For David Coté , the cost of his company's failed initial public offering is measured in more than dollars. "If it hadn't been for the stress of the IPO falling through," says Coté , 54, "I don't know whether I'd have had that heart attack."

What happens to a small company when its would-be entrance into the world of publicly traded stock - on which employees, executives, investors and even customers have pinned so many hopes - never gets off the ground? The consequences, as David Coté learned, often reach far beyond the company's bank account. It's been a little over a year since his software company, Young Minds Inc., based in Redlands, Calif., was forced to deep-six its IPO on the eve of its launch, after nearly a year of preparation. And while the company sorely missed the $13.2 million it had hoped to raise through selling its stock to the general public, that was just the beginning of the fallout. "It's amazing how much pain this has caused us," laments Andrew Young, the company's eponymous chairman. "The IPO failure practically killed this company."

Throughout its seven-year history, says Young, Young Minds "had been more or less continuously seeking capitalization" to develop and sell its products: recordable compact discs that warehouse large volumes of data, and "jukeboxes" that can "play" dozens of these CDs at a time. Some relief had come in the form of deals with private angel investors, though as Young notes, "the terms would hardly make them angels." Then came the historic IPO market of 1995-1996, and Young Minds executives watched goggle-eyed as companies less substantial than theirs raised enormous sums of money, cheaply and seemingly easily. In a market like this, they reckoned, Young Minds could hardly afford not to go public. "The lure of the public market in times like this is huge," concedes CEO Coté , whose personal equity stake might have been worth more than $5 million if Young Minds completed the offering.

Never mind that a company in Young Minds' financial shape wasn't exactly tip-top IPO material.

A quick leafing through its prospectus revealed that Young Minds had lost money every year except one. Sales had been flat for 1995 and 1996, hovering around $7 million. The company owed $329,526 in delinquent taxes and penalties to the IRS, which had filed liens against the company's assets. Interest expenses had eaten up 12% of the previous year's revenues. Three attempts at private financing had fallen through, and the company admitted to suffering from "chronic undercapitalization."