Mtnres: This is an example of a trading shell as published by SD
December 21, 1997
deputy: Bill Davis
city: Springfield, MO
subject: Future Healthcare (OTCBB: FHCI)
DD comments: Why is this stock still trading, from what I heard, it went out years ago?
SD Reply: It is not uncommon for a company to cease operations while continuing to list its
shares for quotation on the OTCBB. From time to time its shares may even trade, usually for
pennies. Typically this would be referred to, in the vernacular of Wall Street, as a "trading shell."
The person or persons having a controlling interest in the shell corporation are probably hoping to
sell their shares in the future when the shell may become attractive to new investors or a private
corporation which would seek to become public through a "reverse-merger" with the shell
corporation. This may not occur for some time, if ever at all. The market for shell corporations
with little or no assets is not very predictable.
If you presently own shares in the shell, you probably can't do much other than hold on to them.
Chances are if you tried to sell now you wouldn't find a willing buyer at any price. However, if a
merger takes place later and the shares of the new company become actively traded, you may
have an opportunity to sell and at a value greater than today's.
But don't get your hopes up too soon. Most reverse mergers are conditional on a reverse-split,
thereby reducing your equity in the successor company significantly.
After all, fair-is-fair. If you invested in the former company, which since went bust, why should the
new shareholders of the successor company reward you beyond the value of your interest in the
shell? |
