Tech Futures:
Sep 24, 1999
By Michael
Volker
Pink Sheets, Updates on New Media,
Portfolio and VCPs
In recent columns, I've been critical
of the OTC-BB (Over-the-Counter Bulletin Board) stock market in the U.S.
A number of companies, expecially from B.C., have opted to list on this
market either because of their negative perception of the VSE (Vancouver
Stock Exchange) or because they failed to meet the VSE's listing standards.
Many companies on the OTC-BB incorrectly
say that they are traded on the NASDAQ OTC market. In fact, the NASDAQ
market has nothing to do with the OTC! The OTC is an unregulated market
and until just recently, OTC companies did not even have to file their
corporate reports, thereby escaping much scrutiny. Now that the SEC (Securities
and Exchange Commission) in the US is requiring companies to report on
a regular basis, many are being bumped off the OTC. Rather than having
to comply, some of these are going to the so-called "pink sheets" which
is yet another form of stock trading market and one which is just now starting
to operate in an on-line mode.
These pink sheets are managed by
the National Quotation Bureau (http://www.nqb.com). For you students of
stock markets, here's a little history for you. In 1911, a Boston book
publisher, Arthur Elliott thought it was a good idea to provide a quotation
service for people wishing to trade securities. This led to the creation
of the National Quotation Bureau (NQB) in 1913 which published market quotations
and distributed these on pink sheets of paper to stock dealers throughout
the U.S.
The Securities and Exchange Commission
(SEC) and the National Association of Securities Dealers (NASD) were created
in 1933. Dealers were able to use the NQB in order to obtain stock quotes.
Thirty years later, NQB was purchased by Commerce Clearing House (CCH),
a publisher of reference books. CCH did not invest in new technologies
which led the NASD to establish the NASDAQ Stock Market®, a real-time
quotation service. The NASD also implemented the OTC-BB market for companies
which did not meet the listing criteria for NASDAQ. This is why many promoters
incorrectly associate the OTC-BB with NASDAQ.
The NQB continued as a paper-based
publisher and was acquired by a new group in 1997 which started using new
technology to improve its services.
Unlisted companies, i.e. those not
listed on a recognized exchange like NASDAQ (or the New York or AMEX exchanges),
could be traded in other markets. These companies did not have to report
or disclose their business affairs to the general public. By the way, the
AMEX merged with NASDAQ last year.
Early this year, the SEC decreed
that OTC-BB companies would have to become "reporting issuers" and start
filing corporate information. This summer, NASD will drop over 3,000 companies
from the OTC-BB for failing to meet these reporting requirements.
The NQB responded to these orphans
with the introduction of a real-time OTC quotation facility for the companies
that trade OTC, i.e. the Electronic Pink Sheets.
Unlike the NASD OTC Bulletin Board
(OTC-BB), Issuers (i.e.companies) do not (at least for now) have to be
SEC reporting for a market maker to quote their securities in the Pink
Sheets. The Pink Sheets is a quotation medium for subscribing members.
The NQB continues as a private company which is not in any way affiliated
with NASDAQ or the NASD.
The bottom line is that companies
on the OTC-BB and on the Pink Sheets do not need to meet any listing standards.
And the only difference between the two markets is that the OTC-BB
requires more public information disclosure than does the Pink Sheets.
NASDAQ operates its traditional market
as well as a junior, small-cap market. But even the smallcap component
dictates some stringent listing criteria (e.g. market cap of US$50 million
and share price of $4). Fewer than 20% of the public technology companies
in B.C. would meet such a standard.
This is why I'm such a big fan of
the new Canadian Venture Exchange (CDNX) which I've been commenting
on in previous columns. Other than for the choice of name, I think that
this exchange can fit nicely just under the NASDAQ Small-cap market as
the exchange for Canadian and American venture (especially high
tech) companies.
It will provide a bona-fide regulated
trading environment with established standards for smaller,
growing technology firms, regardless of their location. As they mature
they can graduate to a more senior exchange. The CDNX can be a much better
market than either the OTC-BB or Pink Sheets - especially for investors.
If all goes well with the submissions
now in front of the B.C. and Alberta Securities Commissions, the CDNX could
be up and running by late November (see the CDNX website at http://www.cdnx.ca).
New Media Companies in B.C.
