Videolocity International Inc (VCTY)

[tgroot00]

EVERYBODY READ THIS

Some DD for you all to eat

VERY informative: 'Reverse Mergers - trading OTCBB shells and Rule 419 shells - timing of PCAOB compliant audits'

Auther profile:
Name: John Petersen
Location: Barberêche, Switzerland

U.S. born Attorney at Law and Certified Public Accountant with 28-years of hands-on experience in seed financing, private placements, IPO registration and SEC reporting and compliance.

MOST IMPORTANT BIT, READ!!

It is true that a trading OTCBB shell can close a reverse merger first and report the merger to the SEC three days after the closing. It is also true that the ability to close first and report later does theoretically shorten the time to the commencement of trading by the time it would normally take the SEC staff to review and comment on a post-effective amendment. But there is a major fly in the ointment that the trading OTCBB shell promoters usually fail to either recognize or mention.

A reverse merger with a trading shell is treated as an acquisition of the public shell by the private company for accounting purposes. That means the financial statements that the combined companies must file with the SEC within three days after closing must be audited by a PCAOB registered public accounting firm. If a private company that is considering a merger with a trading shell is fortunate enough to have financial statements that are audited by a PCAOB registered firm, then the promised time savings may materialize. If the private company's financial stateents are not already audited by a PCAOB registered firm, then the pre-closing timeline will have to be extended for several weeks while the private company goes out to hire a new PCAOB registered auditor and have its historical financial statements reaudited by the new firm.

Rule 419 EXPLAINED
An SEC rule that stipulates that funds received by a blank-check company from an issue of penny stock must be placed in an escrow account for the benefit of the purchaser.