INITIAL PUBLIC OFFERINGS ARE THE MOST SOUGHT-AFTER FORM OF FINANCING, HOWEVER, SURPRISINGLY FEW COMPANIES CAN FIND A BROKER DEALER WILLING TO UNDERWRITE THEIR DEAL.

The truth is that financing has always been a Catch-22 for most companies. Many promising small companies find it extremely difficult to obtain funding because they are private. But without funding, they can’t hope to grow to the size that would allow them to go public.

Being a private company is anathema to the capital-formation process. Why? Because without an exit strategy, investors have no way to get their money out or realize a substantial return on their investment. The other side of the coin is that a company that has been properly funded realizes its true potential and eventually will provide a sizable return to its shareholders.

If your goal is to go public you may want to consider a route that’s less burdensome and may be equally lucrative: a reverse merger. In a reverse merger, a private company acquires an already public OTC Bulletin Board Shell. Your company replaces the existing dormant company within the shell. Completing a reverse merger can lay the groundwork for receiving funding as a public company and for substantial capital growth.

There are three primary reasons to use a reverse merger:

· Listing Qualifications: Companies that back into shells are listed on the OTC Bulletin Board and do need to meet SEC filing requirements as a fully reporting company. However, they do not need to meet stock exchange listing requirements, such as NASDAQ or AMEX, that include earnings and net capital requirements.

· Market Conditions: Conventional IPO’s are risky for companies to undertake because the deals depend on market conditions over which you have no control. If the market is off, the underwriter may cancel the offering. If a company seeking an IPO is in an industry that is considered undesirable at the time, investors may shy away from the deal, causing it not to get funded.

· Cost: Purchasing a shell is not cheap but it is still only about one third of the cost of going public through a traditional IPO.

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