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Microcap & Penny Stocks : Tonto and Janice Teach Investing -- Ignore unavailable to you. Want to Upgrade?

To: Arcane Lore who wrote (180)	4/1/1999 8:03:00 PM
From: Arcane Lore	Respond to of 302

Here is the SEC list of red flags without the explanatory text: 1. Commission Trading Suspensions 2. Foreign Trading Suspensions 3. Concentration of ownership of the majority of outstanding, freely tradeable stock 4. Large reverse stock splits 5. Companies in which assets are large and revenue is minimal without any explanation 6. Shell corporation's acquisition of private company 7. Offerings under Rule 504 of Regulation D where one or more of the following factors are present : Little capital is raised in the Rule 504 offering and there appears to be no business purpose except to provide some shareholders with free-trading shares; The Rule 504 offering is preceded by an unregistered offering to insiders or others for services rendered at prices well below the price in the subsequent offering; Sales immediately following the Rule 504 offering are at substantially higher prices than those paid in the Rule 504 offering; or A shell company and an operating company merge, which results in the operating entity becoming the surviving entity. The surviving entity goes "public" by issuing shares pursuant to Rule 504 8. A registered or unregistered offering raises proceeds that are used to repay a bridge loan made or arranged by the underwriter where : The bridge loan was made at a high interest rate for a short period; The underwriter received securities at below-market rates prior to the offering; and The issuer has no apparent business purpose for the bridge loan. 9. Significant write-up of assets upon a company obtaining a patent or trademark for a product 10. Significant asset consists of OTC Bulletin Board or Pink Sheet companies 11. Assets acquired for shares of stock when the stock has no market value 12. Significant write-up of assets in a business combination of entities under common control 13. Unusual auditing issues . Auditors refuse to certify financial statements or they issue a qualified opinion; or There has been a change of accountants 14. Extraordinary items in notes to the financial statements, e.g., unusual related party transactions 15. Suspicious documents . Inconsistent financial statements; Altered financial statements; or Altered certificates of incorporation 16. Broker-dealer receives substantially similar offering documents from different issuers with the following characteristics: The same attorney is involved; The same officers and directors are listed; and/or The same shareholders are listed 17. Extraordinary gains in year-to-year operations 18. Reporting company fails to file an annual report 19. Disciplinary actions against an issuer's officers, directors, general partners, promoters, or control persons 20. Significant events involving an issuer or its predecessor, or any of its majority owned subsidiaries 21. Request to publish both bid and ask quotes on behalf of a customer for the same stock 22. Issuer or promoter offers to pay a "due diligence" fee 23. Regulation S transactions of domestic issuers 24. Form S-8 stock 25. "Hot industry" microcap stocks 26. Unusual activity in brokerage accounts of issuer affiliates, especially involving "related" shareholders 27. Companies that frequently change names 28. Companies that frequently change their line of business sec.gov