RSS

Tag Archives: OTC Markets Group

OTC Markets’ update

OTC Markets’ update

Rhodes Holdings LLC and myself, Robert C. Rhodes, are focusing more and more on private companies and their operational funding (and financial oversight), but it is important for all of us to keep track of what’s going on in the OTC markets (not to be confused with the company OTC Markets).  The best way to keep track of what’s going on is to stay on the newsletter list for OTC Markets – here is the latest update / newsletter from them…


© 2017 by Rhodes Holdings LLC, all rights reserved.

Advertisements
 
 

Tags: ,

OTCQB versus S&P 500

A funny happened in the last couple of weeks – the global weaknesses in the economies around the world have shone through.  China, the powerhouse economy growing at over seven percent (7%) a year (see the World Bank’s numbers at 7.7% in 2013, 7.8% in 2012 and so on on their website) has stumbled.  Our own Federal Reserve doesn’t know if it will raise the rate it lends to banks.  Europe is in the midst of a crisis of immigration and other issues. To steal a line from Ghostbusters

…real wrath of God type stuff.
…, dogs and cast living together… mass hysteria…

SO what does this mean for us, the micro-cap investors who believe in the little guy and who work in and around entrepreneurs who aren’t part of the S&P 500 index?

A little notoriety

An article in the New York Business Journal entitled “Early – stag companies fair better on the OTCQB than S&P 500 during these turbulent days” is an interesting view of what is happening right now.  Of course, OTC Markets loves the exposure and they have shared this article with many of us who follow them (I would recommend joining their mailing list).  In essence, the OTCQB hasn’t seen the decline that the S&P has (take a look at the OTCQB index on the OTC Markets’ website).  The OTCQB index has only declined by 3.31% in the two week period ending August 28th, 2015 versus the S&P 500 dropping by 5.46%. Why?

First, why are the S&P 500 companies highly sought after by investors?  Because they are big enough to ride out ups and downs.  They are big enough to have robust operations.

Secondly, why are all the globe’s markets down?  China is a harbinger of the global economy being a slump / recession that is deeper than we expected.  Our economy really hasn’t rebounded that much from the 2007 debacle.  Now the rest of the world sees that.

Lastly, the OTCQB is a “venture” marketplace.  The risk is already figured into the stock price since investing in these stocks are smaller and don’t have the resources that the S&P companies do.  But therein is where they fair better in down markets – we’re placing a bet that these guys will graduate to the S&P 500 someday.  That risk isn’t greater because the world’s markets are basket cases.  In fact, that means that innovation and risk takers will be rewarded to an even greater extent.

My conclusions

2015 through 2020 will probably be sideways markets – giving up as much as they give.  Including some up and coming stocks in your portfolio is how I’m mitigating the risk that my portfolio does absolutely no growing during that time.  Of course, I am focused on bonds for current income, but that is pitiful right now.  All in all, it’s a good time to ensure that your business operations yield lots of cash and worry about where you’re going to put it all.  Happy hunting…

 
Leave a comment

Posted by on September 8, 2015 in Business, Public markets

 

Tags: , , , , , ,

What were they thinking…

First, I must apologize for the dearth of information on the public markets and financing techniques therein over the last four months coming from our BLOG.  Our associated group of organizations (Rhodes Holdings LLC, ReCap Marketing & Consulting LP, and American Equity Fund LLC) have been involved in a number of actions to protect shareholder value as well as having been asked to put together a number of “go public” projects for clients.  With that said, expect a new focus on providing a look into what is going in the public markets…

OTC Markets

Since the Jumpstart Our Business Startups Act (“J.O.B.S.“) Act was signed into law on April 5, 2012, there has been a “promise” in the air that it would help get capital formation for the micro-cap market started again.  This really hasn’t happened since the Congress and President can’t seem to get their acts together (pun intended), and the Securities & Exchange Commission (“SEC“) hasn’t released the details on how it will enforce the J.O.B.S. Act provisions, like changes to internet marketing of stocks (general solicitation).

OTC Markets Group Inc. had hoped that this Act would help drive their business, but alas FINRA is all about limiting the markets that OTC Markets Group Inc. serves by making it impossible to deposit shares in Pink Sheet companies as well as OTC:BB companies.  The crux of the problem that those of us working in the

Seal of the U.S. Securities and Exchange Commi...

