Editors Note: There are 7 photos associated with this press
release.
Investor Insight announced today that is has initiated coverage
on Psychic Friends Network Inc. (OTCBB:PFNI) with a $2.55 target
price, commenting that "the upside potential is sizable," with the
outstanding marketing opportunities and distribution pipelines
available to the firm offering huge membership growth
potential.
Company Overview - Summary of Opportunities
The Psychic Friends Network (OTCBB:PFNI) first hit the airwaves
back in the 1990s, and was a huge cash-generation success story.
Circumstances beyond the company's control compromised its status
as a going concern at the end of that decade. With new
technologies, better marketing apparatus, and a more efficient
advertising structure, PFNI is back to recreate the magic.
-- The rapid globalization that has occurred over the past 10 years opens
international markets to service firms like never before. The potential
for penetration in overseas venues is impressive.
-- The proliferation of mobile communication devices makes connecting to
customers easier, more economical, and more fluid than ever imaginable
in the '90s.
-- Video interfacing options personalize the connection between customer
and advisor to a level not possible with the telephone.
-- Advances and streamlining in the area of payment options help tighten
verifiable commerce exchange, significantly lower delinquencies, and
increase cash flow and income capture.
-- A myriad of marketing avenues through multimedia platforms and bundling
partnerships with successful services firms should help catapult the
company's image to new heights of recognition in the popular culture.
-- In the past decade, the psychic/astrological space has expanded its
footprint in the realm of popular culture making now a more optimal time
than ever for the company's re-establishment.
-- The industry as a whole has expanded to over $2.5 billion in revenue. It
is highly fragmented, with few recognizable players, leaving the door
open for a firm like PFNI to gain immediate traction, and capture
sizable market share.
-- The management team that propelled the firm in the '90s is back with its
past experience, vast customer databases, and an even stronger stable of
industry contacts.
-- Lower cost structure, opportunities for partnerships with brick and
mortar shops, and increases in the potential for advertising revenues
all help bolster the claim that the company is re-engaging the market
place at the perfect time.
-- The firm expects to generate revenues from a variety of sources
including its benchmark phone network, advertising on its website and
social media platforms, mobile app subscriptions, PSMS text content
(daily horoscopes, for example), and video interfacing on mobile and
website platforms.
Potential Sources of Revenue for the Company
PFNI is in its developmental stage, and thus is in need of
substantial funding to capitalize on the huge potential revenue
opportunities that exist in the current marketplace. Estimated
costs for the coming year are approximately $1.2 million; real
money-but a fraction of potential revenues awaiting the model 12-18
months out.
The company is already beginning to make strides in the right
direction with an appearance at the Daytime Emmys this past summer,
a recent presentation at a San Francisco investors conference, the
launching of its tricked-out 2.0 version website, and the
development of its mobile app platform.
Based on PFNI's ability to secure the proper financing, and
execute on its game-plan, the upside potential is sizable. In a
sense, the stock can be viewed as a long-term option, with no time
decay or expiration date. Applying the company's aggressive
projection for sales and net income, we arrive at a valuation of
$2.55 on a 15x forward P/E basis. In the near term, we believe that
the "option" value of owning the firm's revenue stream potential
would be reasonably enumerated at $.80 to $1.00.
The Numbers Indicate a Very Promising Future for PFNI
Second chances abound in life-relationships, sports, etc. - but
in the business world they are quite rare. Ideas typically have one
shot at success; a window opens only briefly. It is not often that
an idea, a business schematic, is afforded an opportunity to come
to the starting line with the knowledge that its model has worked
in the past, and can work again. That is what I believe the folks
at the Psychic Friends Network (PFNI) are looking at today. They
are in possession of a proven formula, a cash producing business
model, that has been deployed before, experienced smashing success,
but whose life cycle was cut short by external forces beyond their
control - and more important, forces that are no longer
relevant.
In fact, various developments in the marketplace over the past
10 years make for a more attractive landscape than PFNI could ever
have imagined in the 1990s.
A Brief History of PFNI
The Psychic Friends Network was launched as a concept in 1990.
