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Gold/Mining/Energy : JAB International (JABI) -- Ignore unavailable to you. Want to Upgrade?

To: ladystaed who wrote (3714)	5/12/1998 10:17:00 PM
From: DDS-OMS	Respond to of 4571

<<PP stock. Do you contact the company once they file with the SEC?>> No, by the time they file with SEC the placement is closed out--can't get in anymore. Most companies want $100K minimum buy, BCMD was an exception--they stated $50K but took a lot smaller buys--needed the cash. A lot of small, start-up or developing companies do PP's--they can't finance through normal borrowing channels, and often don't have the income stream to make payments--so have to resort to equity financing. Biotech companies as a group do a lot of this. If you are interested in a small, struggling company, simply call them and ask if they have done or are doing a pp. If not, leave your name as wanting info if they ever do a PP. If they are presently doing one, they will send you a packet of info--probably more than you would ever want to read<g>. You also have to be an "accredited investor"--usually means $1MM net worth excluding residence. I suppose you could lie on the application--who would check? More of a CYA for the company anyway--so you can't come back on them and plead ignorance if the venture fails. It's my understanding that a company can't overtly solicit investors for a pp--you have to ask them. If you know them well, I'm sure a drop of a hint would suffice to encourage you to do the asking. Another way to get offered pp's is to have your name released on an S-3 as participating in one. Then you get offers to invest in things like a 2 man company trying to raise $5MM to set up an importing company to JV with a diamond mine in Russia. Run, not walk, to nearest...<g> Seriously, I get a lot of unsolicited offers--must be on some kind of suckers list--have never taken any offered over the phone. So, you're right--can buy the stock at a big discount to present price, but the great risk is having to hold it for up to 1 year. Also, have to figure on more dilution while waiting for the year to go by--this has happened to me elsewhere than in BCMD and it really hurts the stock's price. PP's are not for the faint of heart--high risk-great possible reward. I would always ask any small cap company that you are considering buying stock in--whether or not they are doing a pp, and if so ask for an info packet and application. Two things you find out--first you know there is upcoming dilution, and secondly, the information they send you contains far more company info than you could possibly get otherwise--after all it is a sales pitch and the info is usually detailed and well organized and would be a big help in deciding whether or not to buy stock in the company--let alone participate in a PP. Regards, Gary