BULLS analysing the BEARS, its a case of what's hot when its down.

     One of the greatest mysteries in any investment circle is always asked, "how do those guys make the money, where do they get the hot tips", how do I pick the good emerging company".

     Well, the facts are, there is no hot tips, never was, unless you are involved in Insider Trading which is illegal, but for the normal Investment Buyers it comes down to a couple of simple and basic known facts.

1. If you buy something no one else wants, sooner or later it will be in demand, the other one is, (art works are an example, no value until the artist dies)
2. give any investment enough time and it will appreciate (even the worst property in the wrong position will gain in value)

So, lets look at some famous people and see how they did it.
     Walt Disney is a person who comes to mind, Disney was basically an artist with a few ideas, it caught on and he made a little money, slowly to start with, but, he now had cash flow, next he needed a large property site to build his visionary project Disneyland, which had never been done. Did Walt go and buy the best land and apply the old real estate principle,... position, position, position,... no.
      Walt select a property that no one wanted out on the crockidile and mosquito infested swamps of the Florida everglades at bargain basement price, well, we all know how the story ended.

     Lets look at Warren Buffett, is Warren really smarter than the average yogi bear, or is it that he just never sells and lets time do the work and uses asset appreciation to buy more. Antique collectors do the same, buy something that maybe low or fair value and hold it for 10-20-50 years. Andy Warhol was a mad collector of junk, now its worth a mint, because it is a time capsule of an era that has passed.

          What about J.P Getty, the wealthy oil tycoon, well his biography is inspiring to and budding entrepreneur and Investor.  Getty was a small unknown wild-catter at the time, very risky in buying or leasing property that had only duster holes. Well, Getty virtually went broke trying, but he knew, in time, drill enough holes and sooner or latter they come home. Getty worked the rigs himself, drove around in beat up trucks and used second hand junk to build his business, one day he asked his Accountant if the company had the money to buy a piece of machinery, which his Accountant reply was, J.P. your a multi millionaire,... he didn't know because he worked out on the rigs.

     Australian John D'arcy Knox is a classic example, Knox retired in London as a mega millionaire from the Mt Morgan gold mine. He then believed he could find oil in Persia, except for one big problem, this was 1900 and no one needed or wanted oil. Knox operated an old percussion drilling rig and essentially went bust finding oil, except for the last hole, but he had no money to run a pipeline 300 miles to the Persian coast and there was no town, refinery or holding tanks nor customers. So he convinced the British Navy to convert its fleet from coal to oil, next he sank some old barges for a wharf in the mud at a place to become known as Aberdeen. Anyway to cut a long story short, this who venture was the start of BP, British Petroleum.

These example all have 2 key elements that created untold success and wealth. 

a). Time, every banker knows the value of time in an investment, without time noting would appreciate nor could interest be charged, likewise investments may need to wait for time to create a demand.

b). Ownership, every investor knows that ownership means you can hold the investment or hand it down to the next generation which can be converted into another investment or cashed out.

Once these two basics can be understood, then its an easier matter for the bull to analyse Bear markets as they fall to more attractive prices and deals, again a depressed market is highly attractive to demand a top bargin. Bull markets can be more nerve racking as no one knows for sure when they peak and tip over, but Bears are usually an cashed up investors happiest time due to the wide variety of options and choice.

