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Microcap & Penny Stocks : 504 Reg D and Beyond - Going public without an Underwriter
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To: PitBull who wrote (42)7/16/1998 4:32:00 AM
From: american dreamer  Read Replies (2) of 50
 
Ok here are your answers.
1. Is the purpose of a 504 to get listed as a NASDAQ stock as opposed to just being
an OTC BB stock? no
2. Do existing OTC BB stocks ever go through a 504 to become NASDAQ listed? Normally no.. highly unlikely. All the 504 will contribute is another million in assets.
3. If the answer to number 2 is yes, then the OTC BB is ALREADY public...the title of
this thread says going public...
4. What exactly does an underwriter do? Do they guarentee the money for the stock
will be there? Underwriters contract with the company to assist in the fund raising and to provide other services in the area of public markets.
5. How do you know if an underwriter is reputable or not? Check existing and previous clients.. unfortunately you will not know the companies who contracted with them who they did not get capitalized and trading.
6. How do you know if a transfer agent is reputable or not?check their references.
7. Why would a company NOT want an underwriter? Cost/benefit. A company needs the following things to be successful in an underwriting. This involves raising the money, getting the stock trading and supporting the stock. An underwriter will normally do the first two. There are consultants who can do the last two and help with the first as well. It is doubtful that a company can accomplish the last two items alone, so either an underwriter or consultant is necessary.
8. Does a reverse merger into a shell mean it is a 504? If so, why must it be a reverse
merger into a shell? Why not just buy the shell? Or why the reverse merger in the first
place? Can a 504 take place with just a reverse merger and no other new companies
involved? Does a reverse merger always involve a symbol change? A permanent symbol
change? A reverse acquisition (the correct term) involves placing an existing company into an existing publically tradable corporation (shell). The shell can be purchased to make a better deal. It is called a reverse because the acquired company winds up with control. A 504 can follow a reverse acquisition if you reverse into a nonreporting shell but it defeats the purpose of the reverse normally. A symbol change is optional if the shell already has a symbol and is trading. Otherwise, you get a new symbol when you submit to trade the stock.
9. What is the POINT of a 504...a shortcut to doing what and for what reason? A 504 is a way to raise a maximum of $1 million and to be able to trade your stock without filing with the SEC prior to selling your stock.
10. Does a company who is doing a 504 give notice to shareholders? Are they required
to? (so a shareholder has the opportunity to sell the stock in case they do not want to be
part of a reverse merger) Depends upon the state of incorporation.
11. Are reverse mergers general;ly better for a stock than a reverse split? Yes. Generally but not in all cases.
12. Does a reverse merger into a shell mean an automatic symbol change
and would that symbol change be something entirely new, or would the symbol be the
existing symbol for the shell company it was reverse merging into? If the stock is trading and has a symbol, the company can apply for a new symbol.
13. Can you give me some symbols of successful and unsuccessful companies that have
done a 504 reverse merger into a shell, so I can look at the pricing history? 504s and reverese acquisitions are different animals. The success or failure of either is as dependent upon who structures and manages the transaction as it is the quality of the comany. Also, long and short term success are quite different... but yes I can
14. Does the float get smaller & stay smaller, or do additional shares end up getting
printed which essentially negates the growing value of the stock? This question makes no sense.
15. Can a shell company be listed on NASDAQ? And if so, how does a shell company
get allowed to be NASDAQ listed when many REAL companies that are OTC BB are
NOT? (assuming they are both reporting of course) NO
16. how does an investor learn about which companies will be going through a 504
BEFORE it actually takes place? Do companies publish press releases about this? Some companies try to get the word out at the time of the offering. To know about it you must know the company ahead of time or know the underwriters or consultants. My netword always knows when a client of mine is about to offer its stock through a 504.
17. What is the worst case scenario? What is the best? Wosts case is a company pays lots of money to someone to raise them money and little or no money is raised and the stock never starts trading and the company goes under destroying the hopes and dreams of the principals and shareholders. Best case.. the company sells out the offering, begins trading and the public loves the stock and it trades at a significant premimun to the offering and then goes on to execute its business plan successfully fulfilling the hopes and dreams of the principals and the shareholders.

You can write me for more information if you need it. It sounds like you are contemplating a 504.. true?
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