Replies to post #4560 on International Building Technologies Group, Inc.(fk

[Bramabill]

Scaler read Mactheknifes posting in regards to S-8 shares, and by the way did you read the quarterly wouldnt you agree they only have 60K in cash,? and given the loss of last quarter it would be about on this time line that they would be pretty much out of cash. That is the way I look at it. How can the CEO make a deal with potential revenues of 1 to 5 million with no assets, no cash, and a negative balance sheet?

[flaflyersfan]

scalecarfan,

You truly haven't gotten it although explained on this board dozens of times. Remember, this company is run by two professional stock traders and majority ownership is by another with a history of OTCBB stock exchanging companies.

If S-8 shares are given to officers which increase their holdings; they must file Form 3,4, or 5s declaring the increase and can only sell a predetermined % depending on volume and the filing of a Form 144.

If they give S-8 shares to "employees" or consultants, they can be cashed out immediately with no registration. I'm still not too certain about the legality of using the proceeds of these S-8 shares as cash put back into the company- but I would think that they would know the rules. The sec.gov website goes into exhausting detail on the subject. Here's the best link I've seen in layman's terms;

S-8 registrations enjoy two immeasurable benefits: S-8 registration statements are not subject to automatic review by SEC examiners, and become effective immediately upon filing. Once the Form S-8 is filed, the S-8 shares are registered, free trading stock. Company counsel can then issue an opinion letter to the company's transfer agent asking that unrestricted shares be issued in the name of the employees under either the consultation contract or employee benefit plan.

A History of Abuse

The SEC's literature on S-8 routinely notes two primary areas of abuse that are strictly forbidden. First, companies fraudulently issue S-8 stock to nominal employees or consultants, who then sell the shares at the direction of (and for the benefit of) the issuer. Second, Form S-8 has been misused to register securities issued to compensate advisors who then use the shares to hype and/or promote the issuer's securities. These two specific misuses have routinely led to SEC investigations and prosecutions by SEC staff. See http://www.sec.gov/litigation/admin/3-9597.htm, for a sample case.

When S-8 Cannot Be Used

As discussed, the SEC's prohibitions on the use of S-8 fall ultimately into two areas: a prohibition on the use of S-8 to raise capital, and a prohibition on the use of S-8 to promote the issuer's stock. In practice, these prohibitions are necessarily expanded to, for example, forbid S-8 shares to compensate persons who arrange reverse mergers. The SEC's position is that reverse mergers too often deteriorate into pump and dump schemes. Similarly, S-8 shares cannot be used to compensate anyone if the issuer or a promoter directs the resale of the shares, or the issuer receives any of the proceeds.

Also, S-8 shares must be issued to an individual person who provides bona fide services, not an entity such as a partnership or corporation. The SEC reasons that they wish to prevent "the use of consultant entities as underwriters." Note, however, that the consulting contract underlying the S-8 issuance can be between the issuer and an entity, "as long the securities registered are issued to the natural persons working for the consulting entity."

Thus, the following five rules summarize S-8's explicit prohibitions:

· S-8 shares cannot be issued in connection with promotion of the company's shares.
· S-8 shares cannot be used if the issuer or a promoter controls or directs the resale of the shares.
· S-8 shares cannot be part of a capital raising-scheme or if the issuer receives a share of the proceeds of resales.
· S-8 shares cannot be issued to persons who arrange reverse mergers.
· S-8 share must be issued to natural persons for bona fide services.

Services for Which S-8 May Be Issued, and a Warning

As long as the S-8 prohibitions are avoided, S-8 can be issued in exchange for a wide range of services. Of course, because Form S-8 is not subject to automatic SEC examiner review, the SEC will never advise that S-8 is or is not appropriate. The only way an issuer will ever learn that an S-8 issuance was improper will be if the matter comes to the attention of the Division of Enforcement. Thus, caution is obviously warranted. If an issuer ever doubts the appropriateness of S-8 shares in a particular circumstance, the best course is to postpone the S-8 filing and secure a no-action letter from the SEC.

The SEC has offered a substantial degree of welcome guidance by outlining specific types of compensation for which S-8 share may be issued. Of course, individual circumstances can render these examples worthless. The following services have been explicitly outlined by the SEC as examples of services for which S-8 stock may be issued:

· Consultants who provide traditional product or corporate image advertising (except when done to promote a company's stock).
· Business development consultants retained to identify another company as a potential partner for technology development.
· Consultants who advise the issuer on business strategy or compensation policies.
· A consultant who arranges a bank credit line.
· Attorneys who represent an issuer in matters not relation to its securities, such as litigation defense, securing U.S. Food and Drug Administration approval, or obtaining a patent.
· Attorneys who prepare the issuer's Exchange Act reports and proxy statements.
· Attorneys and other consultants who assist an issuer in identifying acquisition targets, or in structuring mergers or other acquisitions in which securities are issed as consideration, unless the acquisition is a typical reverse merger.

http://www.learnaboutlaw.com/newsletter/v0001.html

Hope this helps again.