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Financing Nashville Records - News Out - It has been out all morning. Did you guys miss it or is this a repost?
Publication:The City Paper; Date:Jul 2, 2007; Section:City Business; Page Number:9
You can go to nashvillecitypaper.com and see a picture of Gene.
Financing Nashville Records
Small music label plans to raise money in penny stocks, but the choice can be risky
BY AMYGRIFFITH agriffith@nashvillecitypaper.com
It’s an understatement to call Nashville Records unusual.
The young, small local record label went public nearly two months ago with Pink Sheet stocks, a strategy Row veterans say no legitimate company has used in at least 20 years.
According to Gene Sibbett, president of the company, the move makes sense only because Nashville Records has solid plans for management of artists as well as distribution deals.
“You have to have pretty powerful people and distribution in place,” Sibbett said.
Whether those plans will pay off for investors remains to be seen.
On Friday, Nashville Records announced distribution agreements with River City Movies & Music and Rock Bottom Distribution, which might get Nashville Records’ products sold nationwide at stores including Wal-mart, Borders, Best Buy and Amazon.com.
Also last week, Nashville Records issued a statement saying representatives of four “A-level” artists, according to Sibbett, are in final negotiations to perform songs written by Records’ songwriters for the upcoming USS New York project. The USS New York ship is being constructed with steel from the World Trade Centers, and associated projects will include a patriotic album.
Not an easy ride
But the company has also had trouble. Nashville Records was forced to buy back and return more than 25 million of it’s small, “penny stock” shares, which were then traded at about six cents each. The offering, which the company says came about due to a “breach of contract,” is being considered an unregistered underwriting by company securities attorneys, according to a statement from Nashville Records.
“While the company was founded on expert talent from the music industry, the unique risks associated with being traded on the public market will be minimized in the future by engagement of legal and investment banking advise [sic] before actions of this nature are undertaken,” the statement read.
The murkiness of the situation has a lot to do with the nature of the Pink Sheets. Recently called the “dark matter” of the business world by a Cincinnati Enquirer financial writer, Pink Sheet stocks can be confusing. Also known as over-the-counter stocks, the securities are not traded on the major exchanges. The “Pink Sheet” nomenclature has come about because many are listed daily in a National Quotation Bureau publication called the Pink Sheets.
Financial planners consider the stocks riskier because they are not as large or stable as shares on a major exchange. Sometimes companies choose the Pink Sheets because they’re raising money for an initial public offering, as Nashville Records says it’s doing. Others can’t afford to meet listing requirements. Nearly all the firms have in common a size small enough to be wiped out if a hurricane hits their office, for example, or if there are safety concerns about the product the company sells.
It’s not always easy to find a broker with knowledge of over-the-counter stocks. Many consider the shares to be a few steps above blackjack on the risk continuum. But some local investors — not to mention publications including The Motley Fool and Business Week — believe that, when thoughtfully chosen and closely watched, over-the-counter stocks can be money well spent.
“The perception is, don’t touch them,” said Buzz Heidke, president of Heidke and Co., a Nashville brokerage specializing in small- to mid-cap stocks. “That’s when you make your money, when you have a lot of people who are afraid to get into a certain area.”
Heidke’s firm owns shares in about 20 of the companies, and these were up, on average, by about 45 percent last year, he said. Heidke said the shares trade infrequently, increasing the bid-ask spread. Also, research is more difficult to obtain on the companies.
But on the other hand, companies listed in the Pink Sheets have plenty of room to grow. When one pays off, it can really pay off. Pink Sheet companies aren’t required to adhere to the Sarbanes-Oxley act, Heidke said, and the stocks often come at about a 30 percent discount under what prices would be on a major exchange.
Heidke advises working through brokers with a knowledge of stocks and equities before purchasing any Pink Sheet stocks. He also advises to only invest in companies that are profitable, and to normally not pick a company with a PE above 15.
In the case of Nashville Records, Sibbett said he wouldn’t recommend the Pink Sheets to every record label, but his company has solid enough plans for artists and distribution that raising money publicly will actually be available more readily than in the heavily tapped music industry private investment circles. When seeking investors in the private sector, he said, companies have to raise money they will have to eventually pay back, in the form of loans or venture capital. By being public, they’re raising equity. The risks are higher, but they don’t have the same debts to pay.
“It was just so difficult, today, to raise any money in the private sector,” Sibbett said. “We wanted to do something to attract major artists to the label.”
