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Microcap & Penny Stocks : 504 Reg D and Beyond - Going public without an Underwriter -- Ignore unavailable to you. Want to Upgrade?

To: american dreamer who wrote (19)	6/30/1998 8:17:00 AM
From: micky	Read Replies (1) \| Respond to of 50

Welcome! I agree with you absolutely, that while not mutually exclusive, a 504 is a far more effective way to go public, if properly structured and implemented. The whole reason a shell is available for a merger is because it represents a company that failed. There are generally shareholders of the failed shell company who have had substantial losses. The company that emerges after the merger needs capital - after all, isn't raising money the point of having a public company -- and the process of the merger costs money to purchase the shell, and the shell has no capital so it has to be raised somewhere -- i.e. on the market by issueing new shares and involving new investors. So the newly ressusitated reverse merger company issues new shares, generally in the form of a 504, 505, etc., and starts selling them to the public. When the public starts buying -- (let's assume this is a good company with a real story and product and people - but it really doesn't matter) generally, the share price will move up a little. Well, guess what. All shareholders in the former shell sell to get something back on what they lost, at the expense of the new shareholders who can't figure out who is selling so low (and don't forget all the fees paid in free-trading shares and the fact that the seller of the shell generally hangs onto some stock as well as taking a hefty fee). Sort of have an attitude about this. Do know of some very "clean" shells, and have seen some of these work, but it's a struggle. In the meantime, agree with you that a 504 is better. Both can be manipulated, but with a 504 the new public shareholders have a better chance at long term rewards. Better have another cup of coffee, sorry to ramble, glad you posted here and look forward to learning more.