The Business n Real Estate Blog

Archive for July, 2010

When my firm goes into a privately held corporation to create strategies for expansion and a solid foundation before initiating the ‘go public’ process the first thing we do is analyze the CEO,CFO and COO professional pedigree and many times the current executives need to step back and allow us to bring in professional ‘C’ level management so that the company can go public, attract investment dollars from accredited and institutional money sources.

To save time we’ll go over the CEO position. This executive will be the public face to the company. They need to remain calm under pressure, respond quickly to critical questions and have a contact portfolio that could choke Godzilla. Within this contact base he/she must be able to create strategic alliances to grow the company’s presence domestically and internationally, take the leadership role to set up pre and post public financial strategies with the CFO and Board of Directors, identify and facilitate acquisitions and mergers to cultivate growth, engage the public via TV, radio and public forums as an industry expert to brand his name, the company name and the trading symbol.

An executive prime for this position will have ample publicity contacts for crisis management and getting the ‘good word’ out about the company’s financial position, new service/product, latest acquisition, newest big contract or distribution source or anything that could trigger trading volume with the stock.

At the end of the day if the company isn’t growing steadily and efficiently and if the company stock isn’t trading at a volume that allows the company to capitalize off of its position, the blame falls on the shoulders of the CEO.

Using the above to initiate the evaluation process of your CEO is a good place to start if you are getting ready to go public or if you are currently public and struggling to grow.

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I deal with S1 attorneys all day every day and most of them are entrepreneurial, hard working and interested in helping you in any way they can but there are also a lot of bad ones out there. If you are taking your company public the last thing you want is a broke as a joke s1 filing agent.

I recently had the misfortune of working with (for a very short time I might add) a New Jersey lawyer who had us all convinced by her pepper gray hair and fluency of legal jargon as a second language and quick calls to what she had us convinced where big shot investors who had millions to put into this and other transactions we brought her way.

During initial negotiations she and I sat down in a coffee shop and went over her equity position and fees in the transactions that she’d be working on for us and it was pretty simple and straight forward. I would have my team organize and structure the company and transaction and she would simply file the s1 in exchange for 2% to 3% equity. Pretty nice payday for minimal work and gaining equity in an average company producing $5m+ per year.

Ah yes, but when it sounds too good to be true it is and when it seems too easy of a negotiation…it is! When she sent us the contract she felt the need to add a few percentage points to the tune of 7%, making a total of 10% equity and she also was charging an extra $10k to fill in the blanks on your prototypical PPM doc. Why did she jack up the price? Her response was, “This S1 will have comments”. I almost died laughing. Of course it’s going to have comments with the SEC, that’s why it’s called the ‘comments’ stage.

We talked her into taking 2 payments for the $10k, half upfront and half on completion but we really should have dumped her right there. She didn’t want to keep her word on that either so I paid her the last payment before the fee was due and just got rid of her.

Turns out she never filed an s1 before and her whole act was a sham. She was desperate for cash and nickled and dimed us the whole time. I laugh about it now but it wasn’t funny when it happened. We lost over a month of transaction time because she couldn’t tell the truth.

The client was going public on the OTCBB with a valuation of around $5m, her suggestion was to raise capital pre public for $1 per share because the company would have a hard time qualifying for the NASDAQ if it started at anything less than $1. This company was years away from even considering the NASDAQ as an option but her in experience and need to prolong the deal to rape us for fees was so blatant and careless that she did everything she could to add as much confusion to the deal as possible so that no one knew what was going on, therefore she got away with a lot and was able to pick our pockets for weeks before we got rid of her.

The moral of the story is this: not all attorneys are rich. The truth is, most are very modest as far as their earnings. There is too much competition these days so there are predatory lawyers out there that will lie, double talk, triple talk and run you around in circles. All the while the clock is ticking and they are billing you like it’s going out of style. Watch your back with the dead broke S1 lawyer.

