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Replies to post #33458 on Funr (FUNR)
There are literally thousands of penny stocks that are publicly traded. It isn’t uncommon for some of those stocks to become abandoned by their control people for a variety of different reasons. When a publicly traded company gets abandoned it doesn’t just stop publicly trading.
The abandoned shell will continue to trade until the day that the SEC files an administrative order to revoke the Issuers registration (for SEC filers) or until FINRA deletes the symbol (for non-SEC filers). That can often mean years of trading as nothing but a “zombie” stock ticker.
As abandoned shells, the public Issuers will fall behind with their business license at the state level (since nobody is around to pay the annual fees due to the Secretary of State). When two years pass without an entity paying its business taxes at the state level, the entity becomes revoked. This opens the door for control of the public Issuer to be taken over by an interested party such as Withrow Financial Inc., through a custodianship petition.
The interested party can file a petition with the local Court requesting that the Court approve a motion to let the interested party (or an individual of their choosing) take over control of the abandoned shell “in the best interest of the shareholders“. The only real concerns the Court
will have is that there is no objections to the motion and that the custodian has a clean background. The petitioner has to prove to the court that they have made a legitimate effort to
contact the former control people and they have to convince the court that the custodian is a respectable choice with a clean background that will act in the best interest of the existing shareholders. That usually is not difficult to do, so most custodianship petitions are granted by the Court.
Stocks that end up being taken over through custodianship petitions can offer several profit opportunities for investors for a number of reasons:
1. The share prices have often fallen on light volume to relatively low prices (for the share structure of the stock) due to years of inactivity putting some of the stocks in extremely good price ranges and setting them up with the potential for large gains if interest builds for the stock.
2. Most have seen very little trading activity for many years so much of the float is owned by non-active traders that may not even realize the stock has become active again …. this means the retail/active float is often even smaller than the true float.
3. Custodianship stocks are automatically considered reverse merger candidates. As reverse merger plays that allows for the type of speculation that can create big message board/social media pumps.
Additionally, shell companies are commonly promoted as desirable for small private businesses wishing to go public. Their chief selling point is that all the buyer need do is
reverse-merge his business into the shell, and he’ll be up and running. A public company will have greater visibility, and public company status will offer the possibility of raising money by selling securities or entering into debt financing.
Theoretically, the going-public process will be much easier and faster for the private buyer than if he decided to start from scratch. Initially, no filings with regulators—the SEC or the Financial Industry Regulatory Authority (FINRA)—are
required, and the reconstituted public entity will be the buyer’s to do with what he pleases as soon as its corporate charter is amended in its state of domicile.
Unless there is evidence of wrongdoing, the SEC generally does not like to prohibit trading of stock in a Defunct OTC public company because doing so would harm those
Shareholders who are holding stock in Defunct Stop Signs and those willing buyers and sellers who want to trade the stock.
Withrow Financial, Inc., assumes management of delinquent SEC filers marked as Stop Signs or Caveat Emptor to bring their companies current under the Exchange Act, in order to
begin reporting as a current Pink Sheet on OTCMarkets.com. We focus on taking microcap companies public on the OTB Bulletin Board and OTC Markets OTCQB.
Notwithstanding, bringing a Defunct OTC public company current is an expensive proposition . This is why Withrow Financial Inc. seeks investor funds to cover the fees and cost associated with bringing these Companies current
with the SEC and the Financial Industry Regulatory Authority (FINRA).
Bringing a company current generally restores the value of the stock, thereon protecting all current shareholders and boosting the value of any shares acquired prior to reinstatement.
Once the shell has been reinstated, and all shareholders are duly protected, we sell the shell for profit, which generally ranges anywhere from 100 -150% of it’s pre-reinstatement value, and which funds we remit to our investors.
If you are an interested investor, please contact investor relations at: 760-809-8079.
AI
