Given I have no experience at all eh? I've been in and out of...

Given I have no experience at all eh? I've been in and out of the market for 40 years Sector Lead.

Generic questions for investing in tiny speculation companies in Australia. Whether they be tech, bio tech or mining and oil. Ratings and chances of making money at the end of the questions.

Each yes answer equals one point.

1\ Has the company recently completed a share placement ?
2\ Was there a shortfall with the recent placement ?
3\ Is the company planning a placement in the near future or just completed one ? (not an error asking this twice)
4\ Has the company announced a share consolidation ?
5\ Looking at the last set of accounts, would it be correct to say the company does not have enough funds to continue for more than 12 months without issuing more shares at the current cash burn rate ? Ignore any placement or planned placement proceeds after the last set of accounts.
6\ Has the company recently released partial results regarding a discovery of breakthrough without full assay/ wire logs or results of clinical tests ?
7\ Has the company compared these initial partial results with a much larger very economic discovery or company or world market for the goods in a release ?
8\ Does the company spend more on administration and salaries than research and development or in the case of mining companies exploration expenditure ?
9\ Is the current share price more than 200% of the low for the last 6 months?
10\ Is the current share price more than 400% of the low for the last 6 months ?
11\ If the company has announced a major deal or partner is the partner from a foreign country ?
12\ Would it be correct if some deal or partnership has been announced there has been no dollar amount attached to the announcement and contract ?
13\ Has the income/sales increased for the company over the last 12 months by less than 40% ?
14\ Was the loss for the previous 12 months greater than the proceeding 12 month period when one subtracts the increases in R&D or exploration off the bottom line loss from one year to the other ?
15\ As a percentage of shares and options on issue have the directors awarded themselves over one percent of issued capital as a bonus over the last 2 years ?
16\ As a percentage of capital does this issue of bonus shares to directors and staff exceed 2 % for the last 3 years ?
17\ Was the loss for the current year greater than the previous years loss by 40% ?
18\ Does the company have any track record of massive price spikes and then falling back by 70% or more in the last two years ?
19\ Including shares and options are there more than 150 million on issue ?
20\ Including shares and options are the more than 350 million on issue ?
21\ Including shares and options are there more than 500 million on issue ?
22\ Looking at the accounts does the company spend what seems to be a lot on marketing/advertising especially if they are not in this area or if it supposed to be there main source of income ?
23\ Have there been rumours either on chat sites or media whispering about inside information or positive announcements for the company ?
24\ If the company has been around for 4 years or longer would it be correct to say it has never made a profit and does not seem to be approaching that level is there a real light at the end of the tunnel ?
25\ If the company spends more on administration and salaries than on research and development or exploration does this admin/salary expense exceed money spent on R&D or exploration by over 30% ? Important not to include costs of purchasing tenements or equipment in the calculation.
26\ Does the company use some different measure when reporting results ? Say for a mining company instead of ounces per tonne it uses grams per tonne or for a Nickel or copper deposit the use say 1,250 part per million instead of the 0.12% concentration it really is.

Scoring

0 - 10 Have at least a reasonable chance
10 - 13 Getting very dicey
14 - 15 Roughly a 2% chance of the share being higher in 12 months
15 - 18 Less than a 1% chance the shares will be higher in 12 months
19 - 21 Less than 0.5% chance of making money longer term
21 - 26 Donate the money to the disaster relief fund or start a fire with it. Chances less than 0.1% of having a higher share price in 12 months.


Please note these are questions that should be asked about any small spec company that one might be thinking about investing in. Of course short term one may be able to ride the wave. Also there is a chance even with a higher score they still succeed but for every company with a 15- 20 score only one in 100 will be higher in price within 12 months.

This is only a guide but hopefully stop and make some think before they buy into the hype.
It will not catch all the ones we should not touch but hopefully will capture a lot of them.
Please consult an licensed investment advisor before investing. This list of questions is only a guide for what you should be asking before you invest. Do not rely on it, do your own research.

Please note it is impossible to score 26 due to the generic nature of the questions. It is also very highly unlikely to score in the 21- 26 region for the same reason. But if a biotech company spends 100k on research and 800k on admin and salary and has little cash left and either has just made a placement or is going to make one and announces partial results along with a planned share consolidation along with a new contract with a partner from another country with no dollar amount specified and you have never heard of the partner and the company awards its directors bonus shares or options amounting to 4% of the company over the past 4 years and the share price is 300% of what it was three months ago .... Logic would tell me .... What not to do !