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Today’s energy conscious climate has motivated many to do what they can to become more efficient and conserve energy and money. Unfortunately this same climate has prompted others to take advantage of unsuspecting consumers’ wishes to save energy and reduce expenses.

Companies that tout power factor improvement (kVAR correction) and transient voltage suppression are a good example of this bad trend. Lately we are seeing more and more of these companies cropping up and feel it is time to set the record straight.

First, transient voltage surge suppression (TVSS) plays a valuable role in improving power quality to protect sensitive equipment inside a facility. However, TVSS does not save energy. TVSS’s are only active a tiny fraction of a second to protect against voltage surges which only last for less than a millisecond. To actually reduce energy consumption the TVSS would need to actually cut power consumption for an extended period of time which is not what they are designed to do. Again, TVSS is important to protect sensitive electrical equipment but buyers should avoid vendors promising, or even guaranteeing, that they will reduce energy consumption.

Now what about vendors who claim that improving power factor will save 15% or 20% or 30% of energy consumption and corresponding cost? This one is a little trickier.

For residential applications, power factor does nothing to save energy because the typical home already has an average power factor of about 0.97 which is almost the perfect power factor of 1 or unity. In addition, the device (called a capacitor) is placed at the main circuit breaker. According to IEEE 5.5.3.3 capacitors must be situated at or near the respective inductive loads to reduce power system losses by reducing heat and distribution losses known as I2R losses.

So what about commercial and industrial facilities using power factor correction to reduce energy costs? It is perfectly appropriate for a company that is incurring penalties or a kVA billing structure from the utility company to improve the facility’s overall power factor by employing a capacitor bank at the main service entrance or individual capacitors at or near the respective motor loads. Doing so will eliminate the power factor penalties and/or reduce the kVA demand charges on the utility bill which can save significant money and provide a significant ROI on the investment.

But what about power factor correction reducing kWh consumption? IEEE also tells us that I2R losses only account for 2 to 5% of the total load in a facility. Simple math tells us that it would be against the laws of physics to get the 15% to 30% energy reduction claimed by some vendors. Think about it. Even if your facility had 5% distribution losses and you could correct 100% of the problem via power factor correction at every load (which can’t be done) you would still only save 5% at the most. No where near the claims of some capacitor vendors and manufacturers.

All that said, power factor correction when done properly will eliminate utility penalties and kVA demand charges, improve facility power quality, increase electrical system capacity, and save a little energy when applied to the appropriate motor loads.

So make an investment in transient voltage surge suppression and power factor correction when appropriate and necessary. But caveat emptor!

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In today’s energy climate more and more people have become motivated to accomplish what they can to become more energy efficient to conserve energy and money. Regrettably this same climate has encouraged some to take advantage of innocent consumers’ desires to save energy and reduce operating expenses.

Vendors that advertise power factor improvement (kVAR correction) and transient voltage suppression to save energy are a good case in point of this bad trend. Recently we are seeing more and more of these businesses cropping up and we believe it is time to set the record straight.

First off, transient voltage surge suppression (TVSS) plays an important part in improving power quality to guard sensitive equipment inside a facility. However, TVSS does not save energy. TVSS’s are barely active an infinitesimal portion of a second to defend against voltage surges which only last for less than a millisecond. To actually decrease energy use the TVSS would need to essentially cut power consumption for an extended amount of time which is not what they are designed to do. Again, TVSS is essential to protect susceptible electrical equipment but consumers should steer clear of vendors promising, or even guaranteeing, a reduction in energy consumption.

And what about salespeople who maintain that increasing power factor will save 15% or 20% or 30% of energy consumption and resultant costs? This is false but also a bit trickier.

For homes, power factor correction does zero to save energy because the average home already has an average power factor of approximately 0.97 which is nearly the perfect power factor of 1 or unity. Additionally, the unit (called a capacitor) is installed at the homes main circuit breaker. According to IEEE 5.5.3.3 capacitors must be located at or near the individual inductive motor loads to decrease power system losses by reducing heat and distribution losses known as I2R losses.

