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MORE ABOUT MICROCAPS

Microcap stocks are different from other stocks since they are from companies with small market capitalization and are traded on stock exchanges that do not require minimum standards, such as a minimum amount of net assets or a minimum number of stockholders.  In addition, these microcap stock companies often have fewer resources to make their information available to the public.  Often, microcap stock companies will specialize in innovative products or services that may be unknown to the general public .

Many microcap stocks are traded [G1] over-the-counter with their prices quoted on the OTCBB, OTC Link LLC, or the Pink Sheets. The larger, more established microcaps are listed on the NASDAQ Capital Market or American Stock Exchange (AMEX).

Microcap stocks can sometimes experience volatility. Some of these companies fail to execute their business plans and go out of business. Fraud and market manipulation are not uncommon, and the transaction costs in trading can be quite high. Pricing is more likely to be inefficient, since fewer institutional investors and analysts operate in this space, due to the relatively small dollar amounts involved and the lack of 

Executives, Officers, Directors, and Administrators of microcap companies have significant management liability exposures.  Failure to establish cooperate governance standards and a comprehensive risk management/management liability program exposes the personal assets of Executives, Officers, Directors, and Administrators.

Microcap companies are public to raise capital, to develop products or distribution.  Public companies have more sophisticated risk management requirements however it is cost prohibitive for companies of this size to hire in-house risk managers