If you were born prior to the mid-1980s, you know the name. It's
astonishing brand recognition was achieved in a very short time
window through a targeted system of infomercials, print, radio and
direct mail marketing that would be the envy of many Fortune 500
companies. That marketing mechanism produced $4 of revenue for each
$1 in advertising expenditure.
This outstanding marketing-to-revenue conversion ratio fueled
rapid growth. From 1993 to 1999, PFNI generated more than $1
billion in revenue, delivering psychic advice and daily horoscopes
on topics ranging from financial matters and relationships to
health, family and career concerns.
PFNI's network of outsourcing, and at-home employment, was low
cost. Their state-of the art (at the time) telecom system was
efficient. Their celebrity-centric marketing scheme was attention
getting. At the peak of its popularity, the operation was averaging
14,000 calls and nearly $600,000 in revenues each day.
In the mid-1990s, a group of activists sought to address the
900-number business in the telecommunications industry. Government,
never an institution to miss out on an opportunity to meddle in the
affairs of the private sector, started down a road that would
eventually render the business environment in which PFNI operated
so hostile that the company was forced into "retirement."
By the latter part of the 1990s, the FCC restricted telecom
companies from enforcing payment from customers for delinquent
bills, and prohibiting firms such as MCI and AT&T from
suspending service for non-payment of services. Essentially
regulatory changes allowed telecom customers to retain their phone
service...while not paying 900 number charges. The progression was
easy to forecast: Telecom firms began to withhold fees owed to
service venders such as PFNI, eventually pushing the firm into
bankruptcy in late 1998. Although originally intended to cripple
the seedy phone sex business, the laws served as a death blow to
otherwise legitimate operators in the arena. In the end, theirs was
a very solid overall business model, undone by outside forces.
It is important to note that most businesses and industries die
out due to declining demand for product or service. This is clearly
not the case with PFNI, its industry, or business model. And in the
interim, revenues in the space have more than doubled in the U.S.
alone.
Fast Forward to 2012:
The 21st Century Version of a Winning Concept
In 2009, the original management team secured $400k in capital
to begin a revitalization of the concept. A reverse merger in the
beginning of 2012 raised an additional $780k. The re-launch has
begun: PFNI, with an experienced team, has the potential to regain
its standing, and use its hallmark brand to gain significant market
share in a multibillion-dollar marketplace.
Consider this: In the '90s, the firm was able to generate
enormous revenues with only the telephone system and television
advertising. The world is a very different business environment
today-one that should prove to be quite advantageous to a services
concern such as PFNI, whose sole focus is the overall experience of
its customers. Imagine the possibilities today. Let's examine the
variables:
Market Overview
-- Market expansion: The market for psychic services has grown to an
estimated $2 billion annually in the U.S. alone and more than $2.5
billion around the world. PFN has the brand recognition and management
team know-how to capture a sizable portion of that business.
-- International markets: During the 1990s, the company only had market
presence in the U.S. and Canada. The global business construct has
changed since then. E7 nations (China, India, Brazil, Mexico, Russia,
Indonesia, and Turkey) account for a full half of the population of the
planet...but only 20% of the GDP. G7 nations are 11% of the
population...yet account for 50% of the global GDP. This is changing.
Purchasing power and disposable income in E7 nations is rising
dramatically. Culturally, many of these nations are quite receptive to
the astrological theme (for example, Eastern Europe, China & India).
Advances in the technology of advertising and multimedia communication
and content distribution make breaking into these new markets attractive
and relatively low cost. These growth opportunities overseas were not
even on the table back in the '90s. Economists project the E7 will
surpass G7 nations in GDP around 2030. This could be the largest area of
growth in coming years. The new website, up less than a month, has
already experienced hits from individuals in 52 different countries. The
possibilities in overseas venues are enormous.
-- Rough economic times: Hardship and uncertain times drive people to seek
outside advice, sometimes from unconventional sources. The U.S. is
immersed in the longest period of economic stagnation and the most
anemic "recovery" seen since the 1930s, and globally, things are equally
bleak. Most economists forecast that an unwinding of the debt crisis,
and a true global economic recovery, will be years in the making. In
times of uncertainty and strife, people seek out alternative sources for
advice, direction, comfort, and consultation. In fact, according to a
recent report from IBISWorld Market Research, over the five years from
2007 to 2012, while most other industries were suffering the ill effects
of an economic downturn, the psychic services industry grew at an
average annual rate of 2.0% to an estimated $2.1 billion. Like a cloud's
silver lining, global financial problems create a very solid economic
environment for the new launch of PFNI's business endeavors.
