Email : info@otcjournal.com
URL : http://www.otcjournal.com
To
OTC Journal Members:
In this weekend's edition we will
bring you our second IPO Alert of 2000. Thanks to the 300,000
plus members we have in our newsletters, we now have the leverage to
go to smaller and middle tier brokerage firms to find you IPO opportunities.
This service is unlike an other IPO alert service you might follow on the
Internet. There are dozens of sites where you can read about the
upcoming hot IPOs. To our knowledge we are the only newsletter that
only features IPOs that our members can actually invest in subject to SEC
and state regulatory requirements.
In our February 9th edition we brought
you New China Homes Ltd, a company which was brought public by Barron
Chase Securities. New China opened for trading on March 10th,
the common stock and the warrant combined were priced at $5.125.
The NASDAQ symbols are NEWC and NEWCW. On Friday the combined
securities closed at $9.6875 for net return on invested capital of 89%
in under three weeks. Today we will introduce to the second
in a three IPO series, and tell you how to establish an account and participate
if you choose to do so. We understand that nearly everyone that contacted
Barron Chase to participate in New China was able to do so.
We also understand that quantities of the IPO were cut back due to high
demand, but there is nothing wrong with making 90% on your money in three
weeks, even if it is a small amount.
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Market
Comment |
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Before we get started on our IPO
alert we have some comments about current market conditions. The
first two months of 2000 were about as hot for small and microcap stocks
as any of us can remember over the last 15 years. Several of the
stocks we cover surged quite dramatically. Blue Zone (OTC BB:
BLZN), which we brought you at $5 back in November surged to a high of
$15, and Pawnbroker.com (OTC BB: PBRR) rocketed from $7.50 to over $17
in four trading days. NetSol International (NASDAQ: NTWK), our all
time superstar stock, started the year at $19 and closed at $63 on Friday.
We had a pretty severe correction
in March, and since that time a number of members have emailed in wondering
if there was something wrong with the stocks that have pulled back.
Investors need to recognize that
stocks do not go straight up. The market for small and micro cap
stocks is not always red hot. Since the recent correction that has
been a much greater flow of capital into large cap stocks and some of the
old soldiers on the DOW that money has been avoiding in its unrelenting
search for "New Economy" growth companies.
However, one of the great features
of our new digital high speed world is the speed with which investors react
to changing market conditions. Bull markets used to last 18 months,
and bear markets lasted 6 months. In today's high speed world bear
markets now last 6 days. Anybody that follows the bio tech sector
recently witnessed stocks giving back huge gains in a matter of hours.
This positions us to get the inevitable pain over with quickly. Money
will flow back into microcap stocks. We just can't pinpoint exactly
when. It could be Monday, or it could take months. A little
patience will pay off if the companies you have invested in perform at
the corporate level.
There is a great deal of institutional
investment capital flowing into microcap companies today. Valuations
are so high for young NASDAQ companies that money managers can't find favorable
entry levels. Look for companies with institutional backing on the
bulletin board to continue to do well. Many of them will then make
the jump to the NASDAQ. NetSol International made it from $3 to $10
on the Bulletin Board. Since obtaining a NASDAQ the stock has climbed
the charts to $63. We are expecting Blue Zone, Pawnbroker.com, and
Envoy Communications to all find their way to the NASDAQ this year.
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IPO
Alert: Busybox.com |
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Most public companies begin trading
through an Initial Public Offering (IPO). Here is the sequence of
events that leads to an IPO:
A Private Company which would like
to go public gets together with a Brokerage Firm and plans to do an IPO.
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The Brokerage Firm's corporate finance
department reviews their business plan, and together they work out an Investment
Banking arrangement by which the Brokerage Firm agrees to raise them a
pre-determined amount of capital through an IPO.
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The company then sells newly issued
shares to the public through the IPO after completing the regulatory process.
The company receives those funds directly and uses those funds execute
its business plan.
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The Company files a registration statement
with the SEC which is meticulously reviewed, and several versions of it
may be generated prior to the IPO. The document is known as a Preliminary
Prospectus or Red Herring.
