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American Company Spotlight

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Omnicity, Corp. Website:
Click Here |
Information As Of
May 1,
2009 |
| Exchange:
OTCBB |
Market Cap:
25
Million |
| Outstanding Shares:
34.5
Million |
52 Low / High:
$0.46 / $0.73 |
|
Price May
1, 2009:
$0.72 |
OMCY Recent Stock Quote and News:
Click Here |
'OMCY recently added
17 additional tower locations within its existing markets,
acquired new tower locations through Forepoint and other
acquisitions and plans to extend its services into 100
additional rural markets over the next 18 months. OMCY
currently operates its network through 200 tower locations and
cover over half of the State of Indiana.'
Overview

Omnicity Corp. is a public company based in Indiana
providing broadband access, including advanced services of voice, video and
data, in un-served and underserved small and rural markets and is planning to be
the premier consolidator of rural market broadband nationwide. Omnicity's
strategy is to provide a total broadband solution and continue rapid growth
through acquisitions, organic growth and continue to partner with Rural Electric
Membership Co-ops and Rural Telephone Companies. Omnicity has an experienced
broadband operations team with extensive wireless broadband/ISP expertise as
well as the expertise to consolidate large numbers of businesses through its
roll-up strategy.
Investment Highlights
- Consolidator Of
Rural Broadband
Market. The Company’s vision
is to be the first Broadband service provider to expand its
network across rural America and to emerge as a lead
consolidator of rural market Broadband.
- Huge Market
Opportunity. OMCY’s target
markets have terrain and other conditions better suited to
wireless transmissions and not attractive to traditional
hard-wire operators. The Company estimates that at least 40
million rural and small market homes, businesses, government
agencies and schools have inadequate high-speed Internet
service and represent a large growth opportunity.
- Development of Nationwide
Wireless Network
To Deliver
Low-Cost
Broadband. OMCY plans to
develop a nationwide wireless network and deliver high-speed
Internet access to rural subscribers more cost- effectively
than traditional cable or fiber optic models. Traditional
hard-wire systems are generally much more expensive to build
than wireless networks. Reduced network development costs
means lower infrastructure costs per subscriber for wireless
operators as compared to comparably-sized traditional
hardwire fiber-optic systems.
- Competitive Advantages
Over Traditional
Hardwire Services.
OMCY believes it can deliver service to customers within
three days of the initial service request. This is much
faster than competitors, who require as much as two weeks
for provisioning and installation. In addition, the
Company’s technicians are installing the service directly in
the customer’s home. Cable and DSL services require the
customer to self-install routers and other equipment sent
through the mail. OMCY’s services are also priced
competitively with satellite services. In addition, compared
to its primary competitors, OMCY provides, at no additional
charge, SPAM and virus scanning of email, personal
webhosting space and free technical service.
- Aggressive Acquisition
Strategy. The Company’s
business model has already proven successful in rural areas
of Indiana. Going forward, OMCY plans to extend its
geographic reach through strategic partnerships with Rural
Electric Municipal Cooperatives (REMCs), rural telephone
companies and local government agencies. Since October 2008,
OMCY has entered into asset purchase agreements with four
wireless operators: NDWave, Inc; Forepoint Networks Inc;
Mooreland Wireless and North Central Communications, Inc. As
a result of these acquisitions, the Company has now more
than 5,500 subscribers and 200 tower locations covering half
of the State of Indiana. OMCY plans to expand into 100
additional rural markets over the next 18 months.
- Positive Cash
Flow &
Strong Revenue
Growth Outlook.
OMCY expects to, accelerate positive cash flow and earnings
and achieve growth in annualized revenues to approximately
$9 million by March 31, 2010. Over the next five years, the
Company anticipates growing its customer base to 170,000
subscribers. These projections are based
upon basic Broadband connections only and do not include the
planned additions of Voice-over-Internet Protocol (“VOIP”)
and Internet Protocol High-Def TV (“IPTV”). With the
addition of these two services, the Company will be
delivering a “triple play” much like its competitors are
delivering in cities through hard-wire systems.
- Speculative Buy Rating Released.
