SPOOZ Inc (SPZI)

[Gbathat]

Dear Newbiez, welcome to the board.

I will post this daily and edit it as needed. If anyone has suggestions, please pm me if you can or post it publicly. Much of it is from memory, so any well-thought corrections are welcome.

The following is a short overview about Spooz, Inc and should be considered only as a personal opinion. I tried to be as balanced as possible in the discussion, but please note that I am a shareholder. Please do your own DD to verify all statements. They are not investment advice. I am not a financial advisor or expert. Most of this information is based on DD (due diligence) brought to this board by other members. We try to share information openly here.

About Spooz, Inc: Spooz is a software company that has designed a trading system (Spooztoolz) based in MS Excel. The company claims it represents a paradigm shift in trading and will become a universal standard for trading. You can find out all about it in the Ibox above, at http://www.spooztoolz.com (brief video demos available), and if you are persistent enough, by surfing through posts on this board.

Spooztoolz (Recent) History: The first version of Spooztoolz was released in spring of 2006. However, the launch failed. The primary reason for this failure was the inability of a partner to bring a promised component to the table. Since then, Spooz has revamped the software and now claims to have a completely operational, improved package. This upgraded system (Version 2.0) was supposed to be released in June 2007. However, a few days before the launch was promised, the company entered a quiet period. The CEO, Paul Strickland, stated that the quiet period was at the request of people wishing to inject millions into the company. Since that time, timelines for product release were modified, and limited information is available regarding the cause of the quiet period. The Spooztoolz release was promised for January ’08, and in recent PR’s the company has indicated that it is now available for professional, institutional traders in the Chicago Trading district. Two components of the Spooztoolz package, SpoozChartz and Fractalz, are available for retail customers via the website. Spooz management has indicated that they are working with several large brokerage clients, but details are not yet available. In my opinion, the launch has begun, and exciting months are ahead.

Share structure: The latest o/s (# of issued outstanding shares) reported on this board was 1,588,619,587 (Thanks Martingale!), see post 43797 (Feb 6, 2008). The o/s on Jun 30, 2007 was 1,465,630,979. The dilution of shares (increase in o/s) is mostly recent. Please see post 42261 (Thanks Birdito!) for a summary of the company’s explanation. The total a/s (# of shares including those not yet issued) was reported to be 2.0 billion. In my opinion, dilution makes short-term investing in SPZI potentially more risky than if no dilution was occurring. However, the right news from the company could also drive demand up to overcome this.

Revenues: The company has communicated that revenues from Spooztoolz-related activities will begin this quarter and that profitability could be achieved by mid-year with the business plan at that time (November 2007, ValueRich Expo presentation). Moderator Alliecorp confirmed these reports recently by phone (see post 43462). A recent PR (Feb 7, 2008) confirmed that software-associated revenues were beginning. Revenues associated with 141 Capital, a spinoff company that will utilize Spooztoolz-based systems to trade (more info below), were supposed to begin in Q4 2007, though reports confirming this are not yet available. A PR was issued stating that the 141 Capital shares were issued to Spooz. Chatter on the board suggests $80K was provided in Q4 and that the new agreement with 141 is $25K/week, which would provide the total $1.5 mil promised in 57 weeks from the time of that agreement.

141 Capital: 141 Capital (http://www.141capital.com) is a spin-off from Spooz, of which Spooz owns 120 million shares. However, the 141 Capital (symbol XXIS) share structure is not yet available. 141 Capital will utilize SWARM, a proprietary trading system developed in Spooztoolz, and other algo-trading strategies to profit. It will initially trade from its own accounts. If it establishes an attractive record, it will then consider trading other people’s money for additional profit.

Notable, recent DD from the Ihub community (in my opinion):

Positive:

New staff: A recent PR summarized the hiring of new staff to facilitate the transition from product development to product sales.

The Fedfundz story: An ihub member with alias fedfunz, reported to have viewed live demos of the software and to have been blown away by the product. Indicating he was a professional trader, he also brought trading colleagues to see the demos with the same result. See posts in Ibox. Months later, Fedfunz reported to be interacting more with the company and just recently, reported that he is now employed by Spooz. His identity has been revealed via DD on this board. Jim Hensel (http://www.linkedin.com/in/jameshensel). A recent PR from the company confirmed his hiring. This man has an accomplished record in the financial industry, and thus, I interpret his venture onto the Spooz team as a huge sign of the potential of this company.

FIA Expo Presentation: In November, John Unwin of Spooz was featured on a panel of experts on algorithmic trading at the annual FIA expo. The talk is linked in the ibox above and highlights many of the advantages of Spooztoolz. It was personally surprising that Spooz was invited to be on this panel without publicly available software, and even more surprising that Spooz did not PR this major event.

141 Capital: DD available on the 141 Capital (XXIS) ihub board details the progress of 141 Capital in terms of their registration with appropriate authorities to engage in the business of trading. Please consult that board for more info. Many updates are needed from the company, but the ball is clearly rolling.

Negative:

Dilution: As stated above, the company is issuing more shares and apparently putting some of them into market. The extent of this should decrease as revenues begin. This activity puts burden on the shareholders by driving down the pps or stifling pps increases and also results in a loss of fractional ownership of the company by the shareholder. The company management has suggested in past communications that this loss in fractional ownership is countered by the added benefits associated with the funds raised. However, the critical question becomes, “Are these benefits truly additional, i.e., above and beyond what was promised before?” It is hard to assess this question without more information on the current state of affairs. Please contact the company if you are concerned about this issue. The A/S before dilution began was ~1.5 billion and is now 2.0 billion, which should be the maximum o/s for the foreseeable future. The shares issued are reported to be primarily for employee compensation and restricted, but some appear to be hitting the market as well as the volume of trading has spiked while the pps is fairly stable. This dilution is a recent event. The company did not engage in dilution for the greater part of 2007.

The dilution can also be a potentially positive aspect for a new, long-term investor, since it temporarily floods the market with shares, usually making them more affordable. For people who already bought their full position in Spooz, especially for those that paid a higher price per share than that currently, dilution is a real pain to endure. However, if the company is successful, the long term investor will be rewarded for enduring such pains despite not getting in at the optimal level.

Communication: The Spooz management has not always been perceived to communicate clearly to the shareholders. Part of this perception may be due to a dynamic business plan that is likely being adapted to maximize market share and account for other developments (good or bad). Mystery surrounding the company activity regarding the quiet period and any big clients they may be working with has drawn considerable criticism from some of the Ihub community. All shareholders are anxiously awaiting clarification on these issues.


Again, the statements above reflect my opinions and my perception of important factors relating to Spooz Inc. There is a lot more info out there, but I hope this will get you started.

Welcome aboard,

Gbathat