It doesn't matter if underwriter signs a "Best Efforts" or "Firm Commitment" underwriting agreement. The day that your underwriter questions your stock support plan is day you'll lose your financing. You need more than a stock support plan, you need to prove constantly that you can execute it. This is reason that you must have someone on your staff familiar with stock support issues.

Firm Commitments aren't firm. The underwriter will have several clauses in Agreement that allows them to withdraw for vague or unspecified reasons such as "market conditions." I've worked with scores of underwriters over years. The real reason that these underwriters withdrew from over 90% of their "Firm Commitment" underwriting agreements was lack of faith in ability of company to make a market in their stock. Keep in mind that company paid underwriter a non-refundable 1.5% fee for "Firm Commitment" underwriting agreement. This means $15,000 for every million in proposed gross proceeds from underwriting. Underwriters won't refund this fee.

My advice is, put your money into your stock support program and not a non-refundable "Firm Commitment" underwriting fee. Your company should hire someone to develop and implement your stock support program.

The other side of this coin is that structure of your underwriting has a lot to do with success of your stock support plan. Doing a million-dollar Private Placement at ten cents will permanently destroy your share price. Seek your company's financing in multi-dollar range. A "Hot Stock" can do an IPO over $20.00. A startup company is lucky to place their stock at two or three dollars while raising a million dollars.

Have a stock support plan before you arrange your first meeting with a potential underwriter. If you can't answer stock support questions, you are wasting your time arranging meeting. Furthermore, you won't get a second chance to sell that underwriter on your company. Once your company is rejected by several underwriters, no one will want to meet with you. A credible stock support plan is key to finding an underwriter for your company.

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/]

Nasdaq is moving to consolidate U. S. Stock Exchanges, excepting NYSE. The German (Frankfurt) Stock Exchange has a similar plan for Europe. Eventually, these two acquisition programs will merge. Currently it's faster, cheaper and easier to list an American OTCBB company in Europe than on Nasdaq. As European Stock Exchange consolidation progresses, this may no longer be true. If your shares trade in States, you should think Europe in 1999.

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/]