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Technology Stocks : ocom breakthrough technology -- Ignore unavailable to you. Want to Upgrade?

To: RumbleFish who wrote (565)	7/22/1998 8:31:00 AM
From: Q.	Read Replies (1) \| Respond to of 994

RumbleFish, re. <<do you think the company's plan (scheme?) is if they can get the stock up high enough they can do a secondary or attract a legitimate investor(s) that will possibly allow them to buy the convertible loan sharks off?>> No. OCOM is a long ways from having good enough finances and revenues to qualify for a secondary. They will just have to keep going back for more discounted convertibles, over and over. If they succeed in ramping their product, they will need cash. If they fail they will need cash too. So from my point of view, it doesn't matter -- they will have to do the convertibles. The question is whether they can keep up the market cap high enough to raise enough equity from convertibles. Here's the rule of thumb: A co. raise cash equivalent to 10% of market cap, and repeat the process about once 12 months. So they need to keep their market cap up to at least 10X their annual cash burn. If bad news or whatever causes the market cap to fall below that level, then they are sunk. If they can put out good news, or buy ads in tout sheets, etc. successfully and keep the stock price up, then they can keep the market cap up and stay in business. Small development stage co.'s that rely on convertibles surive on a very fine edge ... their stock price is the only thing standing between them and oblivion.