Lisa Springer, MBA, CFA of Beacon Equity Research has
initiated coverage of OMCY with a Speculative Buy Rating and
a $1.30 price target. Based on peer group companies
currently trading at forward Price/Earnings multiples
averaging around 9.8 times earnings, Beacon believes OMCY
warrants a comparable valuation because of its niche focus
on rural markets, rapidly growing subscriber base and cost
savings opportunities. According to Beacon's research
report, they also think the Company will emerge as an
attractive acquisition target for a larger competitor
interested in acquiring OMCY’s revenues, subscriber base and
coverage area. Beacon values OMCY at a 8.0 times forward
multiple to projected EBITDA, which they are using as a
proxy for earnings, and obtain a $1.30 price target, based
on their assumption that equity sales will increase shares
outstanding to 40 million in 2010.
Profile
Omnicity Corp (OTCBB: OMCY) is the Midwest’s leading
Broadband service provider. The Company provides affordable,
high-speed fixed and wireless Internet access and advanced
communications solutions to rural communities, businesses and
residential users. At present, OMCY offers its services in
unserved and underserved rural markets of the Midwest. It is
already covering over half of the State of Indiana. OMCY’s
vision is to be the first Broadband service provider to expand
its network across rural America.
A great article in the Indianapolis Business Journal
recently outlined OMCY's past, present and future, including their business
model and growth prospects. In the article, CEO Dick Belthoover stated "We
have 28 acquisitions in the pipeline right now."
Beltzhoover wouldn’t identify the other pending acquisitions. But Illinois,
Kentucky, Ohio and Minnesota are among the states Omnicity has been scouting for
targets, said Larry Morningstar, who handles investor relations for the company.
Omnicity is also trying to earn the trust of the federal government. Last
month, President Obama signed a $7 billion rural broadband stimulus program to
expand broadband in rural areas. Beltzhoover and his team have spent time in
Washington in recent months, meeting with the state’s congressional delegation
to figure out how to tap into the money. Investors are
encouraged to take a read at the article
located here.
OMCY’s 5,500 subscribers include homes, businesses,
government agencies and schools. Opportunities to expand its
subscriber base are significant; approximately 85% of the
line-of-sight households within the Company’s Broadband
markets have limited access to high-speed Internet service.
OMCY is partnering with Rural Electric Membership Cooperatives
(REMCs) and Rural Telephone Companies (RTCs) to provide a
comprehensive broadband solution. About 80% of the nation’s
counties rely on the services of Rural Electric Membership
Cooperatives, which represent the largest electric utility
network in the United States with over 40 million
member-owners. Over the next five years, OMCY plans to grow
its customer base to 170,000 subscribers. It is also likely that, as the
subscriber base grows to exceed 25,000 subscribers, OMCY will
emerge as an attractive acquisition candidate to a larger
competitor interested in acquiring the Company’s revenues and
profits, customer base and coverage area. OMCY plans to extend
its services into 100 new rural markets over the next 18
months. The Company already covers over half of Indiana’s
markets and plans to continue its Midwestern expansion in
2009. Nationwide expansion is targeted in 2010.
In March 2009, the Company announced the acquisition of
NDWave, Indiana’s fastest-growing Wireless Internet Service
Provider (WISP). The acquisition added 1,450 customers to
OMCY’s subscriber base in rural north central Indiana and
brought coverage to another 34 rural Midwestern counties. Also
in March, the Company acquired Cue Connex of Hartford City,
Indiana. Through this acquisition, OMCY adds fiber and
carrier-class wireless infrastructure to its municipal network
as well as new, value-added municipal services such as
automatic meter reading for water and utility companies and
first responder networks for police, fire and EMS. On March
31, 2009, OMCY acquired Indiana’s fastest WISP, Forepoint
Networks. This acquisition represented the third of several
the Company plans to close before the end of May, 2009. The
Forepoint acquisition adds another 1,000 subscribers and 23
towers to OMCY’s network. Some 20 of the 23 new towers are
located in OMCY’s Tipmont REMC partner region.
In early April, OMCY acquired the business and network
infrastructure of Peru, Indiana-based North Central
Communications. This acquisition provides the Company with
additional expertise in advanced meter reading technology,
over 650 new customers, 25 new tower locations and an
additional 1,800 square miles of coverage area. In addition,
OMCY announced a partnership with Craigville Telephone Company
that will bring additional fiber optic connections to OMCY’s
carrier-grade wireless network and extend its network coverage
in north eastern Indiana. In addition, the Company and its
alliance partner, Agility Ventures, LLC, recently added
another $1.0 million to an existing Master Lease facility.
This capital infusion enables OMCY to expand its broadband
network in rural markets and accelerate its acquisition
strategy. The Company now has over 200 towers across half of
the State of Indiana.
