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Microcap & Penny Stocks : AFSI Asia4Sale: When is an IPO not an IPO?

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To: Sir Auric Goldfinger who wrote (11)7/13/2000 12:02:44 PM
From: StockDung   of 13
San Diegan's former shell company takes shot at dot-coms with an acquisition

Don Bauder
July 13, 2000

There are a couple of kinds of shell companies: One is a company that actually launches a business, but is such a mess that it degenerates into a mere shell.

Another is the conventional shell -- sometimes called a blank check or blind pool -- which is a publicly traded company with no business, just waiting to acquire another company that wants to go public through the back door (reverse-merging into the shell), rather than going through an initial public offering.

Controversial San Diegan Troy Flowers has headed both kinds of shells, and a conventional one named after him and his wife became an operating company yesterday.

But first, let's consider Flowers' sad sack shell. In May 1999, the Department of Corporations, which was in the process of shutting down the fast-buck Pacific Cortez Securities brokerage, visited a company that had been headed by Flowers.

It had been named Natural Born Carvers and, among other monickers. Pacific Cortez (née La Jolla Capital) had peddled the company's stock without informing clients that Flowers, a stock salesman at the bad-boy brokerage firm, also was chairman of Natural Born Carvers.

The Department of Corporations sent its representatives to Natural Born Carvers' offices and warehouses. They reported that it was a little more than a shell corporation; there did not appear to be any significant business.

But that had not stopped Pacific Cortez from pumping its stock. Flowers eventually rose to become president of Pacific Cortez before it was shuttered.

Natural Born Carvers, or, initially made skateboards and the like -- but turned out to be a corporate shell through ineptitude.

But Flowers also has been involved in the blank check or blind pool kind of shell. It is a nonexistent business just waiting for an opportunity.

Troyden Corp., such a shell, was set up by Troy Flowers and Dennese Flowers, his wife. Yesterday, a Vancouver-based e-business named said that it will go public via an acquisition by Troyden, which then will jettison its management and change its name to

"In this market, it is much harder to raise money for dot-coms," says James King, president of Vancouver's Pacific Capital Markets, which has raised $7.5 million for

A recent Troyden filing with the Securities and Exchange Commission on June 5 tells the story:

"The company has had no operating history nor any revenues or earnings from operations," the filing says. "The company has little or no tangible resources. The company will, in all likelihood, continue to sustain operating expenses without corresponding revenues, at least until the consummation of a business combination."

There are "disadvantages of a blank-check offering," the filing says, including time delays, federal and state taxes and significant expenses.

The company has no full-time or part-time employees, no capital and no sales, the filing says.

On June 28, Troyden reported that it had moved its headquarters to Vancouver, B.C. Gerry Nel became the new president. The two previous officers, Larry Davis of Lemon Grove and Teresa Gardner of San Diego, dropped out, and cannot be located for comment. Nel says he does not know them.

As a shell, Troyden "is clean," Nel says. "It meets SEC requirements."

Troy Flowers, who now works at Equitrade Securities on Grand Avenue in Pacific Beach, has been out of Troyden for some time: "That is a long time ago," he says.

He and Dennese Flowers had borrowed money from the company, according to the filing.

On June 28, directors split the Troyden stock 30 for 1. The stock had dropped 1.9 percent Friday, 13.7 percent Monday and 1.3 percent Tuesday, before rising 2.3 percent to $7.13 yesterday.
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