"There's nothing quite as instructive as a really BAD example.
So let's take a break from talking about great companies --
potential new Rule Makers -- to remind ourselves of how bad it can
get if we don't do our homework. Let's refresh our sense of
skepticism with a close look at a soon-to-be-public company I
mentioned last week: LinuxOne."
"On September 22 of last year, shortly after Red Hat's (Nasdaq:
RHAT) spectacular first day in the market, LinuxOne filed for an
initial public offering (IPO) with an S-1 statement almost word for
word identical to Red Hat's. The only difference was that LinuxOne
had no earnings -- literally $0.00. It had no INCOME. It had never
sold a product. It had only incorporated (in Nevada, a state with
no disclosure requirements) a few months earlier. The company's
entire assets on the S-1 consisted of about $150,000 cash (from
their president buying stock in his own company) and a little under
$5,000 of equipment (mostly their Web server). This was listed in
dollars, not in thousands as is customary, apparently to make it
"The president of the company, Wun C. Chiou, left his
previous position as president of NetUSA (OTC: NTSA) in March to
found LinuxOne. NetUSA is a penny stock traded over the counter
that issues unsolicited commercial email (i.e., spam) to advertise
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