Industry
Outlook
The communications industry is the nervous system of
today’s economy and its revenue contribution was estimated
at $1.2 trillion in 2006. In the past, the structure of the
communication industry was based on the tight integration of
critical communication functionality. Services were provided
by a very limited set of players, with the core of the
network supplying this tightly integrated set of features,
and the edge (i.e. the users) consuming them. Today,
packet-based Internet increasingly decouples the network
through its design, service and delivery functionality.
In 2007, the worldwide telecommunications market grew to
$1.8 trillion and was expected to expand 7.6% in 2008 to
$2.0 trillion. From a regional perspective, North America
remains the largest telecommunications market. North
American telecom revenues were forecast to reach $511.6
billion in 2008, a 4.5% increase from 2007. Technologies
such as Voice-over-Internet Protocol (VoIP) and broadband
video are key drivers of telecommunications industry growth.
Internet Usage
The continued rollout of Broadband and next-generation,
high-speed wireless networks stimulates mobile markets and
creates a major driver of industry growth. The continual
increase in the number of Internet users also expands the
customer base for IP-based services.
The number of Internet users already exceeds one billion
worldwide. As of June 30, 2008, there were 1.46 billion
Internet users worldwide, according to Internet World Stats.
Broadband Usage
Broadband is often called high-speed Internet because of its
high rate of data transmission. The number of broadband
connections is increasing rapidly as many users require
higher speeds for peer-to-peer (P2P) files sharing systems,
downloading music and games, video on demand and VoIP calls.
Point Topic predicts the total number of broadband lines in
the 40 largest broadband countries will grow from 393
million at year-end 2008 to 635 million by 2013. Broadband
in less developed markets is forecast to grow from 16
million to 48 million lines over the same period. The number
of broadband lines globally is projected to increase 10.8%
annually to 683 million lines by 2013. This is down from
27.7% annual growth between 2004 and 2008, but still a
significant expansion rate. One major reason for the
slowdown in growth is that most of the richer countries are
approaching saturation with broadband; new customers are
becoming harder to find and sign up. At the same time,
poorer countries such as China and India have gone through
the initial rapid growth phase and are now growing steadily
rather than exponentially1.
According to Gartner Group, consumer broadband connections
penetrated 18% of households worldwide in 2007, and by 2012,
broadband will be found in 25% of households. Five countries
exceeded 60% broadband penetration in 2007 and this number
is expected to grow to 17 countries by 2012.2 The dominant
fixed broadband technology is DSL, which controls 66% of the
market3.
Looking five years ahead, China is forecast to emerge as the
largest broadband country, with 153 million broadband lines
versus 117 million lines in the U.S. In fact, China is
expected to surpass the U.S. in 2009. India and Brazil are
also expected to enter the top 10, with Russia positioned as
number 11.
Financial
Outlook
OMCY plans to become the premier consolidator of rural
market Broadband service in the United States by delivering
high- speed Internet access to rural subscribers.
Since its inception in 2003, the Company has grown to become
the Midwest’s largest fixed and wireless Internet Service
Provider (WISP). Management plans to accelerate the Company’s
growth through acquisitions of smaller regional WISPs and
continue organic growth in 2009. OMCY is aggressively
acquiring WISPs in rural and small markets where management
believes the Company can quickly achieve positive cash flow
and operating income.
The Company has already entered into asset purchase agreements
with NDWave, Forepoint Networks, Mooreland Wireless and North
Central Communications. Each acquisition gives the Company on
average 650 new subscribers, $33,000 in incremental monthly
revenues and $400,000 in new assets and tower infrastructures.
These acquisitions also add coverage of approximately 79,000
additional homes. As a result of these acquisitions, the
Company has already increased its subscriber base to more than
5,500 customers.
Through acquisitions and organic growth, OMCY expects to
achieve positive cash flow and earnings and record annualized
revenues of $9 million by March 31, 2010. Over the next five
years, the Company targets growth in its customer base to
170,000 subscribers.
