as a stepping stone to better places. The true aspiration that in a reasonable amount of time, they will become self supporting, and rise from the Wild, Wild West to the OTC and beyond. Now, that's where we come in. We are looking for that 5% that is real, and has a great chance to make it. We are, like the companies, motivated by the almighty dollar....or pennies in most cases!
Where else but the nano's are 1000% returns routine (10 baggers) , and 10,000% returns possible (100 baggers!)? How does it happen? What's the key to success? Timing, of course.
Alright, so what are we trying to do? We are trying to do what some say is impossible. We are trying to determine the exact point that a start-up company goes from dilution as the chief means of financing, to real revenue taking hold. We know that almost all pinksheets are going to have charts that fall off like a ski jump the first year they are in the market. This is the reason that those with experience almost never buy a pinksheet stock until the 504 comes down. Those shares usually will come in the first few months, and almost always causes a major drop in the pps.....because the supply side of the equation has gone up so rapidly. Check out the chart on LBWR:
pinksheets.com
See the large drop off? 504 shares. No surpise there. Now, the trick comes in trying to determine if the dilution is finished, and if they company is close to becoming profitable. After all, if they start turing a profit, then they MAY stop selling shares. Problem is, most start-up companies lack the experience to make a profitable company in so short a time. When they do not, the only thing left to do is use the other exceptions to sell shares like the 505, and the 506. Or do some form of "creative dilutive mezzanine financing". Which, of course, brings us back to trying to time the end of the dilution. So, what is most important is that we be able to see the capital structure at any given time. This is why we hold such in such high regards companies that choose to use transfer agents that are not gagged, and will give out the entire capital structure (A/S, I/S, O/S, restricted/float). We must be able to assess, on the front end, that the structure is still reasonable, and also be able to check the numbers as we go. This is the only way to have a foundation to call a pinksheet a possible investment.
Well, I said all that to say this. If you take a look at Labwire (LBWR.pk), then please remember to compare apples to apples...or nano's to nano's. Don't compare LBWR to a small cap or even a micro. Compare it to it's peers (Hint: call the TA for PLNI and see what they say!). Look for the obvious transparency. Look for the years of experience at the helm that has turned a little pinksheet into a profitable company in such short time. Look to the PR's that show clients with Fortune 500 companies.
• Labwire Signs 3-Year Agreement Valued at $1.8 Million Annually
Market Wire (Thu, Jun 15)
• Labwire May Revenue Up 63 Percent
Market Wire (Tue, Jun 13)
• Labwire April Revenue Up 18 Percent
Market Wire (Wed, Jun 7)
• Labwire Announces First Quarter Results -- Revenue Up 134 Percent
PrimeZone Media Network (Thu, May 18)
• Labwire Announces Contract Renewal With Leading Oil, Gas and Chemical Company
PrimeZone Media Network (Thu, May 4)
• Labwire Announces a 120 Percent Increase in First Quarter Sales For 2006 Compared to Same Quarter a Year Ago
PrimeZone Media Network (Fri, Apr 28)
• Labwire Announces Contract With Major Multinational Recruitment Outsourcing Corporation
PrimeZone Media Network (Mon, Apr 24)
• Labwire Expands Security Presence to Offshore Platform Security
PrimeZone Media Network (Wed, Apr 19)
• Labwire Inc. Signs Contract With Largest Offshore Drilling Company
PrimeZone Media Network (Thu, Apr 13)
• Labwire Inc. Announces Contract with Pan American Express
PrimeZone Media Network (Tue, Apr 11)
Look at the eps growth over Q1 of last year. Look at the revenue growth over Q1 of last year. Look at the contracts closed, but not yet reflected in the reports. Look and see if you think that perhaps the dilution is over, and we are in fact about to turn a mighty corner. Look to the CEO for any of your other questions in regards to dilution, and time left on the pinks. Give us the same fair and balanced appraisal as you did with PLNI. Fair enough?
Thank you so much for your time....and stop by and see us anytime.
IHUB
investorshub.com
SI
Subject 56492
GodBless-ND
cris
P.S. Perhaps TMF could check into this growing trend, and perhaps try to find one pinksheet a month per quarter that may be the exception to the rule, and really be a flamingo that is flapping for the higher ground.
GB-ND
c |