So what about commercial and industrial facilities looking to use power factor correction to shrink energy expenditures? It is completely appropriate for a business that is incurring penalties or a kVA billing structure from the utility company to improve the facility’s overall power factor by installing a capacitor bank at the main electrical service entrance or individual capacitors at or near the particular motor loads. Doing so will do away with the power factor penalties and/or reduce the kVA demand charges on the electric bill which can save considerable money and provide a significant ROI on the investment.

But what about power factor correction reducing kWh consumption? IEEE also tells us that at most I2R losses only account for 2 to 5% of the total load in a facility. Simple arithmetic tells us that it would be in opposition to the laws of physics to obtain the 15% to 30% energy reduction claimed by some vendors. Consider it. Even if your facility had 5% distribution losses and you could correct 100% of the predicament via power factor correction at every load (which can’t be done) you would still save no more than 5% at most. No where close to the claims of some capacitor reps and manufacturers.

All that said, power factor correction when done appropriately will eliminate utility penalties and kVA demand charges, improve facility power quality, increase electrical system capacity, and save a modicum of energy when applied at the proper motor loads in an industrial facility.

So make an investment in transient voltage surge suppression and power factor correction when appropriate and necessary. But caveat emptor!

LEED Certified and Green Technology, Energy Edge Technologies can help save your Industrial, Hospital, Grocery Store or any other high energy commercial buildings massive amounts of money! We Take A Full Facility Approach or call 888-729-5722 Ext. 100.

ntellectual midgets and Pee Wee Herman The Congressman; Hell will freeze over before politicians can fix this economy.

The economy is in shambles. Unemployment is at an all-time high. Foreclosure has become an epidemic and we are looking to the same screw-up’s who put us in this mess to get us out.

Seriously, and I say this with all due respect the handicapped and economically disadvantaged, we would have a better chance of grabbing a random homeless, blind, deaf, mute, quadriplegic out of a refrigerator box shanty in a west Philly alleyway and betting one million dollars that we could train him to win the Ironman in a week, than we ever will depending on succubus congressmen and senators to get us out of this mess of which they are responsible.

Congress will blame this meltdown on aliens and the chupacabra before they admit any wrong doing.

Turn on the news and you’ll see an orgy of sweaty brow, finger-wagging and jaw-flapping politicians blaming a straw man CEO of an investment banking firm for ten years of his firm’s economic gluttony and purging (though he’s only been in this executive position for 90 days). It’s a set up. Wake up. It’s all just a distraction.

Bring in a clean cut yet power hungry executive, put him through rapid promotion from VP to CEO, tell him he’s going to a press conference then blindfold him, lead him to a 3×3 ft closet, toss in a dozen stink bombs, 10 day old soiled adult diapers, bottle rockets and fire crackers, turn out the lights, take off the blindfold, throw in a rabid squirrel, slam the door shut and 5 days later let him out to and ask him to run the Boston Marathon wearing an eye patch, Speedo and flip-flops while waving pompoms. Let’s get real. We need solutions, not a congressional Kid n’ Play dance competition. It’s a joke and we are the ones being laughed at; you, me and our children.

I have an idea! For the next presidential election we can have Pee Wee Herman run under the democratic ticket, the hunchback of notre dame can run under the republican ticket and we can have Chubaka run the CNN televised debate and we can have the post debate commentaries by Lady Gaga and the Teletubbies and why not? Americans would complain for 2 days and then buy the latest Asterix Comic for voting advice on the next election.

Valuations, S1 Filing, Taking Your Company Public and Investor Relations Solutions Free Video Download , Take Your Corporation Public and Globalize Your Business call Princeton Corporate Solutions at 267-233-0183 The No 1 Industry Blog We Can Make Global Growth Happen For Your Company