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Microcap & Penny Stocks : The Real Micro-penny- Less then one penny!! -- Ignore unavailable to you. Want to Upgrade?

To: Daniel Miller who wrote (70)	6/25/1998 5:55:00 PM
From: Chloe R	Read Replies (1) \| Respond to of 906

Daniel, Please don't take this as condescending, because you certainly know more than I did at your age, but I also used to know just enough to be dangerous (as the old adage goes) and got burned numerous times. It is often said that people with good judgement are simply people who had bad judgement in the past and learned from it. This is certainly true in the stockmarket, more true in the penny game, and even more true with shells. Those of us that have been in the trenches can tell you that the best advice is due diligence. Don't bet on hunches and limited information (and certainly not stock malipulation - you were getting close there!) In the penny arena you are dealing with very limited information, non-reporting companies, over-active PR companies stretching the truth, etc. Much has been said about the OTC:BB realm such that I don't have much to add myself. As for shells, if you find a company trading in such a range as those on your list with minimal total # of shares (also like those on your list), you've found one. No going concern is going to have a market cap of 10K or such. What you have found is something that can be very valuable or very worthless. Most of the time it is hard to figure out which category they are in until it is too late. That is not a reflection on anybody's ability to uncover the facts; it's the reality of the situation. You can closely monitor shells and watch for activity, but that still isn't a foolproof strategy. I have found that many people buy into these things blindly as pure momentum plays - so it can often be a case of the blind leading the blind (or a disreputable shepherd leading the flock). Shell brokers often advertise in general and business press. If you really want to narrow down which shells are being shopped around, call these guys, not dormant companies. Some will tell you what they have. Other hold the information close to their chest. But if you can get some of these guys to open up to you - without pretending to be a private company looking for a shell of course ;o) - you at least know which ones have been determined "clean" and are being actively marketed. You still may have to wait a very long time before anything happens, but you'll wait even longer (and with higher risk) in some of those other dormant companies. The best approach, of course, is to monitor continually for announcements about letters of intent or definitive merger agreements. But even most of them don't give you a picture of the final share structure - you may not know if the shell will hold 5% of the shares of the new company or 20%. Until you know that, you don't know if you are making a wise buy, even on a pure momentum play. I prefer the PRIVATE side. I find good private companies that have letter of intent to go public via a reverse merger with a shell. Provided a lot of other things also check out (to discard potential "pump and dumps"), I invest on the private side with the intention of getting a boost to a public valuation when it starts trading (a VERY BIG DIFFERENTIAL!) This can provide a very immediate, very real return, but is a less-known approach since most people concentrate on already public companies. Basically I find those companies that do the equivalent of an IPO, but in two stages one right after the other (funding and trading). That's not to say I won't play the shell game. I've reevaluated it recently, but will only venture there if enough facts are uncovered. AND if some people post viable going concerns trading in the pennies, I certainly entertain evaluating them. Sorry to be so long-winded, Clo

To: Daniel Miller who wrote (70)	6/25/1998 5:57:00 PM
From: DRRISK	Read Replies (2) \| Respond to of 906

Daniel, Your openness to learn is admirable and I know a great deal on the shell game but your purpose on this thread is to make money now. Shells are not a hear and now issue unless you have close ties to all the details of the Shell and its trustee if it is being cleaned up in a Bankruptcy. A clean shell has a marketvalue to a private company but little value to a shareholder due to the future dilution a merged company will exert on existing shareholders, so as to minimize their equity in the new co. The variables in this are enormous and subject to watching the bankruptcy proceeding of the old shell company and the final disposition of the old co. When the shell is cleaned up the trustee in an ideal world, if honest, will attempt to find a good company to merge into the shell and the existing shareholders will get whatever the best deal a trustee can work out for them (usually not very good). This deal has the function of creating newco with x-shares and of those x-shares the old co shareholders become x% holders of the newco stock that is issued. The oldco shareholders are typically invested at high prices and never recoup their losses unless newco is a great company which they are usually not, because if they were they would, typically, not be using this format to become public. If you bought shares when oldco was going out at 1-2cents or if you buy now you have the unlikely chance of being made whole if you are careful and do not buy a pig in a poke. The trustee is the critcal person to speak to and they are virtually impossible to get a hold of. I know a few and their job is at best unpleasant and money you pour down this rat hole is almost always dead money for years if not forever. The permutations on the above are exponential and the risks are worse then exponential. Nonetheless there are some opportunities but you would have to be prepared to loose all your money on 95 out of the 100 shells you invested in at the point in which you find them. As to the purpose of this thread there are many companies that are going through delisting that are going concerns that desire to become relisted and trade at micro or near micro levels IE: 1-5 cents. These have often been the subject of jackass irresponsible financing or some other malfeasant corporate stupidity but have value and are struggling to get back in the game. NASD has changed the rules and is delisting companies that do not meet their stricter criteria. The fate of these orphans remains to be seen many have done reverse splits only to dwindle back under $1.00. This area of orphan stocks is fertile for risking your hard earned pennies but the oldest saying in the book about a "sucker's born every second" applies to these companies and they are usually the denizens of flimflam artists who are adept at what they do. Good luck, DrRisk will follow, all the above IMHO