A St. Louis-based firm says it plans to be the first software company to go public via the Internet.
NewStar Collaborative Technologies of Chesterfield, Mo., says it hopes to raise $3.75 million to $5 million by selling stock directly to the public from its Web site, http://www.newstartech.com.It will join a handful of companies that have made direct public offerings over the Internet, cutting out the investment-banker middlemen.
NewStar is a 3-year-old firm that makes software to send images, voice and data between computers. Its prime product, Sound IDEAS, lets people speak, draw and write simultaneously with distant partners using phone lines or the Internet.
The firm, which is backed by private investors, took a loss of more than $200,000 last year on about $100,000 in revenue.
"Until March of this year, all we were doing was research and development. We were building product," said Larry Cowsert, company chairman.
NewStar says its products are now in use at both the Johnson and Kennedy space centers, Lockheed Martin, United Space Alliance, the Japanese Space Agency and other companies.
NewStar says it plans to offer 1 million shares to the public at $5 a share, beginning some time in the last three months of this year. The public offering equals about 20 percent of NewStar shares.
Investors will be able to order shares directly through a secure link at the company's Web site, putting the bill on their credit cards, or by downloading a form and mailing it in. They also can download a prospectus.
Cowsert said he chose the Internet as the "fastest, most efficient means of reaching potential investors."
Spring Street Brewery, makers of Wit Beer, last year became the first company to go public over the Internet.
There have been a few others since. "You can count them on one hand," said John Perkins, a former Missouri Securities Commissioner.
Some who tried it have been disappointed, Perkins noted. Spring Street, for instance, raised only about half the $3.5 million it planned through the Internet.
"If you believe that going on the 'Net will automatically raise the money, it won't happen. How will people find your Web site?" asks Perkins, who chairs a council that helps companies sell stock directly to the public.
NewStar, however, thinks it's a natural for Internet investing, noting that its products communicate between computers. No other software company has tried an Internet offering, Cowsert says.
The Securities and Exchange Commission, which regulates stock trading, is encouraging firms to use the Internet for stock sales.
(Distributed by Scripps Howard News Service.)