The company went public in a reverse merger in April and Nashville Records acquired the legal “shell” of a small neuroscience company, Neuroscience Washington, then changed the name and ticker symbol. Terms of the merger were not disclosed. Nashville Records had looked for some time for an appropriate company to acquire in this manner, and worked with a consultant adept at taking companies public through the Pink Sheets.
The company was created to be an answer to what those involve in Nashville Records consider to be failings of the modern music industry, Sibbett said. Corporate strategy will be project-oriented. The songwriters, musicians and catalogues involved likely will already be somewhat established. Nashville Records leaders don’t intend to “drop millions of dollars on one artist and move on,” Sibbett said.
“It seemed like Nashville was selling out to all the big media corporations,” Sibbett said. “We just hoped we could get back to a more traditional way.”
Nashville Records leaders say they can move the company to a higher trading level in coming years. Sibbett said the average cost of an initial public offering on the NASDAQ is $1.5 million. Entering the market as a Pink Sheet company was about one-fifth of that cost, he said.
According to those in the industry, the strategy is unusual. The labels that do go public tend to do so by first achieving a certain level of success and recognition, then by being bought by a public corporation. The company’s viability in the eyes of investors hinges entirely on the marketability of signed artists. Record companies without very prominent artists can have a hard time standing up to the scrutiny of a public offering. Companies can only bank on the perceived value of the parties involved.
But some say it’s getting harder than ever to raise the dollars necessary to lift a private label out of obscurity. Wade Jesson, Nashville-based country editor and director of charts for Billboard and Radio and Records magazines, said Nashville Records sounded “a bit unusual.” But that doesn’t mean he would rule out the possibility of success for the company.
“The business practices are changing,” Jesson said. “The money comes from a variety of sources. I don’t think there are many funding options that would really surprise anyone.” CP
Nashville Records President Gene Sibbett says he chose the “Pink Sheet” route since private funds are hard to find. Steve Lowry
I just bought a Miata for my son off of ebay in Hop town. I am West Nashville on the Cumberland. Good luck to you on this one. A few more bumps and I am riding a ton of free shares that will sit there for my kids. There aren't any hurricanes in TN.
Learning from the pros - some of you are nuts and do not know squat about what you are talking about. I hold a bunch of this stuf and have numerous friends here in Nashville and other places that hold a bunch. This is not my lunch money and I do not need to flip so I can have a beer Friday night. Grow up. Learn to invest and grow. Good luck - I have made a lot of money sitting on a penny.
The nashvillecitypaper.com had an article on 4/23/07 on the OTC. Buzz is a well respected investor. NSHV is the only stock mentioned. I think he implies that it is reputable. Read all the way. If you want to see it yourself, you need to live in Nashville or go to the website, sign up, and go to the personal finance section.
Over-the-counter stocks can offer
over-the-top risks — and rewards
BY AMY GRIFFITH
agriffith@nashvillecitypaper.com
It’s not always easy to find a broker with knowledge of
over-the-counter stocks. On the risk continuum, many consider
the shares to be a few steps above blackjack.
But not everybody. Some local investors — not to mention
editors and writers with publications, including The Motley
Fool and Business Week — believe that, when
thoughtfully chosen and closely watched, over-the-counter
stocks can be money well spent.
“The perception is, ‘Don’t touch them,’” said Buzz Heidke,
president of Nashville-based brokerage firm Heidke and
Co. “That’s when you make your money — when you have
a lot of people who are afraid to get into a certain area.”
Heidke’s firm owns shares in about 20 companies, and
these were up on average by about 45 percent last year, he said.
Over-the-counter stocks are securities not traded on the
major exchanges, typically because the companies selling
the stock either can’t meet listing requirements or are still
raising money. They’re sometimes called “pink sheet stocks”
because many are listed daily in a National Quotation Bureau
publication called the Pink Sheets.
These stocks are considered riskier because they are not
as large or stable as shares on a major exchange. A company
listed in the Pink Sheets can be wiped out if a hurricane
hits its office, for example, or if there are safety
concerns about the one product the company sells. The
shares of such companies trade infrequently, increasing the
bid-ask spread. Also, research is more difficult to obtain
on the companies.
By contrast, companies listed in the Pink Sheets offer significant
room to grow. So when one pays off, it can pay off
royally. Also, the shares are sold at a discount when compared
to those shares of similar companies with comparable
financials, according to Heidke. Pink Sheet companies aren’t
required to adhere to Sarbanes-Oxley, Heidke said, and the
stock prices often come at about a 30 percent discount under
what they would be if their respective companies were on a
major exchange.
