It took until Fall of 1999, for NASD to create an increase in demand for trading shells. As I reported in an early issue, OTCBB shells doubled in price in about three months.

The SEC is ending sale of Trading Shells. How will this affect price of spinoffs and IPOs, by this Summer? It depends upon Bull or Bear winning in Market in next few weeks.

The end of trading shell sales makes spinoffs only low cost alternative to doing an IPO. If a Bull Market survives current Market correction, demand for spinoffs will increase and cost of doing a spinoff must go up. If Bear wins Market battle in next few weeks, demand for going public will collapse. You can't raise risk capital in a Recession or Depression. Spinoff costs should remain at current US$250,000 level. This is payments over eight months of US$100,000 and balance paid from proceeds of Offshore Private Placement.

Financial Professionals are caught between a rock and a hard place. If Bear wins, they can't raise risk capital. If Bull wins, Cost of Money will go up in next few months. If Bull looks like winner, my advice is start spinoff process before your Costs of Money double.

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/]

Underwriting Costs The underwriting cost is a function of money raised in IPO. The NASD allow up to 18% in costs. If gross revenue from IPO is $10 million, this is an underwriting cost of $1.8 million.

Here's how costs breakdown Nonaccountable Expense 3% Accountable Expense 5% Discount 10% Company supplied IPO buyers usually 50% (10%-90%) Commission 5% - Its paid by brokerage firm client and doesn't affect money received by company.

Compare these costs with that of doing a spinoff. For a startup company seeking a million dollar financing cost is $150,000. For an operating copy grossing over US$2 million, cost is US$250,000.

If you want to arrange a spinoff or blind pool, contact me. We can arrange a fee consultation.

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/]