Technology and New Media
-- Technological innovation: The world is a very different place than it
was a mere 10-12 years ago, and we communicate in a much different
manner. PFNI marketed, and generated massive revenues, utilizing only
the telephone, basic television, and the mail system. Imagine what
opportunities await the company in today's environment. The creation,
and exponential growth of social and new media platforms such Facebook,
Twitter, Skype, satellite radio, the internet, internet video, mobile
apps, etc., should equate to a significantly larger addressable
audience, and near endless global potential client pool.
-- Mobile device market: Advances in mobile technology present enormous
opportunity for content- and service-driven firms such as PFNI. Branded
content can be accessed over the web by any mobile device-and there are
a great many of them in today's marketplace. As of Q3 2012, there are
82.2 million smartphone users in the U.S. alone. That number is expected
to grow substantially in the coming years, both in the U.S. and
globally. To capitalize, PFNI is currently working on the design and
implementation of various mobile applications. These include apps that
will be downloadable from third-party stores such as iTunes, the Android
app store, and Blackberry. Streaming content capability could provide
live interfacing on the go. Free downloads of apps, coupled with short
trial periods and subsequent subscription fees, will form the backbone
model for monetizing this end of the business. The firm also plans to
provide a simple fee-based text service through its PSMS platform, where
daily horoscopes and other customer-specific content is sent to members
via text messages. Discounted monthly packages could prove to be an
attractive member retention option.
For customers with specific advisors they wish to speak with,
text and mobile app options will allow them to schedule
appointments with their selected advisor, when that advisor is
unavailable - rather than waiting on hold or terminating a
connection. This represents another example of technology -
unavailable even 10 years ago - streamlining the client/advisor
process.
Bill-to-mobile will provide customers with a direct payment
option through their existing mobile service provider. Data
estimates relating to the explosion of mobile application
technology use is all over the map, but one thing is certain: the
near parabolic trend.
Technological Advances
-- Better method of payment: Gone are 900 numbers and the collection of
payment through third-party telecommunication companies. Refinements in
the credit card payment process (as well as the advent of PayPal, debit
cards, text pay, bill-to-mobile, etc.) have helped streamline verifiable
commerce exchange for all potential platforms such as web chat, phone,
Skype, mobile apps and others. This will not only make it easier for
clients to make payments, but from an accounting perspective, will aid
in significantly lowering delinquent accounts receivables levels, and
thus increase actual Cash Flow (CF), and net income. Some estimates
project that close to 50% of all service commerce is now conducted over
the web-up 10-fold in the past decade in large part to the ease and
security of payment.
-- A more personal touch: Video interfacing of the kind provided by Skype,
Apple's FaceTime, and website video chat formats, brings clients face to
face with their advisors in a personal manner far exceeding that of past
decades, enhancing the personal connection of clients and their chosen
psychic. For tasks such as card reading, the actions of the advisor can
now be viewed live, furthering fortifying the experience. Rather than
the reputation of "fortune tellers," these individuals serve as
therapists and trusted advisors, a relationship that benefits from an
increased human touch. To provide some perspective: Skype alone has
recently reached 70 million downloads on Android mobile platforms, has
recorded a peak of 38 million simultaneous users, and logged an
impressive 115 billion minutes in the prior quarter. People have become
quite comfortable with the use of this medium.
-- The Website (PsychicFriendsNetwork.com): The new site had its soft
launch in early October of this year and the 2.0 version is anticipated
to be fully operational by Q1 2013. It will provide the hub from which
all web and social media based traffic/business is conducted. Live audio
and video chat, instant messaging, and communication forums are a few of
the features that will provide a significant upgrade to customers from
the competition. Online merchandise vending and gift card sales provide
an additional revenue stream. And finally, advertising on the site
itself should prove profitable.
