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Microcap & Penny Stocks : Private companies using reverse process to go public -- Ignore unavailable to you. Want to Upgrade?

To: jas244 who wrote (30)	5/4/1998 11:41:00 AM
From: Chloe R	Read Replies (1) \| Respond to of 62

Hello James! I was wondering where you had got to. I did a quick look at it, but I must put forth a disclaimer. Again, I am more familiar on the private evaluation side rather than the shell side. But I will offer some observations: Shells typically cost between 3% and 15% to the merging private company. Usually, the higher the potential of the private company, the lower the cost in terms of percentage of the private company given up to get the shell. However, the same is of course true on the other side as well: the cleaner or better the shell, the more expensive to the private company. Given the number of shares going to the shell after the reverse, etc., it looks like this one costs the private company about 12% - the high end of the spectrum. Either the private company was deemed to be really mediocre or the shell was deemed to be really great, or both! Of course, one's ability to negotiate is a factor here also. My quotes are delayed (yahoo), but when i checked it last traded at .047 at 10:56 am EST. Post reverse would have the shares trading at $18.80. And with 8,264,569 shares outstanding post merger, that puts the market cap of the new company at $155,373,897. Unfortunately, we don't know the bottom line of the private company's $30 million in annual sales. Only them could we really figure out if it is priced as a bargain right now. I'd venture a guess that the shell is already at a P/E of 50 + given the earnings of the private company, because somebody out there did the DD during the last few days. If the private company had about a 10% bottom line, that's were it's at. But I don't know enough about the private company to pass or participate in the shell at this point. I'd guess that it's probably fairly priced right now. Sorry, I probably raised more questions! Clo