Cloudward Inc. (CDWD)

[dejavu alloveragain]

you don't know that much about reverse mergers.

let me share an example or two about how they work.

sure you may be right and the shares here go POOF.
ultimately you don't know, and I don't know. this scenario is unusual enough, and lots of smart people here can't agree how to interpret the filings or the pr.

however, I've been in hundreds of reverse merger plays.
and lots of them didn't go poof. and its the ones that don't that make up for all the rest that eventually do reverse splits and take all your position away.

here is an example I'm sure you've never seen
explain this one to me:
WSDT.pk

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=wsdt&sid=0&o_symb=wsdt&freq=2&time=12

I saw the first pr hit when it was .04 per share, and I bought shares at the very bottom. a new business folded into the pinksheet ticker. I thought I was smart, and sold with a nice gain somewhere in the .30 area. it went to 9.95 and a valuation of over 700 million. and it never reverse split. it had a ticker change later, which never affected share count.
now its planning to move to a bigger exchange like the nasdaq.

the only reason reverse mergers are of interest to private companies is that there are public shares in the float already being traded. that remain in the float after the merger. period. otherwise, you just do a form 10, and forget the hassle of negotiating with some pinksheet worthless company, and giving them cash and a percentage of your company. what for? because there is already a market for the shares. no other reason to do it. it all about liquidity.

when you launch a new company and use form 10, you have to find market makers willing to trade your shares. and then you have to create a market for your shares which will probably come on the OTC market at 4 or 5 bucks a shares, with a huge wide bid/ask spread. and as a result, no volume. thus no liquidity.