Seal of the U.S. Securities and Exchange Commission. (Photo credit: Wikipedia)

micro-cap arena are facing is that even if you follow all the rules (register your shares, pay cash for stock, etc.), the broker dealers and their compliance departments are running scared of the SEC and FINRA’s rules, so stock just doesn’t get sold.  If no stock gets sold, that capital doesn’t get re-invested into other micro-cap stocks – thus, the velocity of money associated with micro-caps has ground to a halt.  Read what OTC Markets Group Inc. has to say:

In a few cases, it has eased regulation and shown that at least some of those in Congress listened.  The J.O.B.S. Act did make it so that issuers did not have start filing SEC mandated disclosure statements (10Q, 10K, 8K, etc.) until they reach 2,000 shareholders – previously it was 500 shareholders triggered filing requirements.  Read CFO magazine‘s article on banks de-registering:

All in all, the J.O.B.S. Act has not helped us reach its stated goal – helping jump start capital formation.  It may still help, but those of you who thought that crowd funding was going to take over capital formation, it hasn’t delivered the goods.

Accredited Investors

The J.O.B.S. Act did make some changes to the accredited investor definition, which would be very helpful.  The original 1933 Act definition is as follows for Rule 501 definitions.  Here is what the General Counsel of Second Markets had to say about the proposed implementation in his letter to the SEC.  In general, we at Rhodes Holdings LLC are keeping track of what is happening in the marketplace that will make it easier for our clients to access the capital they need.  Here are some websites associated:

 

Tags: , , , , , , , , , , , , ,

Digerati Completes Acquisition of Waste Deep, Inc.

logoHOUSTON, TX, Dec 03, 2012 (MARKETWIRE via COMTEX) — Digerati Technologies, Inc. (OTCBB:DTGID) (OTCQB:TGID) completed its acquisition of Waste Deep, Inc., and its two well established oil field services operating subsidiaries on November 26, 2012. In connection with the acquisition, Digerati Technologies, Inc. will be changing its name to HD Energy Services, Inc., moving its headquarters to Houston, Texas, and changing the composition of its Board of Directors to better reflect its current business plan.

John Howell, Chairman and CEO, stated, “The acquisition of Waste Deep with its operating subsidiaries Hurley Enterprises, Inc. and Dishon Disposal, Inc. provides a great basis for enhancing current shareholders’ value. We are currently in the process of doing PCAOB audits of the operating subsidiaries as part of the due diligence. When we complete these audits, we will file the audits in an 8K in order to provide the basis for filing a registration statement for an American Equity Fund equity line of $100,000,000 to fund capital investments for our operating subsidiaries and future acquisitions. When the company has qualified initial due diligence financial statements, we will provide initial, non-audited, summary information as part of press releases associated with the company.

“As for the changing Board composition, we elected three directors that replaced two of our directors. We also moved our Sr. Vice President of Finance & Controller into the position of Chief Financial Officer — further information is available as part of 14C filings available at the http://www.sec.gov website. The business backgrounds of our new directors and officers are included in the information statements we filed with the Securities and Exchange Commission and mailed to the stockholders on the 16th day of November, 2012. The information statement is incorporated herein by reference and is available on the SEC website at http://www.sec.gov.”

About Digerati Technologies, Inc.

Digerati Technologies, Inc., soon to be renamed “HD Energy Services, Inc.” (OTCBB: DTGID) (OTCQB: DTGID) is a diversified holding company with operating subsidiaries in the oil field services industry and the cloud communications industry. The company’s websites are available at http://hdenergyservices.com and http://www.digerati-inc.com.

The company’s cloud communications subsidiary, Shift8 Technologies, Inc., is a three-time recipient of Deloitte and Touche’s Fast 500 Award for recognition as one of the 500 fastest growing technology companies in North America. Shift8 Technologies, Inc., is meeting the global needs of businesses seeking simple, flexible, and cost-effective communication solutions. Shift8’s cloud-based services include a fully hosted IP/PBX, VoIP transport, SIP trunking, data storage, and customized VoIP solutions for specialized applications. Services are delivered with unparalleled reliability and performance over Shift8’s carrier-class global VoIP network, which has been built over the course of a decade.

