TRADING STOCK ON THE NET

LAUREN COLEMAN-LOCHNER, Staff Writer
The Record (Bergen County, NJ)
03-23-1995
TRADING STOCK ON THE NET -- BEER MAKER PUTS ITS IPO ON LINE
By LAUREN COLEMAN-LOCHNER, Staff Writer
Date: 03-23-1995, Thursday
Section: BUSINESS
Edition: All Editions -- 3 Star, 2 Star P, 2 Star B, 1 Star Late, 1 Star Early

You could call it "When Spring Street Spurned Wall Street."

When the Spring Street Brewing Co. of New York decided to go
public, it forsook the usual route through a brokerage house in favor of
cyberspace.

Yes, IPOs have come to the Internet.

Spring Street, which makes a wheat-based beer called Wit, is
displaying an announcement for its stock offering on the Internet's
World Wide Web. Potential investors can have the company's entire
35-page circular sent to them electronically.

Although entrepreneurs regularly post other investment
opportunities on the Net, this may be the first IPO, Spring Street says.
A search of beer and investment discussion groups on the World Wide Web
produced no comments about Spring Street's announcement.

"We turned to the Internet because we were impressed by how widely
we can reach people for a very low cost," says Andy Klein, an Internet
user who heads the company.

"The Internet was just an obviously easy thing to do. It's been
very, very successful in getting the news to people and getting them the
offering."

Klein says it costs the company $150 a month to maintain its page
on the World Wide Web, a series of linked sites on the Internet
containing both text and graphics. To mail a prospectus to just one
customer would cost close to $2, he says.

The company hopes to raise $5 million by selling 2.7 million shares
at $1.85 each. In fiscal 1994, ended Sept. 30, the company had a loss of
$487,969 on sales of $297,929. The company has registered the offering
in 13 states, including New York and New Jersey.

But some market experts worry that cyberspace may not be the best
avenue for making thoughtful investment decisions.

"There's no accountability," says Yale Hirsch, who edits and
publishes the Smart Money newsletter and compiles the annual Stock
Trader's Almanac from his office in Old Tappan. Creating a climate in
which it's too easy to invest can create a frenzy, Hirsch says, and
"people are bound to get hurt." With investments via the Internet,
decisions can be made too quickly.

And because Spring Street is not using an underwriter, there is no
intermediary brokerage or analyst to provide independent information and
recommendations.

John Heine, a spokesman for the U.S. Securities and Exchange
Commission, says the agency hasn't issued any rules electronic
investment.

In response to a query from a law firm, however, the SEC has issued
a "no-action" letter, essentially a list of recommendations.

The letter lays out nine guidelines for offering a prospectus
electronically. For example, it states, companies should replace
graphics that cannot be duplicated on-screen with a description of the
graphic information. In addition, the prospectus should be continuously
accessible, without additional charge, on line. The prospectus can be
converted to a hard copy or stored, and other sales literature should
include instructions on how to gain access to the company's prospectus
electronically.

Heine says it is too soon to know whether the guidelines will
evolve into more formal regulations.

Klein says the company intends to use the Net as one of several
conduits to publicize its offering. It placed an advertisement in a
local newspaper, and publicized the IPO through beer clubs and stores
that sell the product. It also attached announcements to its six-packs.

The company even maintains a toll-free number -- (800) 948-8988 --
that customers can call to order the prospectus.

Kohler Distributors in Englewood sells the beer in very limited
quantities, says Elena Faulch, a sales administrator.

Keywords: ALCOHOL. BUSINESS. STOCK. COMPUTER. INVESTMENT

Copyright 1995 Bergen Record Corp. All rights reserved.