Advantages of a Reverse Merger

• Management Time Requirements – There is considerable difference between the amount of time your management team will have to devote to going public through a reverse merger versus going public through a traditional IPO. If you have hired an experienced consultant to source you a qualified OTCBB shell you will not have to dedicate an extraordinary amount of time bringing your company public. Completing an audit of the last two years of your financials in a timely manner will take up a good bit of time. If you have a good local accountant that has been keeping your financial records in order then your CPA firm should be able to complete the audit in 60 days. Make sure that your CPA firm has PCAOB designation. This is a requirement by the Securities and Exchange Commission (the SEC).

Unlike a traditional IPO, a reverse merger does not require a full blown SB registration statement. The attorney representing the Seller will have to file an 8K with the SEC that outlines the reverse merger transaction. Your attorney will then file either a Proxy or Information Statement with the SEC that explains all facets of the new business, any reverse stock splits, etc.

Most company executives do not realize what they’re getting into when they pursue a traditional IPO. The preparation of documents to file an SB-2 with the SEC along with your audited financials will usually take an enormous amount of man hours to complete. In addition to the time (9 to 12 months) the process takes away from your executive team actually running and growing your business there are countless other “going public” related areas to address: countless due diligence meetings with attorneys, accountants and investment bankers, dog and pony shows to prospective stock brokers and fund managers to raise money for your IPO and lets not forget the huge cash drain on your company. Remember with a traditional IPO regardless of whether you pass the finish line and become public or not you are out all of the money you spent – and that number is usually north of $2,000,000 which excludes underwriting fees.

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