Now with first-half sales and profits triple what they were a year ago and the stock holding steady at $9.50, Math Box has announced a secondary offering of 1.1 million shares. The Math Box Inc., a Rockville chain of computer stores, went public at $9 a share in January, raising just over $3 million by selling 400,000 shares. Yet neither the soft stock market nor the disappointing performance of many new issues has kept many Washington companies from raising additional capital. The latest to delay its offering is Boat America Corp., a highly successful Alexandria boating supply dealer whose summer stock offering has been put off at least until the end of the year. More than a dozen companies in the Washington area filed plans to go public in the last year and never carried them out. of McLean faced a similar problem, annoucing an offer of 500,000 shares at $11 to $13, but actually selling 255,000 shares at $8.50. Gray & Co., the high profile public relations firm, was unable to get the $9 a share it sought for its stock and was forced to put out the issue for $7.50 a share and cut the offering from 600,000 to 500,000 shares. Such results have soured investors and disappointed some companies that have sold stock this year. Trak shares that went out at $22 a share in April 1983 closed Friday at $13. Crown went public in August of 1983 at $25 a share and has shown steadily growing sales and solid profits, but the stock was down to $10.75 Friday. Trak Auto and Crown Books were two of 1983's hottest issues when they spun off from Dart Drug Corp. Nor does the success of the company guarantee that investors in new issues will prosper. Sold for $5 a share in August 1983, the stock is no longer trading and the company is being liquidated. Family Entertainment asked that trading in the stock be halted permanently, saying that any reorganization plan would wipe out shareholders.Īlso gone is the $5 million that was invested in PC Telemart, a McLean company that wanted to sell computer software by using computer kiosks. The stock, which had been selling for 13 cents a share, last week was officially declared worthless as a result of losses that forced the company to seek to reorganize under Chapter 11 of the federal bankruptcy law. Cheese Pizza Time Theatre restaurants, was a sexy new issue that raised $5 million when it sold stock at $10.50 a share in September 1982. New issues can be risky, investors who bought into some new Washington ventures have learned.įamily Entertainment Centers, the Rockville company that opened more than a dozen Chuck E. In other instances, they're taking a flyer on start-up outfits where the risk that the company will fail is balanced by the rock bottom price of the stock. In some cases investors are getting both, buying shares in quality companies without the exorbitant markups made possible by last year's overheated market. Today, underwriters and market watchers agree that buyers of new issues are demanding either lower prices or stronger balance sheets from companies trying to market their shares for the first time. In the first nine months of this year, companies selling stock to the public for the first time raised about $3 billion, compared with the record $9 billion in initial public offerings through September of 1983, reports New Issues, a newsletter that tracks the market. Then, along with the summer stock rally came a renewed interest in new offerings. Last year was the best year ever for new stock issues, but the initial public offerings market all but dried up earlier this year when the stock market turned stagnant. The surprising interest in low-priced issues is one result of what brokers say is a recently opened window of opportunity for companies seeking to raise money in the stock market. (Profiles of several of the newest Washington businesses are on pages 34 through 37.) Virtually all the new local offerings this year have been priced under $10. Half a dozen local firms recently have offered shares at 10 cents to $2 a share. Thanks to inflation, they qualify as "penny stocks" these days. No longer able to sell new stocks for prices like the $25 a share fetched by Crown Books last year, emerging companies in the District, Maryland and Virginia are bringing out initial public offerings at less than $5 a share. Wall Street's ardor for new stock issues has cooled considerably this year, but Washington area entrepreneurs are finding they can raise capital by tapping another group of investors - penny stock buyers.
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