Last week, I identifed B.C. based
public companies in the New Media arena. Here's an updated list with a
few additions (like DVD and WKWG). Are there any others? Please let me
know.
| Symbol |
Company |
Price
Sep 24 |
More
Info |
|
DVD.V
|
Demand
Ventures Ltd
|
$0.40
|
quote/chart,
website
|
| EDUV |
EDUVERSE
Accelerated Learning Systems |
$0.81 |
quote/chart,
website |
| ELE.V |
Electric
Mail Company |
$1.70 |
quote/chart,
website |
|
EUIN.P
|
Destiny
Software Productions Inc
|
$3.05
|
quote/chart,
website
|
| FCS.V |
FirstClass
Systems |
$0.17 |
quote/chart,
website |
| IPZ.V |
Image
Power |
$0.40 |
quote/chart,
website |
| MAC.V |
Mosaic
Technologies Corp. |
$0.57 |
quote/chart,
website |
| MCZa.AL |
MC2
Learning Systems |
$2.65 |
quote/chart,
website |
| MER.V |
Medera
Life Sciences |
$2.10 |
quote/chart,
website |
| MFE.TO |
Mainframe
Entertainment |
$2.05 |
quote/chart,
website |
| MTV.V |
Multivision
Communications Corp. |
$0.50 |
quote/chart,
website |
| NNCI |
NetNation
Communications Inc. |
$4.08 |
quote/chart,
website |
| NNS.V |
Net
Nanny Software |
$0.88 |
quote/chart,
profile,
website |
| ORTG |
Orion
Technologies |
$3.38 |
quote/chart,
website |
| PNI.M |
PhotoChannel
Networks, Inc. |
$0.53 |
quote/chart,
website |
| POST |
CyPost
Corporation |
$8.07 |
quote/chart,
website |
|
RNK.TO
|
Rainmaker
Entertainment Group
|
$1.31
|
quote/chart,
website
|
| SCE.V |
SoftCare
Electronic Commerce |
$2.35 |
quote/chart,
website |
| SCS.V |
SCS
Solars Computing |
$0.89 |
quote/chart,
website |
| SWEB |
Stockgroup.com |
$3.13 |
quote/chart,
website |
| SYD.V |
Sideware
Systems |
$2.36 |
quote/chart,
website |
| THW.AL |
Totally
Hip Software |
$0.32 |
quote/chart,
website |
| UTOb.V |
Uniglobe
Travel Online |
$4.05 |
quote/chart,
website |
|
WKWG
|
CityXpress.com
Corp
|
$1.50
|
quote/chart,
website
|
OTC traded companies (the ones without
a .V, .TO, or .AL attached) are quoted in US dollars. The one with the
"P" is an OTC company quoted on the Pink Sheets. I hope that we'll soon
see most of these on the CDNX!
Junior Technology Portfolio -
Update
In July 16, I "invested" $25,220
in 10 small, micro-cap companies selected from the T-Net listing
of all B.C. publicly traded technology firms - just for fun to see what
would happen if we tracked this group.
This "starter" portfolio has declined
steadily to $21,510. But, I'll sit tight awhile longer. Unless there's
a fundamental reason to bail out of any of them, I'm going to hang in.
I used to really get a kick out of watching all the day traders hang around
the VSE lobby downtown at Granville & Dunsmuir (before Canaccord took
it over). These fellows would buy and sell on minute-by-minute changes
in stock prices on mining deals as news on drilling programs rolled
in. Well, it doesn't work this way in high tech (at least not as fast)
even though many brokers still seem to think so! Oh, well.
VCP Update
I've been keeping track of "VCP"
companies in this column because they may provide funding to, and in the
process acquire, technology companies. A VCP company is a Venture Capital
Pool which is created on the VSE by financiers interested in acquiring
and active enterprise through a publicly traded vehicle.
Check
our Venture Capital Pools chart for a complete
updated list of the VSE's VCP companies.
In the next column, we'll update
the T-Net20 to include our recent IPOs (CREO and Pivotal).
Michael Volker
is the Director of the University/Industry Liaison Office at Simon Fraser
University, Chairman of the Vancouver Enterprise Forum, and a technology
entrepreneur. He owns shares in many of the companies he writes about.
Contact: mike@risktaker.com.
Copyright,
1999.
What
Do You Think? Talk Back To Mike Volker
Tech Futures is a bi-weekly
column that focusses attention on new and emerging BC publicly listed technology
companies. Mike Volker is the Director of the University/Industry Liaison
Office at Simon Fraser University, Chairman of the Vancouver Enterprise
Forum, and a technology entrepreneur. He owns shares in many of the companies
he writes about. Contact: mike@risktaker.com
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