Let's start by discussing the difference between a good company and a good OTC BB company.  When
    you buy a listed stock you are buying a company that is owned by so many more people than a bulletin
    board stock.  In giant corporations things like executive pay, what insiders are buying or selling, and how
    much they waste on expense accounts don't matter very much.  In our world these things are much more
    important, think of an over the counter stock as a Mom and Pop company.  In many cases one or two
    people run the entire company and even do the accounting and SEC fillings.  We must determine what
    company's legitimately make or sell a product or service, and not just push paper around to sell shares to
    the public.  A good way to do this is to spend five minutes researching a company and if you can't figure out
    what they do, make or sell, then forget about it.

Sometimes it can seem impossible to find information for OTC BB stocks.  Their rules are not as stringent
as the NASDAQ's and late filings will not get them delisted.  The amount of data required from these
company's depends on the number of market maker's registered and how often they update prices.  OTC
BB stocks are dually quoted on the Pink Sheets and both have helpful websites for a little more
enlightenment.  First of all, read all of the company's most recent  unabridged filling's with the SEC.  The
number of shares outstanding and insider info can be used to estimate float for example.  So if the balance
sheet, cash flow, and income statements are old, are we only to assume that things are looking grim?  Not
necessarily, check their web site or give them a call investor relations or not and ask whats going on.

            Every investment requires careful consideration.  Never jump in to a stock simply for technical
    reasons.  We look at charts first to determine good possible bottoms, then screen out the obvious losers
    with fundamental analysis.  The remaining few are ready to buy as long as they don't go up in price.  
    Remember that for a good technical buy it has to be at the price your imagining on the chart.  If the spread
    is to big wait for the ask to work its way down.  It will usually get closer on the second half of a U-shaped
    bottom.  Ignore charts of stocks that have been finding new bottoms consistently for the past six months or
    more.  Look for charts that have made a clear bottom and are on their way up.  Avoid fundamental disasters
    like the ceasing of operations, closure of many branches, inability to find financing and extreme dilution of
    common shares.  Find companies that have plenty of cash or financing to continue as a going concern for
    at least a year.  Always be critical of press releases and take them only on the facts.  Although finding
    companies that are turning around and on their way up is relatively easy, using money management and
    having the patience to wait for a better price is not.  Think of yourself as an arbitrage trader that finds the
    best prospects with the furthest fall from their high and exploits the most extreme examples.

            One important tool that is often overlooked is the company website.  Where else can you obtain a clear
    and informed understanding of what they actually do.  This is the chance for the company to sell
    themselves to the public.  You can also find descriptions of management with credentials and sometimes
    their latest conference call.  Whether the site is robust or a work in progress, it will give you a clue as to how
    seriously they take their business.

            The best and only reliable way to determine an unlisted stocks number of shares outstanding is to call
    the company directly.  All of their numbers are registered with the SEC and you can find them on their
    website.  By simply making a phone call you can get the inside scoop on liquidity and float.  Most traders in
    the penny stock world do not bother to do this and usually rely on outdated information.  Knowing the float
    will help you determine how the stock will trade when heavy volume comes it's way.
    Micro Cap DD
    PSW Staff
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