Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : HISC -- Homeland Integrated Security Systems Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Walt K who wrote (42)	4/7/2005 5:01:45 PM
From: rrufff	Respond to of 1970

It's typical when you reverse merge with a shell basically to go public. Given the IPO market has been dead for a number of years since the internet bubble popped, the way for a company to go "public" is to merge with a corporate "shell" that has no business or assets. The value of a shell can be in the range of a 1/2 million dollars, depending on whether there are tax losses, debts, or problems with the corporate entity. The old shareholders bascially get a windfall because the old business was essentially worthless. The new company may already be a thriving business or it may be a start-up or something in between as I believe this business was. I believe it already had a business plan, contacts, preliminary contracts and proprietary processes. In that type of case, the owners of the business and the people that controlled the shell (speculators and lawyers) negotiate that the shares would be split with a certain percentage going to the old shell shareholders, a certain percentage going to lawyers and promoters, and the lion's share justifiably going to the owners of the business. They would accomplish this through splits or other changes in the capital structure. I've given a hypothetical summary but most follow this pattern. It was their business before they went public so it's understandable that they have most of the shares. From the point that the merger takes place, this is when it is important to determine that the public is being treated fairly. In this case, given the price per share of 1/2 cent, a market cap of about $5 million seems very low given the filing which shows the existing revenues and actual earnings. Note - this is my opinion only and I only have the filings to go on. But very few pink sheet companies have actual revenues and earnings. Most have promises and lots more shares.