* The OTCBB (Over-the-Counter Bulletin Board Stock Exchange is far less credible than NASDAQ, AMEX, NY Stock Exchange or any American Regional Stock Exchange. Investor Relations costs will be lower if company trades on a strong American stock market, precisely part of our program. ** The SEC's Penny Stock Rules don't apply to shares trading over $5.00, ensuring less stringent rules make Investor Relations efforts more effective. *** The Florida Rule is more accurate for stocks trading below $10.00 than for those trading over $10.00. In fact, costs are usually lower than Rule suggests.

(Beyond a $20.00 share price, you will probably not attract many small capital investors, target audience for smaller companies.)

For example, if you assume a float of 2 million shares and a US$4.00 average share price, public company's annual Investor Relations budget should be about US$2,000,000.

How NOT To Pay For It

Many Small Capital public companies try to manage their Investor Relations costs by paying for them in shares of company. Aside from fact that this violates an SEC regulation, it works against company. It's no different than having insiders sell their company stock. Those paid shares add to company's float, increasing company's Investor Relations costs in following quarter.

The REAL Cost of Legal Insider Selling

So here's where I repeat that promised sentence: When your public company insiders sell their shares to public, they add that many shares to company's float.

Let me give you a simple example. If one of company's insiders decides to sell 1,000,000 shares of his stock into market place at a price of $10.00, he will profit by $10,000,000. Very nice, you might say.

But what he has actually done is to increase next quarter's Investor Relations cost by $450,000 without adding one single cent of value to company. He has also increased public float by an additional one million shares, now your float is 3,000,000 shares instead of 2,000,000. The cost of your Investor Relations Program has been permanently increased by $1,800,000 annually without any benefit to company. Few Small Capital public companies can afford to pay this bill for very long. It usually leads to collapse of company's share price in a very short time.

This is exactly why I will not invest in companies, which permit their insiders to sell stock whenever they choose. I believe it to be an unethical and destructive practice. While insiders benefit, they do so at expense of their shareholders.

The Correct Way To Use Insider Stock

If you see taking your company public as a way to an exit strategy, there are only two proper uses for your public company's "non float" shares. (1) You can buy cash-producing assets with your shares. (2) You can leverage your profits on company's sale when you sell it.

A License To Print Money

As a U.S. Public Company, you have been given a license to print your own money. That money is your company's stock. Your stock is convertible into U.S. Dollars at whatever exchange rate you can achieve with your Investor Relations Program.

You should use that money to buy private, cash producing companies. The cash, as well as perceived value of acquired company, adds to your public company's revenues and to perceived value of your company. Most importantly, using our program, you can ensure that issued shares never become part of your company's public float. You increase both actual and perceived values of your company without increasing your Investor Relations costs. With your company being publicly seen as more valuable, it makes it far easier to resell stock when one of your public shareholders decides to sell.

Your Public Company's Appraisal Value

Using a variety of business appraisal formulas, private companies are valued on their balance sheets. Public companies, however, are valued on their Market Capitalization, which is public company's issued shares multiplied by company's average share price. Thus a total issue (insider and public float) of 10 million shares at $10/share is considered a $100 million company.

Long experience has shown that Market Capitalization is almost always a multiple of at least four times over company's balance sheet valuation. If you can sell your private company for $20 million, you can usually sell same firm as a public company for $80 million.

The most logical reason to take your company public is because you can use your shares to grow your company quickly by buying cash-producing assets with those shares. When you are ready to sell your company, you will get at least four times its balance sheet value by selling it at Market Capitalization. These are only two correct uses of your company's insider shares.

To contact author: Visit Beowulf Investments website: [http://home.earthlink.net/~beowulfinvestments/] Or, visit Global Village Investment Club Website: [http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/]

(Note: Bill Gates and family have already given millions and millions to charity. It was announced on CNBC that on April 24, 2003 Bill Gates had just donated 28 million dollars to S. Africa’s AIDS program.)

Microsoft had just recently (10/15/03) raised their dividend from eight cents a share to sixteen cents a share, giving Bill Gates, I would imagine, a 96.5 million dollar a year raise. As an individual investor in stock market for almost 40 years I have found that companies that raise their dividend every year outperform those companies that stop or trim their dividends. For example, Dominion Resources had raised their dividend from 1984 to 1994 every year, and then stopped in 1994. Since then company continues to pay a 64½ cent a share dividend, with a dividend yield of around 4 percent a year. The stocks performance since 1994 has been mediocre, rising in price from 40 dollar range in 1994 to 60 dollar range in 2004. Now compare that stock’s performance with Comerica, a company that has raised their dividend for past 35 consecutive years. In April of 2003, Comerica’s stock price was around 37 dollars a share, paying a dividend yield of around 5%. Today, July 20, 2004 stock closed at $58.28 a share, paying a dividend yield of 3.57%. A $21.00 a share move in stock in 1 year and 3 months and in March of 2005 company will probably raise their dividend again for 36th consecutive year. (By way, Comerica’s stock performance for past 14½ years (with dividends being rolled back into stock) has returned a little better than 15% a year, compounded annually.) The simple point I’m trying to make is to invest in those companies that have a history of raising their dividend every year. There are hundreds of them. A company that just pays a dividend is not good enough; find those companies with a historical record of raising their dividend every year.

For more excerpts from “The Stockopoly Plan’ please visit www.thestockopolyplan.com