Conversion Solutions Holdings (fka CSHD)

[Valis]

Price reset on reverse mergers.....


taken from post 50796


This is a great read for folks that are having a rough time with the idea of Reverse Mergers. Its amazing how many quesitons ive had or seen the past few weeks that are answered here.

Anyway, i think ill store this one in my favorites........

http://www.legalandcompliance.com/reversemergers.html

EDIT : Here are two significant paragraphs. Did someone post this site before? It looks familiar to me now

Tax Implications & Initial Share Price


Almost all Reverse Mergers take advantage of the tax free, stock-for-stock reorganization provision of the Internal Revenue code. Capital gains tax is paid when the individual shareholder sells the stock in the public stock market (usually after the minimum one year holding period for control persons). That is, the shareholders of the newly merged company do not recognize a capital gain until after they sell the stock, even though the stock may have a much greater value after the merger is complete. The timing of the stock sales can be determined by each individual investor to suit their investment or tax consequences.


Once a Reverse Merger is completed, a broker/dealer must decide to make a public market in the stock. The market makers, in conjunction with the company, can determine the initial price for the stock. Perceived value, track record and potential growth of the company usually have more to do with initial pricing than earnings multiples and current book values. Competent investor relations and supportive market makers as well as management's ability to relate the company's potential to investors are of key importance. Ultimately, the public market acceptance of the company will determine the market price for the stock.