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Saturday, 07/22/2006 9:59:53 PM

Saturday, July 22, 2006 9:59:53 PM

Post# of 169278
Reverse merger "Costs Involved":

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There is a strong demand for U.S. public shell companies. By definition these are companies that are publicly owned but have no existing business operations. There are many types of public shell companies available, and many pitfalls that need to be avoided, but properly utilized public shell companies can save private businesses considering "going public" hundreds of thousands of dollars in costs and months, if not years, of strategizing when compared to the typical Initial Public Offering (IPO). There are numerous other benefits to using, or "reverse merging" into, a public shell company, including gaining quick access to public capital markets.
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OTC Bulletin Board

The most popular type of public shell for conducting a reverse merger is the OTC Bulletin Board public shell vehicle. The OTC Bulletin Board is operated by the National Association of Securities Dealers (NASD) and requires that all companies whose stock is traded on the OTC Bulletin Board (or Nasdaq or Amex) maintain their current reporting status with the Securities and Exchange Commission (SEC), which includes current audited financial statements. OTC Bulletin Board shells come in various forms and packages, with some currently trading and some non-trading.
Cost: (non-trading) $150,000 - $250,000, plus 5 - 20% retained equity ownership
(trading) $250,000 - $800,000+, plus 5 - 20% retained equity ownership
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Nasdaq Small-Cap,
Nasdaq NMS,
NYSE, and AMEX

While the OTC Bulletin Board is an excellent stock market and the NQB Pink Sheets are gaining a following, some clients are interested in trading on one of the more mature U.S. stock markets - Nasdaq Small-Cap, Nasdaq NMS, NYSE or AMEX. There are varying levels of qualification for each exchange including asset levels, number of shareholders, required Board level committees, and market capitalization. There are also secondary stock exchanges such as the Boston Stock Exchange and Pacific Stock Exchange. Stag Financial Group can assess whether your company qualifies for one of these stock exchanges and, if not, help your company grow and obtain a listing when it does meet the minimum requirements for such a listing. Typically, though, a client wishing to trade on one of these exchanges will need a minimum of $20 - 100 million in annual revenue and net profits of at least $2 million annually.
Cost: $3,000,000 - 100,000,000+, plus 30 - 70% retained equity ownership
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Registered "Spin-Offs" A Registered "Spin-Off" is a quasi-Initial Public Offering (IPO). Registered Spin-Offs are used by both companies wishing to go public and companies wishing to enhance shareholder value. In a registered spin-off, the client company issues a significant block of its common stock to a publicly traded affiliate company with a large shareholder base. This public affiliate company then dividends, or "spins-off", a portion of that stock to its own shareholders thereby creating an immediate base of shareholders for the client company. Upon registering this stock with the SEC and making all of the subsequent required filings, the client company's stock can then begin trading under its own trading symbol, typically on the OTC Bulletin Board.
Cost: $25,000+, plus 30+% retained equity ownership







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