Financial Armageddon diffused, emerging companies keep working.
     The G7 recently tipped a $450 Bil write off on sub prime crisis, speculation is it could hit a trillion dollars. Regardless that the Analyst, Banks and Fed's are pulling every lever to avert a global melt down and simply don't have the answers, the fact is cataclysmic meltdown just won't happen, there will be no Armageddon or nuclear winter, or aliens landing on earth, so calm down and get back to work, the future looks bright. Why not?, you ask.
      For a start, it never has happened before and hence history cannot repeat what has never happened, sure there were depressions, market corrections or economic adjustments, some where harsh others a soft landing, but, we all survived, built houses, drank cheap wine and still had the Friday night fish & chips. No, the current market adjustments is not WW3.
      One of the fundamental facts of life on earth is, "life goes on", very little changes in one own life time, hence we all can adjust to the fluctuations of life quite well. Globally, man is in control through sheer numbers and co-operative effort, man generally overcomes most problems. Man can change the course of rivers, dig mines over a kilometre deep, build vast canal like Suez or Panama, construct space programs, farm vast areas for food, build irrigation system, create new crop strains, dam rivers, and, create fiscal structures so vast that cannot be easily toppled, we live in an age of absolute enlightenment and untapped ability, since mankind has eradicated superstitious and spiritual phobias of the past.
    The global stock markets aggregately exceed 55 trillion dollars, so a market correction of a $100 billion is a mere drop, major banks move capital into the trillions every year, so a loss of $450 billion is not a big problem, the credit system is 'free-floating' and can be cranked up to trillions of dollars to stimulate industry, governments can cut taxes to the bone to stimulate economies, and greed of the pent up wealthy will always come to the surface to drive economies as they make more money, no, Armageddon is not going to happen.

 Recently, Warren Buffett announced his organisation would buy up a huge swag of sub-prime default debt, probably at a large discount, just goes to show you how valuable sub-prime debt is worth, obviously more than the banks think, so why does Warren think debt is an asset, well given enough time and sooner or latter the debt must be paid, plus all the arrears, penalties, defaults etc... what a great deal. Today, in the 21st century corporations are virtually more powerful than some countries and have more economic clout. So is there really a sup-prime crisis, no. 
    The labour force runs into the 100s of trillions of man hours, property values globally is $1000s of trillions, so there is a huge reserve of assets and resources behind society six billion inhabitants.
    Ever since the Egyptians, man has been trading, doing business and making a 'buck', and it ain't gonna stop, its natural, its what humans do, we have been doing it ever since the Tower of Babel and we are still doing it, building, eating, drinking, trading and making a dollar.

    So this is good time to form a new strategy for the next  venture and lets get on with building new companies, new inventions and building our own nest egg. Forget the media who over hype everything from failed States to the burial of some politician, it has no impact, the media is a poor barometer of real life on earth, also ignore the so called analyst or the hocus pocus nonsense of financial gurus, they really know little. The reality is tomorrow the sun will shine, earth keeps turning.
    The eradication of the dinosaurs was a good thing, melting polar ice may be an indicator of a warm and tropical earth conditions, there is still plenty of oil, coal, wood, corn and all other commodities, all we need is better utilization and management, recycling and ecological efficiencies are here to stay and so on, so the next 100 years look bright once a few inter-country and cultural conflicts are sorted out.

     One Australian emerging company with a revenue fluctuating between $2mil to $7mil with a deemed company value of $24 million is 'Australian Emissions Control' has already installed its patented Emission Reducer into Australian and USA Power station applications, which, has produced startling results between 50% to 80% particulate reduction from chimney stacks. Governments will soon start to legislate and make mandatory demands in the next few years, there will be only a few companies that will have the base knowledge and capacity for zero* emissions control, meaning emissions low enough to be no threat to natural ecological eco-system or climate.
     This patented apparatus is located (installed) in the high velocity ductwork or smoke stacks leading to the air pollution control (APC) device. It uses both electrostatic and fluidic dynamics methods to pre-treat dust or particulate matter entering the APC, agglomerating small and large particles together creating larger more easily collected particles and reducing the number of particulate matter emitting from chimneys, stacks, vents or exhausts, such as foundries, hospitals, car plants, paint, petro-chemical, power stations and the like. 

      The electrostatic method charges the dust to half positively and half negatively in the treatment zone then mixes them in a specially fluid dynamically designed mixing field. The fluidic agglomeration method uses a highly specialized mixing regime to increase the interaction and therefore impact rate between large and small particles, agglomerating them. The installations to date are impressive;

*according the the Australian OTC Bulletin Board definition: Zero emissions means emissions that equal the natural ecological cycle of any particular substance for its neutralisation or absorption and thus rendering the emission non threatening to life, ecology or climate over any given period. zero emission does not mean nil emission.

