Re-Posted for informational purposes only. This is not a solicitation to buy or sell any stock mentioned herein. I saw this on the BOBz's Forum and copied it for re-posting hereon. It is not intended for profit and/or personal gain:
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Hot Stock Tips
In response to earlier question. What IS a reverse merge, and WHAT are its benefits??
[CDNO]
rca77 [207.66.20.192]
roady@gilanet.com
Reverse Merger vs. IPO
Going Public by Reverse Merger
In 1970, with no cash and in an exchange of stock, Ted Turner gained control of publicly traded Rice Broadcasting
(WJRJ-TV) using a little known maneuver called a reverse merger. Virtually insolvent, but with a bold vision and control of a
public company, he was able to tap the capital markets of Wall Street. His stock in the former Turner Broadcasting System (TBS)
now Time Warner (TWX) is worth over three billion dollars.
In February of 1996, Wall Street's top woman Muriel Siebert, who in 1967 became the first woman to buy a seat on the New
York Stock Exchange., took her brokerage firm Muriel Siebert & Co, Inc., (SIEB) public through a reverse merger with J.
Michaels, a liquidated Brooklyn furniture company.
The legendary Arman Hammer invested in a public shell company in the 1950's and created an International company with
14,300 employee's worldwide and operating revenue of $10.6 billion in 1996. It's known as Occidental Petroleum Corporation
(OXY).
Reverse Mergers bring Public Shell Companies back to life.
Companies usually go public by finding an underwriter and filing a Registration Statement with the Securities and Exchange
Commission (SEC). An alternative method of going public is to effect a reverse merger into a public shell company.
When the reverse merger is complete the operating company that wants to be public is merged into the public shell company.
The public shell company is the legal surviving corporationThe name of the public company is changed to the name of the former
private company and the controlling shares are transferred to the officers of the former private company. The net effect is that the
former private operating company is now public with the same business, officers, directors with its shares being traded on the over
the counter (OTC) Bulletin Board or on NASDAQ. The old shareholders
of the public shell company also benefit; their old
worthless shares now have value
Reasons to Go Public
The public company achieves liquidity for its shareholders through
the OTC Bulletin Board or NASDAQ. Insiders "controlling
shareholders" also achieve liquidity under Rule 144, which allows control people to sell, unregistered stock under certain conditions.
A public company can use its stock to purchase other companies, collateralize loans or reduce debt in exchange for stock.
Employee stock option plans also increase incentive.
The capital markets of Wall Street could open to the company through private placements and secondary stock offerings once
the market for their shares is established. Capital can also be raised through Reg S, offerings to foreign investors. Under certain
conditions free trading stock can be created to reimburse for services rendered, under an S-8 Registration.
Why Shell Mergers?
There are four major advantages of a shell merger. It is a less expensive method of going public, and if the shell has capital,
you will know before the shell merger precisely how much equity you must give up for that capital. In the traditional IPO, you do
not have assurance as to how much capital you will actually receive until the effective date of the IPO, after you have already
spent a substantial sum. After the merger, the existence of a public trading market in you company's stock is a very useful in
attracting additional capital, since the market provides immediate liquidity for the investor. And finally, if the shell has a tax loss
carryover, that carryover, subject to significant limitations, may be available to shelter the taxable income of your business.>>>
As a matter of record on last Friday, I sold all of my AMDI shares and put the proceeds into another Public Shell, OTC:BB, CDNO. Only time will tell if I am right or wrong. But, the fact is they are both very risky stocks.
WARNING: Investing in Penny Stocks and especially Public Shells, can be very hazardous to your wealth.
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