Sunday, January 31, 2010

Why Do Investors Buy Penny Stocks?

Investors buy penny stocks for a number of reasons, some are financial gain, the hunt, and  inexperience!
Penny stocks can be found on all exhanges. Those exchanges include the Pink Sheets, OTCBB, NASDAQ, NYSE, and AMEX. The riskiest of these exchanges are the Pink Sheets, and OTCBB. Many of the companies listed on these exchanges are under funded and require additional capital raises. This activity generally poses additional risk for investors. Companies listing on the larger exchanges, AMEX, NASDAQ, and NYSE, tend to be more stable. However, stocks which have fallen below their required listing price can become very unstable because their listing status on these exchanges becomes uncertain. This uncertainty can cause stock prices to fluctuate greatly.
Investors who purchase these stocks on the pink sheets should have a great understanding of the market and its requirements for those issues to continue trading on the pinks. For instance, pink sheet stocks can lose their right to be traded, or fall to lower levels of quotation if they fail to meat minimum requirements.
There are five levels on the pink sheets. Those levels are OTCQX, Current Information, Limited Information, No Information, and Caveat Emptor. With each level the underlying securities become less liquid, and are subsequently harder to sell. These statuses can and do change often with little or no notice, and that's why trading pink sheets should only be done with a great deal of understanding.
Penny stocks traded on the OTCBB market are also risky. Many times stocks which were listing on higher exchanges choose to be listed on the OTCBB because it is easier to meet their listing requirements. Additionally, liquidity is a concern for penny stocks trading on the OTCBB exchange. Companies listed on the OTCBB exchange also rely on funding practices which can result in unfavorable terms for common shareholders.
Companies listed on the major exchanges, AMEX, NYE, and NASDAQ, tend to be more stable than those penny stocks listed on the other two exchanges. However, all penny stocks are risky, and should only be purchased with capital which can ultimately be lost.
Investors tend to believe that purchasing a penny stock creates a larger potential for gain. If the investor takes the time to review financial statements of penny stocks, they will find that the majority of them are already overvalued. However, some penny stocks do represent the potential for great gains, though many do not!
Some investors enjoy sifting through penny stocks seeking the diamond in the rough,the hunt. Their are a few companies which are under valued or represent a great deal of potential. These companies which have great potential require the perfect storm to realize great gains.
Many penny stocks are purchased by investors who are inexperienced traders. These investors are referred to penny stock investments by friends, family, and random sources. The random sources of information can be ads, email, or web pages. These sources are generally compensated to provide the information and they should display the compensation. If you ever find one of these sources of information you should look for the pages disclaimer and read it!
Don't buy a penny stock if you do not have intimate knowledge about the company and its situation.

All in my honest opinion, consult an investment advisor prior to making any investment decision!

Wednesday, January 20, 2010

SIBN Has Solid Trading Day

Shares of SIBN rose 225% on 300,000 shares traded. The company has no revenue, and is losing money. Additionally, the company has 500,000 in debt and 700 in cash.

I found this information in the most recent 10Q for SIBN

previously loaned to KNG, and $1,406 of property and equipment, net.
We had total liabilities of $2,206,752 as of September 30, 2009, which were solely current liabilities and which included $505,211 of accounts payable to related party stockholders in connection with those shareholders paying certain of our expenses from the period between January 1, 2003 to September 30, 2009; $67,316 of accounts payable to Baltic in connection with a $29,000 loan advanced to the Company from Baltic and certain other expenses owed to Baltic; $565,013 of accounts payable to others for advisory and professional services rendered; and $1,069,212 of accrued payroll, which included $607,500 payable to our Chief Executive Officer, David Zaikin, of which $360,000 was accrued in 2007 and 2008, and $112,500 which was owed to Mr. Zaikin for services rendered prior to September 2005, at which time he agreed to stop accruing salary until January 2007, when he provided us notice of his intent to once again begin accruing salary until such time as we have sufficient funds to pay such accrued salary, $218,537 payable to our Chief Financial Officer, Elena Pochapski, and $69,242 of accrued salary payable to our former Chief Executive Officer, Shakeel Adam.

We had negative working capital of $2,205,438 and a total pre-development and development stage accumulated deficit of $15,341,744 as of September 30, 2009.

Because our cumulative losses associated with the operations of ZNG exceeded our investment as of the date of the Joint Venture, ZNG, Ltd. is carried on our balance sheet at $-0- as of September 30, 2009. Our investment in ZNG, Ltd. will exceed $-0- at such time as ZNG, Ltd. has cumulative earnings sufficient to repay all loans to Baltic as provided in the Joint Venture, if ever.

As of September 30, 2009, the Company owns a 44% interest in KNG. The Company’s investment in KNG is recorded on the equity method of accounting effective October 1, 2008. After careful consideration of the current financial position of KNG, the Company applied an impairment charge to the value of the investment in KNG which resulted in carrying it at zero value.
We had $14,592 of net cash flows from operating activities for the nine months ended September 30, 2009, which was attributable to adjustments to reconcile $485,355 of net loss, offset by $461,535 of accounts payable and accrued expenses, $458 of depreciation and amortization, $37,989 of common stock and warrants issued for services and increased by $35 of prepaid expenses and other assets.

In connection with the Joint Venture (described under "Joint Venture," above), the Company historically received management fees, which varied from $25,000 to $85,000 per month. Due to the “transition period” of the Joint Venture’s exploration activities, no management fees were paid during the year ended December 31, 2008 or the nine months ended September 30, 2009, and the Company does not anticipate receiving any such fees moving forward. If the Company does not receive any management fees moving forward, the Company anticipates that its stockholders and management will continue to provide financing for the Company, of which there can be no assurance.

Sunday, January 17, 2010

NEOP Neoprobe

Neoprobe has had a great run over the last few months.

The company has some cash however, they have more debt than cash. Additionally, Neoprobe has a negative book value, I would be very cautious with NEOP at this point. I am not a shareholder in Neoprobe, and likely will not become one any time soon.

Total Cash (mrq):6.03M
Total Cash Per Share (mrq):0.075
Total Debt (mrq):10.95M
Total Debt/Equity (mrq):N/A
Current Ratio (mrq):3.55
Book Value Per Share (mrq):-0.133