Brand Building
-- Marketing Efficiencies: As discussed above, PFNI's opportunities for
conducting business and providing core services to clients will be
enhanced dramatically. So will expanded and more diverse marketing and
advertising avenues. All of the new technology pipelines, available for
distribution of services being discussed in this report can be used to
develop sophisticated, targeted marketing programs. The firm plans to
use this to broaden the demographics of their prior customer base,
target and capitalize on various international markets, and rapidly take
revenue and client participation levels to heights exceeding those of
the '90s era.
With that in mind, it is important to remember PFNI's past successes. During
its peak call volume periods in the 1990s, 14,000 calls per day were coming
into the firm's operation. In retrospect, it's astonishing to think nearly
90% were generated through good, old-fashioned television advertising.
Today, the few serious competitors in the marketplace advertise almost
exclusively on the internet. Yet infomercials remain extremely effective,
and PFNI was essentially the king of them in the past-winning multiple
awards and ranking in the top 40 infomercials for 178 straight weeks,
according to the industry's Jordan Whitney Greensheet.
-- Marketing Distribution Channels: The hi-tech communication age was in
its infant stages in the 1990s. Few at that time could have imagined the
magnitude of expansion/reach we see today. Multimedia and communication
platforms such as Facebook, which reaches nearly 700 million users
worldwide, and Twitter, with over 500 million subscribers, are two
recognizable leaders. Cell and smartphone use is skyrocketing along with
the use of various multi-media apps that accompany them.
-- The Potential for Bundling: The potential for targeted partnerships,
which could further refine PFNI's marketing focus, is highly promising.
Affiliate-driven traffic, banner ads programs, and algorithmic email
distribution could further enhance the marketing strategy of the
company. A potential example would be a partnership with Match.com (10
million+ members) or eHarmony (20 million+ members) for the relationship
angle. Another would be the top-rated late-evening radio show in the
country, Coast to Coast, a forum focused on the supernatural that
attracts over 4.5 million listeners in the U.S. every night. Finance,
health, and career are other areas of possibility.
-- Targeted Marketing: The company expects to see their marketing to
revenue conversion ratio expand from the previous mark (4 to 1) to an
even healthier 5 to 1. Utilizing a focused, yet comprehensive approach
implementing the old print, radio, direct mail and affiliates, with the
exciting new opportunities in the social media and mobile app area.
-- Celebrity Endorsements and Popular Culture: The astrological/psychic
space has gained legitimacy in popular culture in the past decade. Shows
such as Medium, The Ghost Whisperer, and The Housewives series, along
with numerous cable psychic/supernatural themes, post impressive
followings. Movies such as The Gift, Sixth Sense, AfterLife, and dozens
more pertaining to the psychic realm draw millions of viewers. World-
renowned psychic personalities such as John Edwards, Ron Bard, Barbara
Powell and James Van Praagh are more successful today than ever.
Hollywood and the entertainment industry has long been fertile ground
for the psychic realm, and today there are more celebrities than ever
whose profiles are have been linked to the space: household names such
as Brad Pitt, George Clooney, Angelina Jolie, the late Patrick Swayze,
Sarah Jessica Parker, Tori Spelling, Cameron Diaz, Denise Richards,
Heidi Montag, Chelsea Handler, and Brett Butler, to name just a few.
Singer/actress Dionne Warwick became the iconic face of the PFNI in 1990s,
creating a memorable presence via infomercials and television ads. The field
lends itself well to the eclectic Hollywood crowd, and the company's early
efforts toward reaching out to this influential audience - such as the
readings done at the VIP lounge at the 2012 Emmys-bode well for cultivating
a longer-term celebrity passion and following.
Additional Points to Consider
-- Advertising Revenues: A less sexy, but potentially fruitful avenue for
net revenue growth for PFNI is advertising income. The company should be
able to generate steady income streams with the sale of ad space on all
of its media and social networking platforms. Cross-selling within the
psychic/astrology industry, coupled with derivative interest market ads,
could develop into a cash cow for the firm.
-- Regulatory environment: The 900 number issues that challenged the
company in the past are gone. They are replaced by 800 number calling,
and the various internet, social media, and mobile platforms discussed
in this piece.