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Once the SEC completes its review, the
company is cleared to go public. The Underwriting Brokerage Firm
then negotiates the final price of the stock with the Company, and just
prior to the stock opening for trading, clients of the Underwriting Brokerage
Firm are allowed to purchase the IPO stock at the predetermined price.
No commission is paid by investors, it is paid to the brokerage firm by
the Company. After all the stock is placed, the stock opens for trading.
The money from the sale of shares which investors purchase goes directly
to the Company.
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There are a finite number of shares
available for investors in the IPO. If there is extremely high demand
for the shares and a limited supply, the stock will generally open for
trading at a higher price that the original IPO price. If demand
is weak the stock may go down.
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You must have an account with
the Underwriting Brokerage Firm to be allowed to purchase the IPO
shares. Once the stock is trading, it may be purchased through any
brokerage firm in the open market.
Over the last several years there have
been IPOs that were priced in the $15 to $30 range that actually opened
for trading between $50 and $100. Those fortunate investors that
were given the IPO shares enjoyed substantial profits almost immediately.
However, very few IPOs trade this well immediately.
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BusyBox.com,
Inc.l |
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Busybox.com has filled with
the SEC to sell 2.3 million shares and 2.3 million warrants. The
anticipate price is $5 for the common stock and $.125 for the warrants.
The IPO is expected to go effective in the first or second week of April.
Shortly thereafter the stock will open for trading.
This is an Internet technologies
company. Here is how they describe themselves in their SEC registration
statement:
| Busybox designs, develops,
maintains, services, markets, sells and distributes digital imagery, including
black and white and color still photographs, film footage and video, over
the Internet to our business customers in the technology, media, entertainment,
government, corporate and sports industries. We believe that our
proprietary Java-based technology, combined with our component-based content
programming, uniquely enables busybox to catalogue, manage, transact, deliver
and reconcile digital images and video on the Internet. We also believe
that our component-based programming is unique in the industry and provides
a significant business opportunity for busybox when combined with the emerging
and rapidly developing business-to-business Internet e-commerce marketplace. |
You can find their corporate web
site at www.busybox.com.
There is a great deal of information about the company and its products
at the site.
This is a relatively small underwriting
and therefore there will be a limited supply of stock in the public market
once Busybox.com opens for trading. Because the company will
trade on the NASDAQ Small Cap market, the individual state regulatory requirements
are different than in many other IPOs. The state you live in may
preclude you from participating in the IPO.
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How
to Participate |
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Mr. Karl Birkenfeld,
Vice President of Sales for Barron Chase Securities, will be handling
the transactions for our members that wish to participate in this IPO.
Karl is located in the Barron Chase branch in the World
Trade Center of New York's financial district.
At the bottom of this section is
a link which will take you directly to a sign up page that we have created
to facilitate this process. Sign up on this page if you are interested
in this or any future IPOs we may cover. A copy of the form
will be forwarded directly to Mr. Birkenfeld.
After you have filled out and submitted
the form, your browser will take you directly to a web site owned and maintained
by Karl Birkenfeld for the purposes of streamlining the process
of requesting shares in an IPO. There is a simple six
step process which includes reading the preliminary prospectus,
which you can find at the site. Very Important- Follow the simple
six step procedures that you will find at the top of Mr. Birkenfeld's
home
page.
It is very important that you take
the time to read the Preliminary Prospectus. Pay particular attention
to the risk factors. We want you to know exactly what you are investing
in.
Click
Here to be Taken to the Sign Up Form
Web Address: http://www.otcjournal.com/busybox.html
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How
to Participate |
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Our comments on BusyBox.com
are not to be construed as a buy recommendation for this particular IPO.
Once the stock is opened and trading we will no be following the progress
of the company. You should read the Preliminary Prospectus and formulate
you own opinion. If you think that you are investing in an IPO
that you can sell on opening day at 10 times its IPO price you need
to look elsewhere.
There are high profile IPOs
which rocket to ridiculous valuations on opening day. If you are
not a multi-million dollar institution with major Wall Street relationships
you will most likely not be invited into those IPOs.
Please take the time to read the
Preliminary Prospectus paying particular attention to the Risk Factors
section. After all, it's our money, so be careful how you invest
it.
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