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Mike Volker

There's Gold in them thar Minds!

By: Mike Volker, Tel:(604)644-1926, Fax:(604)925-5006

Email: mike@risktaker.com

(as published in TREK magazine, April/May 1992)

The Latest "Resource" Play: The VSE's Newest Gold "Minds"

Over the past several decades, our resource-dependent economy's growth was fuelled by high risk, high growth, speculative mining and exploration ventures. The Vancouver Stock Exchange (VSE) played a key role in providing venture capital to these risky companies. Investors (or should I say, speculators) knew the risks and they knew the rewards:  they only needed one big winner out of many to provide attractive returns. And yes, there were scams, but there were also many legitimate projects which otherwise wouldn't have had a chance.

Today, the advanced technology industry is Canada's hottest new resource play. Instead of minerals and fibre, we're talking about the resource which can be found between our ears. In this competitive global market, countries are waking up to what Harvard Professor Michael Porter has been lecturing about: the need to innovate and the opportunity to profit by developing our intellectual resources. By mining the new resource, our minds,  the payoffs promise to be even greater.

Whenever you mention the VSE to technology companies as a financing opportunity you invariably get a number of reactions - many of them negative! But just because there have been (and always will be unless we can figure out how to eliminate human greed) abuses, we shouldn't shy away from what promises to be a key factor in facilitating growth and investment in our companies.

For a technology company, especially an early-stage venture, the main advantages in raising cash through the VSE (be it an initial public offering or a reverse takeover) relate to valuation matters and the likelihood of raising capital. Market capitalization (i.e. number of shares issued multiplied by share price) for public companies tends to be higher than the valuations ascribed by Venture capitalists and for the founders of the company this means less dilution. Regarding the alternatives available to a start-up, it is well known in the technology industry, that early-stage venture capital is virtually non-existent. Public financing is a viable option. And after all, this option effectively spreads the risk among many investors. Unfortunately, the public (including the news media) does not accept the failure of a technology venture to produce as lightly as it does the failure of a mine to produce! What we need is to create a climate that will spawn many ventures of which a relatively small number of successes will more than offset the failures.

There is money on Howe street looking for a home and there are many technology ventures which just might emerge as the next Microsoft. So, who wouldn't pay seventy-five cents a share for some of that stock?

Fast Cash Now!  is a new TREK column which will feature publicly-traded advanced technology companies. Its objective is to generate enthusiasm among companies and investors to use the VSE for its stated purpose: capital formation for emerging companies. It's ironic that even a few California firms (e.g. Frecom, Norris Communications Corp) see this opportunity and are taking advantage of it. However, this article will focus only on advanced technology companies head-quartered in B.C. In each appearance of this column, we'll track the performance of a few of these and make mention of any new developments.

Of some 2500 companies listed on the VSE, only about 50 are B.C. technology firms. Some of the more notable ones are Spectrum Signal Processing, Motionworks, OCS Technologies Inc. and Trionics.  An interesting newcomer, Sanctuary Woods, a multi-media startup which went public in December at $1.00, recently traded at over $2.00. Advanced Gravis Computer Technologies saw its stock recently soar from pennies to over $2.00.
Caption for Sanctuary Woods Graph:
The company publishes multimedia titles using Apple's quicktime software. The company, which is a start-up with no significant revenues, got its VSE listing through an initial public offering in December at $1.00 per share.

Caption for Spectrum:
Spectrum Signal Processing Inc. is a Burnaby based company which focuses on the applications of Digitial Signal Processing Technology (DSP). 1991 revenues were over $6M and are expected to grow to over $10M in the current year due to a pending merger with the company's U.K. partner.

Caption for Advanced Gravis:
Advanced Gravis Computer Technologies, known for its Joystick products recently unvieled its new PC sound card. It also recently announced that  an additional $1.5M is being invested in the Company by Logitech International. The stock, which was trading as low as a dime just last year, recently hit $2.75.

Caption for Motionworks:
Motionworks went public late last year through a reverse takeover. The company produces MacAnimator, an animation software application package for the Apple Macintosh.

Table 1: Some VSE listed BC Technology Firms:

Advanced Gravis Computer Technology -  Computer Joysticks, Sound Cards
Anitech Enterprises Inc.- Electronic Probes
Boswell International Technologies Ltd.- Phonetic Keyboard
Creator Capital Corp - Portable gaming machines
Current Technology - Hair Growth Electronics
Darius Technologies - Personal Computer Products
Epic Data - Data Collection Terminals
Guardian Communications - Fax Communications Products
HiTech - RF Tracking Products
Infocorp Comp - Software for Retail Industry
Intertel Comm - Telecommunications
IVL Technologies Ltd - DSP Products for Music Applications
Izone International - Environmental Products
Merit Technologies - Point of Sale Terminal Systems
Modatech - Sales Software
Motion Works - MAC Animation Software
Norsat - Satellite Systems
OCS Computer Systems - Software for MIS
Offshore Systems Ltd - Navigational Systems
Quadra Logic Technologies Inc. - Biotechnology
Sanctuary Woods Multimedia Corp - Multi-media Software for Learning
Spectrum Signal Processing Inc - Digital Signal Processing Cards
Strategic Tech - Software for Correctional Institutes
Trionics Technology - Automated Credit Card machines
Trove Investment Corp - Computer Security Products
Unitrol Data - Fault Tolerant Disk Software for PCs
V-Tech Diagnostics - Cancer Detection
VSC Tech
(The above list is not necessarily a complete listing of all VSE Technology Stocks. Any omissions are unintentional. Non-BC based firms and inactive companies are excluded.)

Copyright 1992 Michael C. Volker
Email:mike@risktaker.com - Comments and suggestions will be appreciated!

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