These reverse mergers have various stages of readiness and upside potential. Here's a list I made maybe it can help people going forward.
Good one, everyone what else should go on this list. People putting too much money into those stage 1's and 2's without understanding how these things work. There would be a lot more cash on the sidelines inclined to invest in these mergers if they all didn't get trapped in dead shells that might never do a deal. So what else needs to be added to this list?
Rainmaker Merger Countdown Chart
Stage 1 would be a dormant shell who is suddenly reactivated (Weakest one, could be a year+ before they do anything). Also, a shell who suddenly raises their A/S or creates some new Preferred shares would be a stage 1. Still weak.
Stage 2: would be filing a 15-12g (Still very weak, might be nothing more than someone who couldn't afford their auditor anymore, unless coupled with a name change).
Stage 3: would be a change in officers and company address (This one is a decent place to real radar this one, maybe nibble a bit). What you want to see is the new officers have a decent track record on past business deals especially if they did a successful merger in the past.
Stage 4: would be a name change (I split this stage into two lists. One's I can not find any info on new company. These I watch but don't buy. A real company who is already doing a lot of business should be al over google. The good one's are the one's where new company name is all over google, appears to have decent revenue.
Now even if you make it through these four stages, Stage 5 is the make it or break it stage.
Stage 5: How do they structure the merger. What percent of new company do shell holders end up with. 20-30% of new company is a dream split. 10% workable, less not usually a good deal. Also, do they do a R/S a deal killer almost every time.
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....these are lotto's you throw a few dollars at hoping to get lucky. After Stage 5 you can find some life changing deals after filtering down to a few strong one's who are about to be up and running.
By: The Rainmaker Share Wednesday, September 29, 2010 11:17:05 AM
Re: nsomniyak post# 25832 Post # of 25840
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