Triple 000 and Sub-penny Chart Plays

[trader53]

Reverse Mergers: Guide and Stages of Readiness


Guide to Reverse Merger Transaction

* In a Reverse Merger process,

the private operating company shareholders
exchange their shares of the private company
for either new or existing shares
of the public company

* At the end of the transaction,
the shareholders of the private operating company
own a majority of the public company
and the private operating company
has become a wholly owned subsidiary
of the public company.

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A Reverse Merger
allows a privately held company to go public
by acquiring a controlling interest in,
and merging with,
a public operating or public shell company.


A shell company
a publically traded company with

(1) no, or nominal operations and

(2) either no or nominal assets
or assets consisting solely of
any amount of cash and cash equivalents.


A Reverse Merger
is the most common alternative
to an initial public offering (IPO)
or direct public offering (DPO)
for a company seeking to go public.

http://www.legalandcompliance.com/reverse-mergers/

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The Cost of the Shell

In a Reverse Merger transaction,
the private operating business
must pay for the public shell company.

That payment may be in cash, equity or both.

The average cash value
of a fully reporting public entity
with no liabilities, no issues
and which is otherwise “clean”
is between $280,000 – $400,000.


http://www.legalandcompliance.com/reverse-mergers/



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Stage 1

* Dormant Shell company, that is suddenly re-activated.

* Shell that suddenly raises their Authorized Shares.

* Could be a year, or more, before they do anything.

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Stage 2:

* Filing a 15-12g

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Stage 3:

* Change in officers and company address

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Stage 4:

* Name change

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Stage 5:

* The make it, or break it, stage.

* How do they structure the merger.

* What percent of new company do shell holders end up with.

* 20-30% of new company is ideal.

* 10% workable

* Less, not usually a good deal.

* Do they do a Reverse Split

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Bottom line:

* Until you make it to Stage 5,
get the answers you need regarding share structure.

* After the merger, confirm no R/S
and get a feel whether new management
is shareholder friendly.