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Microcap & Penny Stocks : MegaWorld Inc. (MEGW) -- Ignore unavailable to you. Want to Upgrade?

To: Emec who wrote (870)	11/15/1998 12:36:00 PM
From: BS Buster	Read Replies (1) \| Respond to of 1058

David, this TBS deal raises a few questions for me. First, why would a real company like TBS with hundreds of employees, growing revenues and profits agree to be acquired by MEGW which is still nothing but a shell? If the intention was to become public why not go through a underwriting and become an IPO. Sure it's a slower process but the benefits of underwriting are immeasurable compared to a backdoor acquisition win a BB company. As an IPO you get immediate institutional following, good trading exchange, good market makers etc..In this deal there is none of that and the only choice the company has is to pay promoters to hype up its stock. And I don't think I have to tell YOU how these situations end up. In addition there is the ever-present stigma of being a BB company to forever haunt you. Just doesn't make sense. Another question is since MEGW has no cash flow from any operations, what is it using to acquire TBS? Considering recent stock price obviously lots of stock. Issuing so many new shares will greatly dilute earnings among other things. More importantly, since the terms of the deal were not disclosed it is quite possible that there are some conditional provisions in the contract that would require MEGW to come up with cash by a certain date (presumably from telephony operations) or the deal would be dissolved. I've seen many such contracts. If telephony does not work out, say like the magazine, for example, what is left then?