Tuesday, June 28, 2005

Here's a familiar story

Just got off of the phone with a company trading in the pink sheets . They were looking for some cash (if you know anything about the pinks this is no surprise).

I asked the CFO how (or why) the company ended up in the pinks. His response was that he didn't know but that the company was filing the required forms to becoming a reporting OTCBB company in order to access funds that one of their advisors had sourced for them. The investor just wanted to read an SEC filing.

Having a little bit of experience in the area, I suggest to the CFO that before they go to the expense of an audit and doing the filings, that they sit down with the investor and find out if he is serious (or even exists to begin with) as most serious investors would do a little bit more due diligence when investing in a small, young company. In other words, make sure your advisor isn't selling you a bill of goods.

Ask the tough questions, as anyone worth their salt will be able to answer them without breaking a sweat.

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