Traack Technologies Inc (TRAA)

[falon]

GEOTRAQ Inc. aka the Low Floater

Will it become "EPIC"?

Low-Float Stocks: Why Investors Can't Ignore the Risks

http://moneymorning.com/tag/low-float-stocks/

? By David Zeiler, Associate Editor, Money Morning - May 11, 2012


While often ignored in the financial media, "low-float" stocks should be in every investor's vocabulary.

The reason is simple. Low-float stocks tend to be much more volatile than stocks with larger floats.

Simply put, the "float" of a stock is the number of shares available to the public for trading.

It doesn't count shares owned by company officers and insiders.

In this case, it boils down to a question of supply and demand. Because of their limited supply, stocks with small floats can make major moves-either to the upside or downside.

Some companies exploit that same volatile potential in their initial public offerings (IPOs). Last year many tech companies used low floats in their IPOs to ensure a big first-day pop in the stock price.

"The more you constrain demand, the more likely, especially in a retail-oriented name, you're going to see a spike in price," Paul Deninger, a senior managing director at Evercore Partners Inc., told .

The strategy worked for LinkedIn Corp. (NYSE: LNKD) last May.
With a tiny float of just 7.8 million shares - less than 10% of the shares outstanding - LinkedIn more than doubled its IPO price in its first day of trading.

An even more extreme example of using a low float to drive up an IPO was Caesar's Entertainment Corp. (Nasdaq: CZR) in February.
The initial float for Caesar's was just 1.8 million shares, a mere 1.4% of its shares outstanding. CZR doubled in price during its first day, and closed up 71%.

"I've never seen anything like it," Morningstar Inc. analyst Chad Mollman told , in reaction to the low float. "I've been following IPOs, and we couldn't believe it when we saw it. You're creating an artificial demand and supply imbalance that leads to speculation."

The Perils of Low-Float Stocks
But when share prices get inflated by such artificial means, the bubble-like valuation leaves it vulnerable to steep and sudden drops. If a low-float stock gets hit with bad news, it can plummet as quickly as it rose.


One of the “EPIC” low floaters was Vermillion Inc. (VRML), a Pharma/healthcare stock.


VRML had approximately 6,382,166 outstanding shares and 4.6 million in the public float at the time.

On September 11, 2009 the VRML released a press release indicating the U.S. Food and Drug Administration Clears Vermillion's OVA1(TM) Test to Determine Likelihood of Ovarian Cancer in Women with Pelvic Mass.
--First lab test that can indicate ovarian cancer prior to biopsy or exploratory surgery

The stock was selling for a nickel ($0.05) at the time and I believe the company was in bankruptcy.

The stock traded form $0.05 up to $1.29 on 9/11/09 on almost 2 million shares.

The stock top out at $32.24 on February 26, 2010.

http://www.nasdaq.com/symbol/vrml/historical



If GTQR executes their business plan and there is significant interest in their technology they can become one of the “EPIC” low floaters.



Plan of Operation

GeoTraq has not had any significant revenues generated from its business operations since inception. GeoTraq expects that the revenues generated from its business for the next 12 months will not be enough for its required working capital. Until GeoTraq is able to generate any consistent and significant revenue it may be required to raise additional funds by way of equity or debt financings.

At any phase, if GeoTraq finds that it does not have adequate funds to complete a phase, it may have to suspend its operations and attempt to raise more money so it can proceed with its business operations. If GeoTraq cannot raise the capital to proceed it may have to suspend operations until it has sufficient capital. GeoTraq expects to raise the required funds for the next 12 months with equity or debt financing.

To become profitable and competitive, GeoTraq needs to develop and advance the Technology to a point where it can be sold commercially. To achieve this goal, management has prepared the following phases for its plan of operation for the next 12 months.

Phase 1 - Develop the Technology
During the next six months, GeoTraq will focus on Phase I of its business plan which is to continue to develop its technology. Management anticipates spending approximately $600,000 on the development, testing, marketing and sales of the Technology in the next six months.

Phase 2 - Implement marketing strategy
GeoTraq plans to start Phase 2 of its business plan during the next 12 months, which will include an aggressive marketing campaign designed to increase customer awareness of its core product.

In Phase 2, GeoTraq plans to (1) hire personnel for sales, marketing and customer service, (2) create a marketing strategy for the Technology and its products, and (3) implement its marketing strategy on its target market.

GeoTraq has budgeted approximately $300,000 for Phase 2, assuming it receives full subscription under the offering, and expects it to take six months to complete.