-- Bricks and mortar approach: There are thousands of "mom and pop" psychic
shops throughout the U.S. The potential opportunity for PFNI here isn't
in the roll-up of the individual physical locations, but rather the
employment of these individuals for their time and expertise. Providing
a fiber-optic pipeline into these locations, connecting them to the PFNI
secured grid, would be an interesting business twist. It could be sold
as an optimization of these individuals' time (i.e., better utilization
of their downtime.) It would also tap into a wealth of experienced
psychics and readers in the pursuit of expanding PFNI's competency
drove.
-- Lower cost structure: Technology and improved operations can be
anticipated to help the company realize a lower cost structure. 1) lower
fulfillment costs, 2) lower cost of sales, 3) off-book independent
contractor employee payment structure, 4) and improved technological
efficiencies-all combine to enhance and streamline the cost environment.
-- Customer data: Customer stats from the past should provide a solid
benchmark for early forecasting, establishing a sound floor from which
to build. Average annual revenue per customer in the 1990s was $350-400,
80% of which was recorded in the first 6 months of the relationship.
Retention rates were an astonishing 75%. It is not unreasonable to
consider that branding, a focus on enhancing customer loyalty (i.e., a
lengthening of that 6-month figure), and more personal interfacing
options, will grow all customer data metrics this time around.
What Stays the Same
-- Management Team: The management team is returning, and with it, their
core competencies in the media arena. Basically, PFNI retains every bit
of the intellectual capital that developed the successful model in the
first place, returning to the stage with new and improved marketing and
implementation tools.
The company will have its vast customer/member database at its disposal.
Coupled with a new array of data mining tools and enhanced targeted
marketing options, this should allow the company to be significantly more
efficient in their marketing strategy, and to utilize social media
technology to optimize demographics.
-- The phone: Enormous opportunities exist for the new launch of PFNI, but
the one-on-one call service is still a core concept of the business
model. Customers call from whatever environment they are comfortable,
and can be connected to the specialist of their choosing, or area of
specific expertise (tarot, astrology, relationship advice, money,
career, dream, past life, etc.) This allows an individual to establish
an ongoing, lasting relationship built on comfort and trust. Changes to
the customer initiation and psychic compensation process to a "softer"
scalable approach should be beneficial for the critical long-term
customer recapture rate, and thus, the long-term health of the firm.
Attractive initiation plans (free minutes packages, etc.) assist in getting
potential interested parties in PFNI's door. Past data suggests that 75% of
initial callers become return customers. The implementation of an attractive
bonus structure for advisors, which rewards independent contractors for
return customer percentage rates (rather than minutes per call), and
customer-friendly policies of periodically informing clients of their minute
totals (chat time) as well as money-back satisfaction guarantees, further
the firm's move to better foster client trust. What could be more important
for a steady cash flow than return customer loyalty?
-- The Psychics: The firm takes pride in employing the best individuals in
the business, and plans to re-initiate that philosophy going forward.
The utilization of mobile app, voice-over-IP (VOIP), and various social
media tools can allow the firm to employ the talents of psychics all
over the world-to customers all over the world.
Competition
The industry is estimated to generate revenues upward of $2
billion in the U.S. alone. The composition, however, is extremely
fragmented. The largest organized participant is Keen, owned by
Yellow Page Holdings and AT&T (ironically enough, one of the
phone companies that helped drive PFNI into bankruptcy).At the next
level down, CA Psychics and Hollywood Psychics are successful
enterprises that operate in the fertile ground of the West Coast.
And then you have thousands of brick and mortar shops, online
"reading" sites, and public fair venues garner business around the
country.
These all lack the benefits of scale and organization, though,
that PFNI has proven successful at implementing in the past, and is
intent on replicating in the near future.
Moreover, even with PFNI absent from the industry for close to
12 years, how many of those competitor names can an average person
on the street cite? Short answer: None. PFNI represents a sizable
edge in today's brand-centric world.
Financial Review
Below are income statement projections for the company. The
estimated growth pattern is sharp. However, as depicted in the
second small exhibit, the history of the business model suggests
such expectations have some precedence. These are ambitious
estimates, and are certainly no guarantee of success. However, if
proper forward funding is secured, and many if not all of the
business avenues discuss in this report are successfully executed
by management, these projections could easily be met-or possibly
exceeded.
