Wide Open News Gold Mine a Bust? Pan for Linux!
What do you do when cash is short, your stock is down, and your gold mines have seen better days? Change your name to LinuxWizardry! That's the investment strategy pursued by Flame Petro-Minerals, a Canadian mining company that owns a 50 per cent stake in the Fish Creek Claims outside Fairbanks, Alaska. In February, the company acquired a Linux router company called LinuxWizardry, Inc.. On March 22, Flame Petro-Minerals changed its name to LinuxWizardry Systems, Inc. a shell corporation holding 100 per cent of LinuxWizardry, Inc. shares. The same day, it began trading on the Over-the-Counter Bulletin Board, home of cheap "penny" stocks. LinuxWizardry Systems' stock price has been bouncing between the $2 and $4 range -- quite volatile but holding its own as Nasdaq tech stocks were getting hammered. The penny stock market is loaded with legitimate companies and not a few scams. Unlike some Linux startups without a real product or service to demonstrate, LinuxWizardry showed off its Apprentice Command Center router technology in February at LinuxWorld Expo 2000 in New York. Running on Linux and using graphical interface written in Java, the LinuxWizardry router is being hawked as a low-cost, easy-to-use competitor to Cisco products for small- and medium-sized businesses. John G. Robertson, president of the shell company, is upfront about his motivations for switching from gold mining to Linux. "The one thing public companies have in common is the mission to make shareholders money," he told Wide Open News. "It doesn't make any difference whether it's gold or whether it's tech." "Right now," says Robertson, "there's a real slump in mining companies...Linux is hot. You've got to go with the trends." The router company, LinuxWizardry, Inc., is headed by CEO Mike Carpenter, who tells Wide Open News that before launching his startup he worked on IBM's Via Voice for Linux speech processing software, and has also consulted for Motorola. IBM verifies that Carpenter was a contractor working for the company's Worldwide Speech Development organization on text-speech processing for about a year before leaving in January to start his own company. On March 27, the shell corporation announced $5 million in private placement financing to be used to complete development and production of the router. Carpenter says the company has signed an agreement with a distributor -- he won't say who -- and plans to begin selling the product later this year. Carpenter, who works out of Boca Raton, Fla. with a small team of developers, said "a friend of a friend" introduced him to Flame Petro-Minerals. Using the OTC shell company was preferable to seeking venture financing, both Carpenter and Robertson said, to finish the product as soon as possible. "Speed to market is essential," Robertson said. Drumming up venture capital would have set the project back by months, he said: "If you go through a VC company, you have to present a business plan." In the penny stock market, by contrast, LinuxWizardry raise funds quick and just go for it. And penny stock investors are apt to either reap big rewards -- or get slammed. ® Tune into Wide Open News and check out those Linux, Open Source and tech business stories.