The company’s oil field services subsidiaries are Dishon Disposal, Inc. and Hurley Enterprises, Inc., both located in the Bakken, one of the most important oil fields in the world today. Dishon Disposal Inc. is a waste disposal facility with a 25 year track record, focusing on solid and liquid wastes from oil field and drilling processes. The solid waste is land filled into specially prepared synthetic lined pits and the liquid waste is treated with industry leading water treatment technology, which can be applied across multiple industries outside of the oil field. The company is well respected in the community. Hurley Enterprises, Inc. is also an oil field support services company that functions as a drilling site service company, with 98 service and rental lines of revenue. Hurley provides everything from skid houses, telecommunication services, booster booths, Porta-Potties, generators, potable water, and mess halls in service to many of the major drilling contractors and oil majors in the Bakken. Hurley has several sole source contracts with strategic contractors in the Bakken that will provide large growth opportunity within the next three (3) years.

About American Equity Fund LLC

The American Equity Fund LLC (“AEF”) provides an alternative funding mechanism, an Equity Line Facility (“ELF”), for SEC reporting publicly traded micro- and small-cap companies that want to take control of financial futures. An ELF is a flexible financing structure in which AEF commits to purchase shares of Common Stock directly from an Issuer, at prevailing market prices, over a multi-year period. When an Issuer elects to drawdown on the ELF, AEF is obligated to purchase an amount of shares equal to the dollar amount requested with a discount to market and warrant coverage to underwriting expenses. Issuers request drawdowns at their discretion in accordance with the terms of their funding agreement.

Forward-Looking Statements:

The information in this news release includes certain forward-looking statements that are based upon assumptions that in the future may prove not to have been accurate and are subject to significant risks and uncertainties, including statements related to the future financial performance of the Company. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it can give no assurance that such expectations or any of its forward-looking statements will prove to be correct. Factors that could cause results to differ include, but are not limited to, successful execution of growth strategies, product development and acceptance, the impact of competitive services and pricing, general economic conditions, and other risks and uncertainties described in the Company’s periodic filings with the Securities and Exchange Commission.

Contact:

Jack Eversull
The Eversull Group
(972) 571-1624
(214) 469-2361 fax
Email Contact
SOURCE: Digerati Technologies, Inc.
CONTACT: http://www2.marketwire.com/mw/emailprcntct?id=D7E1FB987C6FF427

Copyright 2012 Marketwire, Inc., All rights reserved

 
Leave a comment

Posted by on December 9, 2012 in News

 

Tags: , , , , , , , ,

Public company information…

Here are two articles that Seth Farbman’s VStock LinkedIn group:

Seth, thanks for the great resources and keeping all of us in the know.  Also, if you are involved in the public markets and understand what the DTC (or DTCC as they put it into initials) is dealing with right now?  Their vault in lower Manhattan was under water and all the certificates that are in “Cede & Co.” which would be the complete public float for all companies that are DTC eligible, may be destroyed.

To understand what this may mean for DTCC, if a certificate is destroyed, the rest of us holders of paper certificates have to post a bond that says that we will not try to use the certificate that was lost or destroyed.  This costs about 10% of the face of the certificate itself.  Will they be required to post such a bond?  If not, why should all of us..


© 2012 by Rhodes Holdings LLC, all rights reserved.

 
Leave a comment

Posted by on November 3, 2012 in BLOG, Business, Public markets

 

Tags: , , , , , ,

New OTC Market regulations

Within the OTC Markets Group monthly newsletter, there is an interesting announcement on OTC Market Regulation & Compliance.

FINRA Rule 6433

On August 5, 2012 FINRA announced that the SEC-approved amendments to FINRA Rule 6433 (Minimum Quotation Size Requirements for OTC Equity Securities) will become effective on November 5, 2012. This has been approved as a 1 year pilot period. The new quotation sizes are as follows:

Price (Bid or Offer) Minimum Quote Size (# of Shares)
$0.0001 to $0.0999 10,000
$0.10 to $0.1999 5,000
$0.20 to $0.5099 2,500
$0.51 to $0.9999 1,000
$1.00 to $174.99 100
$175.00+ 1

For full details of this announcement, please see: FINRA Regulatory Notice 12-37.

So what does this mean to the average investor?  Well, if there is a penny stock out there, the minimum order you can place is 10,000 shares, which equates to $1.00.  Would anyone ever place a market order for $1?  Not a retail buyer since a retail buyer’s stock trade fee wold be at $10 (Schwab or Ameritrade) and then there are market fees of probably $2 on top of that.  On the market maker side though, you would see trades as small as this because their fees are much smaller.


© 2012 by Rhodes Holdings LLC, all rights reserved except excerpts from the FINRA notice.

 
Leave a comment

Posted by on August 28, 2012 in BLOG, Business, Public markets

 

Tags: , , , , , , , , , ,