Recent News and Press Releases
Omnicity Hosts Municipality Technology Summit
GlobeNewswire (Wed, Apr 22)
Omnicity Partners With Its First Rural Telephone Company --
Craigville Telco
GlobeNewswire (Wed, Apr 15)
Omnicity Acquires North Central Communications and Announces
New Board Member
GlobeNewswire (Thu, Apr 9)
Omnicity Acquires Forepoint Networks
Marketwire (Tue, Mar 31)
Omnicity Acquires Cue Connex to Move Into Rural Municipality
Market
Marketwire (Wed, Mar 18)
Omnicity Completes Acquisition of NDWave
Marketwire (Wed, Mar 11)
Omnicity Positions for Federal Stimulus Participation
Marketwire (Fri, Mar 6)
Omnicity Secures Major Financing Arrangement to Accelerate Its
Acquisition Strategy
Marketwire (Tue, Mar 3)
Management
Dick Beltzhoover
President & Chief Executive Officer, Director
Mr. Beltzhoover develops and oversees implementation and
achievement of business objectives, provides leadership,
strategic direction and vision to Omnicity. He was the first
investor of Omnicity and brings more than 35 years’ business
and corporate venturing experience to Omncity. Mr. Belthoover
was the Chief Operations Officer and Board member of National
Vulcanized Fibre and, since 1975, has served as founder and
President of Insul Reps, which represents manufacturers in the
electronic and electro-mechanical markets. Mr. Beltzhoover
grew sales to $40 million and directed Insul Reps expansion.
Mr. Beltzhoover was also instrumental in funding and guiding
Indy Connection into becoming an $8 million revenue ground
transportation company, ultimately selling to Carey Limousine
for $12 million. Other companies he founded include Midwest
Rail, Prestige Magazine, Hunt Graphics, and Digital Arts, all
of which sold to private companies. Mr. Beltzhoover holds a
Bachelor of Science in Mechanical Engineering from Penn State
University.
Greg Jarman
Chief Operating Officer, Director
Mr. Jarman serves as the Chief Operating Officer, in charge of
managing the profitability of Omnicity’s day-to-day operations
in support of established policies, goals and objectives while
providing leadership, strategic direction and vision. Mr.
Jarman most recently served as President of RushDSL, a rural
broadband services provider. Mr. Jarman has also served as
Chief Technology Officer of Q-media, a network services and
managed services provider and was Chief Technology Officer and
board member of Netisun LLC where he directed Netisun’s
technical services group and managed network infrastructure.
Mr. Jarman was a founder and executive of Indiana
Communications & Systems, Inc., which was a rural business ISP
and managed service providers acquired by Netisun LLC. He has
25 years of technical experience working with many corporate
and governmental agencies, and has consulted with Northrop,
The Associated Group, United Student Aid Funds, Cinergy,
Sperry, Unisys, and EDS. Mr. Jarman received his AS in
Computer Information Services from Indiana Central University
and has spent 10 years of his career in information systems
consulting.
Don Prest
Chief Financial Officer, Director
Mr. Prest will lead the SEC public financial reporting process
for Omnicity and the overall financing plan. Mr. Prest has
been a US and Canadian public company assurance partner for 17
years at a large regional PCAOB registered accounting firm
located in Canada, where his career began 26 years ago. Mr.
Prest has been an assurance partner for over 150 public US
companies. Mr. Prest will retire from this position at the end
of 2008 to focus on the business of Omnicity. Mr. Prest has
been a partner of FBP Capital Corp, an investment and merchant
bank, for 6 years where he has leveraged his international tax
and assurance practice and contacts to assist FBP’s clients in
going and being public. Mr. Prest also served as the Chief
Financial Officer for Power Air Corporation for three years.
Power Air is a public fuel cell company. Mr Prest is currently
serving as President and Chief Financial Officer for Omnicity
Corp., the OTCBB listed company that will be the parent
company for Omnicity Inc. Mr. Prest will stay on as the Chief
Financial Officer of Omnicity and be added to the Board of
Directors. Mr. Prest started his career in 1983 upon
graduating from BCIT in Financial Management. Mr. Prest
received his Canadian CA designation in 1991 and his US CPA
designation in 1997.
David Bradford
Vice President Corporate Development, Director
Mr. Bradford assists senior officers of Omnicity in the design
and development of Omnicity’s long-term strategic planning,
organization of resources to execute its plan, and the timely
and accurate reporting and analysis of operating results. His
responsibilities include advising management on acquisitions,
operations, and financial matters, and ensuring their most
effective synthesis to the maximization of Omnicity’s
strategic and operating plans. David works currently in that
capacity on a consulting basis for Omnicity through
International Corporate Resources Group, an international
Investment Banking services firm, where he serves as Senior
Analyst. Mr. Bradford has devoted the majority of his senior
management career to the telecommunications industry. From
1977 through 1987 he served in executive positions at the
Chicago Tribune’s broadcast and cable television divisions.
