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Maybe sometimes. But more usually, the shell

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janice shell Member Level  Wednesday, 04/25/12 08:24:58 PM
Re: Zorax post# 24865
Post # of 192054 
Maybe sometimes. But more usually, the shell in question has been set up for the purpose.

The sequence is predictable:

-- create a shell

-- sell some stock--often using a Reg S placement--to a few people. Those people typically pay a couple of thousand dollars for their stock. At this point, the o/s is low.

-- file an S-1, with the seed investors as sellers.

-- do a reverse merger.

-- sell some convertible debt.

-- do a big forward split.

Note that throughout all this, the stock still hasn't traded a single share publicly.

The day the stock does begin trading, a promotion begins, and the company starts putting out PRs. The original selling shareholders and the holders of the notes (who'll already have converted their notes to shares) will make out like bandits.

A truly risk-free investment.

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