• First Prototype Emissions Reducer - Delta Electrics at Vales Point Australia.
• First Full scale commercial Emissions Reducer in Australia - Horizontal - Vales Point.
• First Full scale commercial Emissions Reducer in USA - Horizontal -Mississippi Power - Plant Watson -  Gulfport, MS.
• Second Full scale commercial Emissions Reducer in USA - Vertical - Georgia Power - Plant Hammond - Rome, GA .
• Second Full scale commercial Emissions Reducer in Australia - Horizontal - Tarong Energy.
•  Third Full scale commercial Emissions Reducer in USA - Horizontal - The Empire District Electric Co. - Asbury Power Plant -Asbury, MO.
• May 2006 - Fourth Full scale commercial Emissions Reducer in US - - Horizontal - Dynegy Midwest - Havana Power Station  - Havana, IL, USA
• June 2006 - Fifth Full scale commercial Emissions Reducer in US - first Wet Scrubber installation - Horizontal - Tennessee Valley Authority - Widows Creek Power Station - AL -USA -June 2006
• November 2007 Commissioning - First commercial installation in China - Vertical - China Light and Power - Castle Peak Power Station - Hong Kong, China

Who could benefit from an  Emissions Reducer?

• Coal fired electricity generators
• Cement producing plants
• Paper pulp mills - black liquor, wood waste and lime kilns
• Coal fired industrial processes.
• Metal Smelters
• Sinter Planets
• Mining Processing
• Oil fired boilers
• Other installations with APC equipment for particulate control.

Why should operators buy an Emissions Reducer?

• Meet boiler MACT requirements
• Meet Continuous Assurance Monitoring (CAM) Plan
• Reduce fine particle emissions to meet EPA requirements
• Reduce opacity
• Lessen the impact of boiler upsets
• May help reduce other pollutants e.g. mercury
• Reduce greenhouse effect due to fine particulate
• Very low pressure drop across Indigo Emissions Reducer
• Reduce running costs of other emission controls, eg SO3 injection
• Satisfy legislative requirements e.g. PM2.5
• Can burn lower grade or alternative fuels for lower operating costs
• Low purchase price and operating cost
• Very short installation time and retrofit ability makes an Emissions Reducer attractive to large industrial plant owners.
• Excellent track record for installation speed, versatility and quality
• In lieu of upgrading existing APC equipment
• Extend bag life in a fabric filter

Hence, it is increasingly apparent, that mankind can and will rapidly change course with new technology to meet climate change objectives, "we have the technology and knowhow".

    In January 2005, this market has set new International and Australian history with many benchmarks for operation of a deregulated stock and capital market for small to medium enterprises. These SME are emerging and developing corporations essentially from start up to significant companies with net tangible assets or revenue up to A$50,000,000. 
   The market operates on a pure OTC platform and is the first successful SME capital market in Australia since concept back in 1997,  when it was launched.  New start companies have successfully grown into Stock Exchanges listings, and its top listed company exceeds A$100 mil in gross assets remains on the OTC market. The market records share movement of about 200 million shares per year and regularly out performs smaller regional stock exchanges, furthermore there is an undercurrent of big and small investors who want a slice of the action. 
         Interestingly, the USA for a long time has legislation ( SEC 1934) in place for "safe harbour" offerings or trades by unquoted companies conducting their offerings ex USA 'soil'. According to Stephen Burrows, he sees the Australian OTC Bulletin Board under Australian legislation similar with global growth. It is an ideal market for emerging foreign companies to list so they can attain legislation clearance to conduct foreign offering back into the international arena. Thus a recent announced by the Australian Unlisted Capital Market that it will expand its Foreign OTC Boards to provide a platform for European companies who desire to conduct offerings or shareholders to re-trade securities without the crippling cost of re-incorporation and prospectus drafting.   