Numerous reputable companies are listed in the Pink
Sheets. For example, various community banks have gone
public in this way, Heidke said. In Nashville, Gene Sibbett,
CEO of new local record label, Nashville Records, Inc., recently
led the charge to take the company public through a reverse
merger with a Pink Sheet company. For Sibbett, listing
in the Pink Sheets was a strategic business move.
“It was just so difficult, today, to raise any money in the
private sector,” Sibbett said. “We wanted to do something to
attract major artists to the label.”
Nashville Records took its company public by acquiring
the shell of a Pink Sheet neuroscience company. Shares were
6 cents each when Nashville Records moved into the shell,
and were about the same at press time.
The City Paper does not endorse purchasing shares of
Nashville Records, or any other Pink Sheet, stock. But the
company is an example of the types of entities that do exist
outside the NASDAQ. Nashville Records this month announced
signing several major artists as well as a cross-country
retail distribution deal. An entertainment event involving
“tens of millions” of viewers is on the horizon for this summer,
Sibbett said.
Heidke said it’s important to work through brokers with a
knowledge of stocks and equities before purchasing any Pink
Sheet stocks. He also advises to invest only in companies
that are profitable, and to normally not pick a company with
a price/earnings ratio above 15.
And in the case of investments in small companies, the
adage, “diversify, diversify, diversify” is especially important.
“They’re riskier, so you need a package of them,”
Heidke said.
I agree 100% - and I knew that when I started playing this thing and everyone on this board should have know it by just looking at his other companies and pr's - nothing was hidden.
People do not change; they just become more like themselves.
I guess I do not 100% understand the crook part. Now I do understand the stupid part - mine. I knew better. I performed very little d&d and saw this guy's pattern "before" I bought in. It was out there for all to see. I was just gambling a little with some profit I made when CTXI or whatever it was ran up. I lost. What a fool I am because all along I knew the guy was full of it and would reverse split - I did not know he would dilute the #$*& out of it. I thought I could grab some newbee's stupid money. I was wrong. I was just gambling. Flannery grabbed my money. I have made some good gambles and some bad. I learn a little everytime. I learned this time to follow my gut. Take profit and never - never look back or get greedy - or believe it can happen again. I am going back to investing only in pennies that I have performed some solid research on and that I do not have to watch every minute.
I am from Nashville and have done my work on NSHV.PK. Do your own research, make up your MHUI losses, and stop whinning and thinking you can get this guy back. You will not get him back - wasted effort. Worry about getting your money back and never making this mistake again.
Thanks - I'll take a look. Have a good day.
At this point, I wish they would do something. 1/2 of the reason I enjoy playing a few pennies is the excitement and challenge. This thing is just sitting here. I will not lose much here, but give me some excitement (and hope) - just a little.
Maybe they need some milk money, but why would they not hold a little. Am I missing something?
At least once. I understand that this is veture capital to the guy, but he does not even seem to play that game very well. I'll never get burned here with 5 million and having made a little on the run several months ago. I am simply disappointed becasue I thought this would be a fun one.
Wow - what has happened here. Maybe we are all just waiting.
I bought a few more shares today. Just watching and buying here and there.
I had it in at .024 also. I moved it up .001 and it hit.
I is not 9. I know of 3 (including myself) that have been buying at .0001 and rarely post. There are a lot of others (many more than 9) that will not even admit buying this thing.
I have bought a lot of NSHV. It is my long-term penny pick. Hope I am right about this one.
Good article on the OTC.
Over-the-counter stocks can offer
over-the-top risks — and rewards
BY AMY GRIFFITH
agriffith@nashvillecitypaper.com
It’s not always easy to find a broker with knowledge of
over-the-counter stocks. On the risk continuum, many consider
the shares to be a few steps above blackjack.
But not everybody. Some local investors — not to mention
editors and writers with publications, including The Motley
Fool and Business Week — believe that, when
thoughtfully chosen and closely watched, over-the-counter
stocks can be money well spent.
“The perception is, ‘Don’t touch them,’” said Buzz Heidke,
president of Nashville-based brokerage firm Heidke and
Co. “That’s when you make your money — when you have
a lot of people who are afraid to get into a certain area.”
Heidke’s firm owns shares in about 20 companies, and
these were up on average by about 45 percent last year, he said.