Positions included Vice President and General Manager for
Tribune Cable Communications, Vice President of Operations for
WGN Electronic Systems Company, and Director of Strategic
Planning for Tribune Cable and subsidiaries. After leaving the
Tribune companies Mr. Bradford served as President of Empire
Communications and Bradford Communications, Inc., both rural
cable television multi-system operators. Mr. Bradford
subsequently served as President of National Telsat, Inc., a
rural wireless television and data provider. Mr. Bradford also
currently serves on the Board of Directors of KX2 Performance
Group, Inc., a North Carolina based NASCAR motorsports
marketing firm. Mr. Bradford brings thirty years of successful
subscriber based telecommunications operating experience to
the Omnicity team as well as participation and oversight of
numerous debt and equity financings, acquisitions, and
restructurings.
David Weddell
Vice President, Sales and Marketing
Mr. Weddell manages and expands business relationships with
Rural Electric Membership Cooperative groups (“REMCs”),
acquisitions and large clients. Mr. Weddell develops and
implements strategy, sales plan, and forecasts for overall
business development, sales, and account management. Mr.
Weddell has been a visionary and entrepreneur throughout his
28 year business career. In 1996 he worked with GTE Wireless
Data based in Tampa, Florida and developed a team that brought
mobility to the credit card industry. In 2003 his passion
turned toward the WISP industry and he became North American
Sales Director for Supernova Systems, Inc., an Indiana based
WISP. Mr. Weddell was responsible for implementing the Virtual
WISP program for Supernova Systems and created partnerships
with Verizon Wireless, Lightyear Network Solutions, Sprint,
DISH Network, DIRECTV and Wild Blue Satellite Internet. By
2007 Mr. Weddell became the Founder and President of Cue
Connex, LLC and focused on building a financial model that
partners with municipalities to deliver automatic meter
reading, first responder and carrier-grade IP networks
delivering internet, telephone and television services. Mr.
Weddell earned a Bachelor of Science degree from Indiana State
University.
Bob Evans
Vice President of Acquisitions
Mr. Evans graduated magna cum laude from Indiana University
School of Law, Bloomington, in 1986 after majoring in
Accounting at the Indiana University School of Business, from
which he graduated in 1983. Mr. Evans worked for the
Indianapolis law firms of Bingham Summers Welsh & Spilman and
Kroger Gardis & Regas where his practice was focused primarily
in the areas of Mergers and Acquisitions and Securities
Regulation. Mr. Evans has extensive experience in a broad
variety of transactional work, including asset acquisitions
and SEC compliance work. Mr. Evans also has significant
experience in leadership and operations management, working
for small to medium sized businesses as well as heading the
field operations effort for the 2000 Census in Chula Vista,
California.
Contact
Omnicity Corp.
720 N. Range Line Road
Carmel, IN. 46032
Phone: (317) 818-0023
Fax: (317) 818-0029
Email:
ir@omnicitycorp.com
Website:
www.omnicitycorp.com
Larry Morningstar - Customer Service
Phone 1: 1-877-888-0459 & Phone 2: 1-866-586-1518
FORWARD LOOKING STATEMENTS
This report includes forward-looking
statements that reflect Omnicity Corp. current
expectations about its future results, performance,
prospects and opportunities.
Omnicity Corp. has
tried to identify these forward-looking statements by using
words and phrases such as "may," "will," "expects,"
"anticipates," "believes," "intends," "estimates," "plan,"
"should," "typical," "preliminary," "we are confident" or
similar expressions. These forward-looking statements are
based on information currently available and are subject to
a number of risks, uncertainties and other factors that
could cause Omnicity Corp.'s actual results,
performance, prospects or opportunities to differ materially
from those expressed in, or implied by, these
forward-looking statements. These risks, uncertainties and
other factors include, without limitation, the Company's
growth expectations and ongoing funding requirements, and
specifically, the Company's growth prospects with scalable
customers, and those outlined above. Other risks include the
Company's limited operating history, the Company's history
of operating losses, consumers' acceptance, the Company's
use of licensed technologies, risk of increased competition,
the potential need for additional financing, the terms and
conditions of any financing that is consummated, the limited
trading market for the Company's securities, the possible
volatility of the Company's stock price, the concentration
of ownership, and the potential fluctuation in the Company's
operating results.
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to the business plans of the Company, within the meaning of
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