Paychest Inc (PYCT)

[tnew2004]

BOY DOES THIS SOUND FAMILIAR

There is a cottage industry of merchant bankers and entrepreneurs who specialize in orchestrating reverse mergers. Unfortunately, there are no barriers to entry in this field. Therefore, scams are common place.

Through various methods, scam artists manage to accumulate large positions in the free trading shares of the shell company. An RTO is consummated with a marginal private company, and the scam artists put together a massive publicity campaign designed to create activity in the stock. Unrealistic promises and absurd claims of corporate performance find their way to the public. The enhanced trading volume allows the scam artist to dump his shares on the unsuspecting public, most of whom eventually lose their money once the newly formed public company fails. This scam is commonly known as a "Pump and Dump".

Alternatively there a hundreds of examples of highly successful companies which have yielded millions in profits for investors that have gone public through the RTO. Many of these companies deserve exposure to investors. Initial valuations can be reasonable, providing excellent opportunities for individual investors to accumulate positions ahead of Wall Street institutional money.

Here are some high-profile and successful RTOs:

Armand Hammer, world renowned oil magnate and industrialist, is generally credited with having invented the "Reverse Merger". In the 1950s, Hammer invested in a shell company into which he merged multi decade winner Occidental Petroleum.
In 1970 Ted Turner completed a reverse merger with Rice Broadcasting, which went on to become Turner Broadcasting.
In 1996, Muriel Siebert, renown as the first woman member of the New York Stock Exchange, took her brokerage firm public by reverse merging with J. Michaels, a defunct Brooklyn Furniture company.
One of the Dot Com fallen Angels, Rare Medium (RRRR), merged with a lackluster refrigeration company and changed the entire business. This was a $2 stock in 1998 which found its way over $90 in 2000.
Acclaim Entertainment (AKLM) merged into non operating Tele-Communications Inc in 1994.