Over-the-counter stocks are securities not traded on the
major exchanges, typically because the companies selling
the stock either can’t meet listing requirements or are still
raising money. They’re sometimes called “pink sheet stocks”
because many are listed daily in a National Quotation Bureau
publication called the Pink Sheets.
These stocks are considered riskier because they are not
as large or stable as shares on a major exchange. A company
listed in the Pink Sheets can be wiped out if a hurricane
hits its office, for example, or if there are safety
concerns about the one product the company sells. The
shares of such companies trade infrequently, increasing the
bid-ask spread. Also, research is more difficult to obtain
on the companies.
By contrast, companies listed in the Pink Sheets offer significant
room to grow. So when one pays off, it can pay off
royally. Also, the shares are sold at a discount when compared
to those shares of similar companies with comparable
financials, according to Heidke. Pink Sheet companies aren’t
required to adhere to Sarbanes-Oxley, Heidke said, and the
stock prices often come at about a 30 percent discount under
what they would be if their respective companies were on a
major exchange.
Numerous reputable companies are listed in the Pink
Sheets. For example, various community banks have gone
public in this way, Heidke said. In Nashville, Gene Sibbett,
CEO of new local record label, Nashville Records, Inc., recently
led the charge to take the company public through a reverse
merger with a Pink Sheet company. For Sibbett, listing
in the Pink Sheets was a strategic business move.
“It was just so difficult, today, to raise any money in the
private sector,” Sibbett said. “We wanted to do something to
attract major artists to the label.”
Nashville Records took its company public by acquiring
the shell of a Pink Sheet neuroscience company. Shares were
6 cents each when Nashville Records moved into the shell,
and were about the same at press time.
The City Paper does not endorse purchasing shares of
Nashville Records, or any other Pink Sheet, stock. But the
company is an example of the types of entities that do exist
outside the NASDAQ. Nashville Records this month announced
signing several major artists as well as a cross-country
retail distribution deal. An entertainment event involving
“tens of millions” of viewers is on the horizon for this summer,
Sibbett said.
Heidke said it’s important to work through brokers with a
knowledge of stocks and equities before purchasing any Pink
Sheet stocks. He also advises to invest only in companies
that are profitable, and to normally not pick a company with
a price/earnings ratio above 15.
And in the case of investments in small companies, the
adage, “diversify, diversify, diversify” is especially important.
“They’re riskier, so you need a package of them,”
Heidke said.
Did everybody miss the news?
The nashvillecitypaper.com had an article today on the OTC. Buzz is a well respected investor. NSHV is the only stock mentioned. I think he implies that it is reputable. Read all the way. If you want to see it yourself, you need to live in Nashville or go to the websiter, sign up, and go to the personal finance section.
Over-the-counter stocks can offer
over-the-top risks — and rewards
BY AMY GRIFFITH
agriffith@nashvillecitypaper.com
It’s not always easy to find a broker with knowledge of
over-the-counter stocks. On the risk continuum, many consider
the shares to be a few steps above blackjack.
But not everybody. Some local investors — not to mention
editors and writers with publications, including The Motley
Fool and Business Week — believe that, when
thoughtfully chosen and closely watched, over-the-counter
stocks can be money well spent.
“The perception is, ‘Don’t touch them,’” said Buzz Heidke,
president of Nashville-based brokerage firm Heidke and
Co. “That’s when you make your money — when you have
a lot of people who are afraid to get into a certain area.”
Heidke’s firm owns shares in about 20 companies, and
these were up on average by about 45 percent last year, he said.
Over-the-counter stocks are securities not traded on the
major exchanges, typically because the companies selling
the stock either can’t meet listing requirements or are still
raising money. They’re sometimes called “pink sheet stocks”
because many are listed daily in a National Quotation Bureau
publication called the Pink Sheets.
These stocks are considered riskier because they are not
as large or stable as shares on a major exchange. A company
listed in the Pink Sheets can be wiped out if a hurricane
hits its office, for example, or if there are safety
concerns about the one product the company sells. The
shares of such companies trade infrequently, increasing the
bid-ask spread. Also, research is more difficult to obtain
on the companies.
By contrast, companies listed in the Pink Sheets offer significant
room to grow. So when one pays off, it can pay off
royally. Also, the shares are sold at a discount when compared
to those shares of similar companies with comparable
financials, according to Heidke. Pink Sheet companies aren’t
required to adhere to Sarbanes-Oxley, Heidke said, and the
stock prices often come at about a 30 percent discount under
what they would be if their respective companies were on a
major exchange.