"calling Houston... we have a problem...search www.otcbb.com.au for a engineering investment"

ADVERTISE HERE and 
SEE the RESULTS

     The proposed new platform will include updated rules, policy and procedures for foreign companies who will need to meet Stock Exchange type protocols to be eligible for an OTC listing (subject to final ratification), such as;

• minimum actual physical trading history for one year and $1,000,000 in gross receipts,

• filing of a registered Prospectus per jurisdiction of incorporation, or similar quality document with an Investigating Accountant and Investigating Attorney report, 

• minimum shareholder base of 100 holders,

• minimum liquidity cash reserves of $250,000,

• minimum share volume issue to create a market free float of securities,

• a proper valuation of the company assets, IP etc,

• bi-annual Fiscal Reporting,

• appointment of a licensed Security Dealer/Broker,

     It is held that this will ensure companies will meet most country securities laws and provide higher quality of reporting, transparency plus being potentially more investment attractive. The Bulletin Board will be closing some markets and re-vamping certain boards of the system to meet higher investors expectations. 
    Obviously  and Australian domiciled Start-Up corporations under the Australian Corporation Act 2001 will have other exemptions, thus an advantage in the short term to kick start their business.

     Recent surveys and industry scrutinised interviews have shown that higher compliance ratios and parameters are more appealing, regardless of the fact that some companies will not be able to reach the threshold criteria. Obviously these new standards puts the prestigious Australian OTC Bulletin Board at a level equating to Stock Exchange standards. this is also borne out by the increasing number of renewals listing on the Market and success of companies shareholders resales and identifying capital resources.

(market code B-102-SIG) holds an international patent for what can be described as Photon Emitting Cells for use in aerospace, aviation, military, rail, oceanic or ports & harbours.
     

The company recently underwent a major restructure in order to conduct its initial offering of 2,500,000 ordinary shares for shareholders to underwrite to raise A$2.5 mil to commercialise the company.  2nd stage offering will be an additional $2.5 sought in 2008 for an Exchange entry. Total issued capital is geared to 18,350,000 ordinary shares in 2006 spread across the Top 20 holders with management diluted by about 30-35%. Already early smart foreign investors are taking up some share script.
      Photon Emitting Cells are based on the collection of solar short wave photons/protons into a duplex wall cavity containing a liquid medium that becomes stimulated (excited) and gives off its own long wave spectrum including visible light, thus the object is illuminated during the day or in twilight and emits light in darkness/blackouts for 12 hours or more before being naturally recharged the next day. Reputedly nothing else compares to this fool-proof system.
     Unlike solar panels which do not store electricity and need a battery plus maintenance or cease to operate in twilight or darkness, the Photon Emitting Cell is a collector and storage medium and needs no electricity, external power or maintenance for possibly up to 10 years. This means aviation airport signal, ports & harbours beacons and rail staffs/signals can be assured to operate in all types of hazardous or hostile environments without continuous maintenance. When Government licensing of low background atomic particle applications comes into existence in the near future, will enhance the device even further, with the company at the forefront of this globally demanded system. In military terms, the system provides a non heat, non glare 'flat light' without side reflection, thus signalling may have certain stealth type features being only visible at precise grid co-ordinates.
    
For more info contact your local OTC adviser or call direct.

 Editorial
"Turkey's gone Mad"
Big companies emerge out of SMEs.
      SMEs may conduct multiple securities trades and shareholder resales depending on the type of Offering & Disclosure document they issue, ie 1). a Private Placement Offering, or 2). an OTC Offering, or 3). Reporting Offering or an 4). Prospectus, thus trades on a company register may range from 20 to 500 accumulated over a few years depending on how the quota system is utilized to conduct a) a Registry Book Build, or b) to raise equity capital on a bi-furcated structure which involves a two tier structure of i. wholesale placements offerings ii. speculative sophisticated capital re-sales, and ii. semi institutional offerings. 
     Emerging companies must be very careful not to indulge or create a scheme to circumvent Prospectus laws in their own country, regardless of the exemptions available via the AU-OTCBB.

