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In a reverse merger, you keep your shares.

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ScrewThisStock   Thursday, 06/02/11 01:00:28 PM
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In a reverse merger, you keep your shares. HWEG technically 'aquires' another company. However, in the process of doing so, they will issue stock to allow the new company to gain controlling stake.

Say HWEG has 20 millions shares now. We reverse merge with some company.

HWEG issues 200 million new shares to the holders of the private company.

We still have our 20 million shares, but now highly diluted in a pool of 220 million total shares.

So yes, we will be equity holders of some new company, but at a % of value.

That so called 20 million tax advantage? Look it up, congress passed a bill back in the 80s or so that basically nullifies any deductions the new company can make against this. The only way around it is if the new company doesn't take greater than 50% stock ownership.. well.. nobody will do that.

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