Numerous reputable companies are listed in the Pink
Sheets. For example, various community banks have gone
public in this way, Heidke said. In Nashville, Gene Sibbett,
CEO of new local record label, Nashville Records, Inc., recently
led the charge to take the company public through a reverse
merger with a Pink Sheet company. For Sibbett, listing
in the Pink Sheets was a strategic business move.
“It was just so difficult, today, to raise any money in the
private sector,” Sibbett said. “We wanted to do something to
attract major artists to the label.”
Nashville Records took its company public by acquiring
the shell of a Pink Sheet neuroscience company. Shares were
6 cents each when Nashville Records moved into the shell,
and were about the same at press time.
The City Paper does not endorse purchasing shares of
Nashville Records, or any other Pink Sheet, stock. But the
company is an example of the types of entities that do exist
outside the NASDAQ. Nashville Records this month announced
signing several major artists as well as a cross-country
retail distribution deal. An entertainment event involving
“tens of millions” of viewers is on the horizon for this summer,
Sibbett said.
Heidke said it’s important to work through brokers with a
knowledge of stocks and equities before purchasing any Pink
Sheet stocks. He also advises to invest only in companies
that are profitable, and to normally not pick a company with
a price/earnings ratio above 15.
And in the case of investments in small companies, the
adage, “diversify, diversify, diversify” is especially important.
“They’re riskier, so you need a package of them,”
Heidke said.
I got watching this one for a nice entry price and the thing keeps going down. Some days it swings big, but Beacon missed it - kind of pitiful.
What has this guy done that is criminal? I have done very well with this stock. Got a little tip bought at .0008 and sold 3, 4, and 5 times higher. Started buying again at .0002. Just because you don't know what you are doing does not make Flannery, or anyone else for that matter, a crook. So far, he has appeared to be very straight forward. Looks like he is slowly building a company. He may fail, he may not. This is a pink sheet stock - quit whinning - you dream more than you think.
Seems to be the challenge for the day. Stalled out.
Your problem is that you get a bit emotional over penny stocks/pink sheets.
Strongtower - I lurk around these boards and own a few Dinars but more important I am also a life long Nashvillian. I live in the west part of town - out in the country a bit. I have livede all around from Goodlettsville to Gallatin back to west Nashville. The school thing is a mess in this town. The biggest mess around (except for maybe Memphis). I went broke and still am paying for private schools in West Nashville. I think the best deal is Williamson County and wish I had done that or Hendersonville. Good luck.
I want a Porsche. When this thing hits pennies I'll be able to buy one. I'll let the wife have a micro.
This is great. I finally played it right - waited till last Firday to double my holdings. THen - pop on Monday. It usually goes the other way.
Long term holders. I am not day to day on this one. Just let a couple mil sit. Got in real cheap.
A little more vol today. This thing gets going with some vol. It maybe getting ready for a price increase.
Thanks - I never saw that. I do not follow SQUM like most of my stocks. It is solid and the bottom is not going to fall. I just sit and wait for the big returns.
None.
I have made some good money here. I have some long term money (not a lot for some people) here and will let it sit and sell real high some day. I think this one is a good find.
This is a great little company and the news that comes out is incredible. Why does this thing not take off?
That is odd - I do not listen to him much, but knows he stays away from these little ones.
Thanks for the link. Cramer's comments were the only bright spot arising from Tuesday. Bush sure has tucked and run. I hope he is just swetting them up. Cramer's point was that the Dems have to come up with something - and homeland security is going to be big since all they do is spend.
Nashville, TN -
Well, undortuantely I beleive he pulled out (maybe not all the way) on the .35 high of last. His name is Heideki and he has a son in the business. I picked it up from my father who is a buddy and investor in the guys Tn Small Cap whatever. That is the best I can do. Did you guys hear Cramer yesterday talking about these security stocks being big after the Dems are in?
Great to see SQUM in the top 20. I have been in this thing for over a year. Got in at .07. Made some good trades and some bad ones. But, this thing has been real good to me and a few of my friends. I got the tip on this one from a small cap manager in TN. It proved to be true. Good luck to all. I have some free shares that I will hold till the end.
750K @ .0008 and then a bunch today in the 2's.
MVEE - No. 1
I got my screen name from this one and learned a lot. GO SLJB - next week will be interesting.
Did this thing just die?