       When the Global Stock Markets rise and fall and all the 'turkey's have mad', how does this affect SMEs, many Investors and Directors ask themselves, "does it affect my partly filled offering", or Investors ask, "does it affect my investment in an SME?". 
     The foundation of SMEs are essentially emerging family companies in the $1.0mil to $50mil category with family money invested in the SME by the Founders and a core of 5 to 500 supporting shareholders built up over the years, thus the Founder has a greater vested interest in the prudent operations of the business and its success. Bear in mind that the OTC market legislative ceiling for corporate size is 450 mil in net tangible assets or revenue, thus as we have seen some OTC companies exceed $100 mil in gross assets, yet remain eligible for a OTC trading. 
     It is worth noting that the Australian OTC Bulletin Board is a very serious market with relaxed guidelines to allow emerging companies to 'kick start' themselves, however there are some strict Rules that cannot be flaunted.

Big companies on Wall St Stock Exchange must have a minimum of $100 mil (USD) in NTA to list, however a large SME could have $100 mil in assets yet carry $60 mil in debt and still qualify for an UA-OTCBB entry since its NTA is under $50mil, hence we see a wide mix of companies on an OTC market, SMEs can be quite big yet others are emerging with only $500,000 in assets.
   SMEs have simple transparent company structures  without a lot of the corporate veneer that make the Conglomerate so glossy. Nor do SMEs have super slick accounting methods adopted by BIG companies that make analysis obscure, SME share base can range from 1,000,000 to up to 500,000,000 shares depending on the issuance price, executives are easier to access for information and negotiation. 

With SMEs, it's a case of WYSIWYG, "what you see is what you get".

   SME Directors are more accessible and information can be demanded by a phone call since there is little ability to manipulate the SME share price or conduct insider trading. SMEs may have more appeal either in a Bear or Bull market, since many Investors are looking for alternative potential investments. SMEs have a resilience to market fluctuations and simply get on with their business regardless of economic or market movements. The old saying still stands 'there is safety in numbers", even Turkeys know this principle, a spread of SME investments is often wiser than just one, you just never know which one will lay the golden egg. 

Special Edition
SMEs weather the Stock Exchange perfect storm
      Over the last few weeks, many companies have ask, how does the global stock market correction affect the AU-OTCBB, this is an interesting question. Historically the AU-OTCBB has seen a number of Stock Market corrections and fluctuations over the last 10 years, however in nearly every instance, its passes without a blip to SMEs, why?
      It all comes down to trading time frames, SMEs at best operate on a T+10 or even monthly, a 30 day cycle, thus by the time a correction occurs on a Stock Exchange the event has passed and its seen in hindsight as very little significance. SME are directly affected by Stock Market knee jerks or inclined to jump out the office window.
       By and large, SMEs in the $5mil to $50 mil bracket are insulated and somewhat protected against the erratic daily re-actions of the global Stock Exchanges, which operate in 'real-time' trading. Start-Up SMEs are outside the market influences due to the lag time to attract investments and gear up.
   SME also are pre-occupied in making products and providing services (real business) as opposed to creating business out of inflated share movements, thus are not obsessed with daily stock prices, even Investors in SMEs have a much slower reaction to SME share pricing thus don't generally panic, however, on a long term outlook SMEs are affected indirectly through general economic slowdown, oil prices and exchange rates. When a listed company shares go from $75 to $0.75c in a month, like some did in the DotCom boom/bust clearly tells us markets can be over priced
    Conservatory, the AU-OTCBB will look back on the event of Jan 20, 2008 market crash as business as usual with not much impact as past market corrections, even as the events unfold, a number of emerging SMEs and Start-Ups are planning new offerings, new business and developments, Investors are still interested and activity with SMEs is expected to maintained.

     Stock Market volatility is more useful for the big institution Investor or the astute professional investors to trade stocks between the highs -v- lows of daily market fluctuations, SMEs and their investors take a much longer objective over over many month even years, hence this evens out any volatility within the SME.
     Overall an forward looking SME CEO and Board of Directors will see past the current storm on global stock markets and be already moving to counter balance its effect.