Risks
Although the business concept is a proven one, the re-engagement
of PFNI is, in all respects, a development stage entity. Its
success as a going concern will depend largely on its early stage
execution. That, in turn, is almost completely dependent on the
firm's cash reserves. The company recently received the third and
final installment of a $780k financing package through Right
Power.
With much work to do in the launching of various tech platforms,
more funding will be needed in the intermediate term. The company
currently has no lines of credit or other bank financing
arrangements. Generally, they have been financing operations to
date through the proceeds of the private placement of debt and
equity instruments, and the financial backing of officers, friends
and family members. The company's intention is to finance forward
expenditures in a similar fashion. This will not only require new
investment interest in the fledgling concern, but will be dilutive
to existing shareholders. Many of these new issues may require
senior rights, and privileges to the existing investors.
This additional capital is imperative to the development of the
company. No matter how outstanding the potential for a business
idea, it needs cash to fuel it. If necessary financing is not made
available on acceptable terms, the firm may be unable to take
advantage of prospective new business opportunities, and the wealth
of potential revenue pipelines in its sights. In my estimation, a
combination of equity, debt, and the initiation of bank credit
should be aggressively pursued by management.
The company estimates expenses for the coming critical 12-month
period to be approximately $1.2 million. It could be a delicate
balance, in the coming months, between initial revenue streams and
additional funding. I believe they should and can get there. The
opportunities 12-18 months out are extraordinary, in my opinion.
However, one cannot discount the going-concern risk.
The estimated cost of initial launch is shown in the chart
below. Not insignificant, but a fraction of the potential revenues
available to the firm's model.
The Coming Year
Developments are beginning to happen quickly for PFNI, and
opportunities abound. The "soft" launch of the company's website,
PFNI 2.0, has just taken place. It will serve as the "nerve center"
of the company's operations. Targeted test market trials are
scheduled to begin before the end of Q4 2012. The critical
important mobile app platform launch is scheduled to occur within
the coming 3 months. By all indications, the initial investment
capital infusions are being allocated to good use.
A coordinated press release program, designed to draw attention
to rapidly developing events on the company's calendar, is also
being initiated. A targeted marketing campaign is taking form, and
will pick up momentum in Q1 2013. The company recently operated
spot locations at the 2012 Emmy Awards in Los Angeles, and
presented at an investors conference in San Francisco. All of these
are positive first steps in the focused approach of returning PFNI
to the pop-cultural center stage.
In addition to the outstanding organic growth opportunities that
exist for the company, substantial joint venture, and industry
roll-up potential could provide momentum for growth, consolidate a
fragmented industry, streamline costs, enhance intellectual capital
deployment, and eliminate competition. Put it all together, and it
could be a busy year indeed for the folks at PFNI.
Conclusion
At an estimated $2.5 billion globally, the corner of the
entertainment industry in which PFN occupies has expanded
dramatically during the decade since they took leave of the space.
Popular culture has further embraced the astrological and psychic
realm. Generally speaking, popularity of this industry grows in
periods of economic strife. We are certainly embroiled in exactly
one of those periods, with absolutely no end in sight.
Businesses usually fail due to one of the following factors: 1)
Their products or services becoming old or obsolete; 2) the
population sours to an idea and loses its appetite for said
product/service; or 3) the product/service in question is replaced
by something better, faster, stronger, more informative, or more
entertaining. None of these was the case with the past demise of
PFNI in the 1990s. As discussed earlier in this document, the
company's fate was determined by an unprecedented shift in the
regulatory environment. And more important, those changes are no
longer a factor.
The company was an absolute cash machine during its prior
run-with little more than two tin cans and a string compared to
what is at its disposal technologically today. The marketing
opportunities and distribution pipelines available to the firm at
present are outstanding, and offer huge membership growth
potential. Mastery of this new social, multimedia environment is
the key to the company's fortunes.
For PFNI, this is a moment of significant opportunities to
regain its dominant market position. As in any business venture,
risks are present, and cannot be disregarded-additional
funding/investment in operations are imperative to business plan
execution. Time will tell, but a look at the numbers and the
overall landscape indicates the Psychic Friends Network has all the
makings for a uniquely inspiring entrepreneurial second coming.
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particular need of any specific person who may receive this
commercial advertisement. Investors should note that income from
such securities, if any, may fluctuate and that each security's
price or value may rise or fall substantially. Accordingly,
investors may receive back less than originally invested, or lose
their entire investment. Past performance is not indicative of
future performance.
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ZIBO's research and/or dissemination of the Information, our
publicly disseminated publications should not be regarded as
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an option to acquire 666,666 shares of common stock of PFNI. This
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Full ZIBO Research Disclaimer: ZIBO is a research firm hired by
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The report at times can be used to create investor awareness about
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We Do Not Provide Investment Advice: We do not hold ourselves
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enough cash capital or will be able to raise sufficient capital to
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Risks, Suitability and Price Targets: Investing in micro cap and
small cap securities is speculative and carries a high degree of
risk. Investors can lose their entire investment. Investors should
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factually accurate. Report/release/advertisements include
forecasted valuations and forecasted price targets that are
accepted securities analysis protocol in the academic community.
These valuations, price targets are academically appropriate and
include in most cases, assumptions that the company provides and
will raise capital to meet the analyst's projections. These price
targets and valuations, including business prospects, are theory
and should not be relied upon for accuracy or investment decisions.
There is no guarantee that the predicted business results for the
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ZIBO or its affiliates may from time to time perform consulting or
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specific investment objective, financial situation, suitability,
and the particular need of any specific person who may receive this
report/release/advertisement. Investors should note that income
from such securities, if any, may fluctuate and that each
security's price or value may rise or fall substantially.
Accordingly, investors may receive back less than originally
invested, or lose their entire investment. Past performance is not
indicative of future performance. ZIBO has not entered into a soft
dollar agreement with the referred to Company. ZIBO does not
currently have an investment banking relationship with the Company,
or a finder's fee agreement with the Company.
Regulation: ZIBO complies with current securities laws,
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in accordance with the SEC's rules and amendments, Oct 23, 2000,
regarding 17 CFR Parts, 240, 243 and 249, (Selective Disclosure and
Insider Trading), Regulation FD (Fair Disclosure), 10b5-1, 10b5-2,
NASD Rules 2250, 2420, 2710 and 2711 and the Can-Spam Act of
2003.
Disclaimer-Price Targets: Stock prices can be heavily influenced
by investor awareness campaigns. In general, we observe the more
money spent on such campaigns, the greater the probability for
short term price increases post our initiate coverage commercial
advertisements. We also observe that our target prices may not be
met unless client companies have enough cash or are able to raise
capital to meet our forecasts.
The Penny Stock Market is a highly risky market targeted at
short term traders. Our reports often times recommend client
companies as short term trades and long term investments if an
investor believes a company will raise the required capital to meet
our valuations and price targets. Our historical performance
statistics indicate that short term price increases often times
occur after release of our initiate coverage reports. Thereafter,
we note that the majority our stock recommendations go down
significantly due to profit taking and other market factors beyond
our control.
The ZIBO Price Target, if any, includes four components. Most
reports assume capital will be raised for the majority of our
client companies. Most micro cap/small cap companies need capital
to reach our theoretical 5 year projections. The academic world
justifies an analyst's decision to forecast the three statements
(Income Statement, Balance Sheet and Cash Flow Statements) for 5
years. We normally do so in three cases: Optimistic Case, Base Case
and Pessimistic Case. However, in the practical/real world, buying
a micro cap stock based on 5 year forecasting is EXTREMELY risky.
If smaller companies are able to raise capital, our theoretical
price targets in a perfect world might be justified, providing the
Company executes on its business model.
At times our price targets may be significantly higher than the
current price of a stock. This can happen in theory only if the
company's assets, with assumed capital raised, could theoretically
create large sales and cash flow volumes over time. In the
practical world, these price targets may appear to be unrealistic.
However, we believe the academics of our calculations support the
theory of these assumed price targets. While we do not give
investment advice, the investor should consider the possibilities
of a given company being able to raise capital to execute its
business model over 5-10 years. Few micro/small cap companies are
able to raise enough capital and execute their master budget over
an extended period of time and often go bankrupt. Our price targets
are academic theory only and should not be relied upon. Investors
should do their own research and consult with their financial
consultants.
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