DD on Shell companies ..!

[fastwalker]

;D FYI...INSTRUCTIONAL /INFORMATIONAL...Links provided by Turbotrader..

SGGM was a mining company, but as of April 22/03 it became a Shell company.

www.shellstockreview.com/ssrUpdates2003.htm

Shell companies are businesses that no longer do their business but have retained their capital structure (stocks). The main purpose of a shell company is to do "reverse mergers".

www.shellstockreview.com/ssrShellLinks.htm

So long story short, a private company would merge with shell company and will emerge on the NASDAQ Small Cap Market a brand new publicly traded company.

;D

[azesm]

fastwalker




How to value a Shell Stock

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How to value a Shell Stock

MAJOR CONSIDERATIONS

VERIFIED SHELL STOCK LOOKING FOR AN ACQUISITION: it should be actively looking for a reverse merger. Verification can come from SEC reports, news releases, or verbally from company management.

EXPERIENCED MANAGEMENT: management must understand the mechanics of a reverse merger and know a good business opportunity. If management is not experienced, it is imperative they are working with an experienced consultant.

SEC Reporting: it must report regularly to the SEC. This is known as a "reporting company." We want to be able to verify information about the company from public/legal filings . . . not by word of mouth or rumor. Believe it or not, there are public companies that are non-reporting.

CLEAN: it has little or no debt, no pending law suites, and little or no outstanding convertible securities (preferred stock or warrants). We don't want anything that can complicate the reverse merger.

SMALL NUMBER OF OUTSTANDING SHARES: the smaller the number of outstanding shares, the better. A smaller number of outstanding shares lessens the chance of a Reverse Stock Split. A Reverse Stock Split can lessen the chance of price appreciation.

LOW MARKET VALUE: basically, this is the buy low sell high rule. A Shell Stock with a low Market Value will have a greater chance of price appreciation than one with a high Market Value. (Market Value = price X shares outstanding). NOTE: the Profile List by Market Value sorts the Shell Companies from low to high Market Value.

CASH ON HAND: some Shell Companies have cash remaining from their previous business endeavors. Having cash to fund the new company's business plan will attract high quality candidates.

MINOR CONSIDERATIONS

TAX LOSS CARRY FORWARD: the new company can offset future net income with the Shell Stock's Tax Loss Carry Forward.

EXCHANGE LISTED: it is better for the Shell Stock to be listed on a stock exchange (NYSE, AMSE, NASDAQ, OTCBB). But, there are some quality Shell Companies that are trading on the Pink Sheets.



INDICATORS

INCREASED VOLUME/PRICE: increased volume and price with no news may be an indicator of a potential reverse merger. Information on a reverse merger sometimes leaks out and insiders/family/friends start buying before the reverse merger is announced.

CORPORATE ACTIVITY: cleaning up debts, law suits, and issuing reverse splits can indicate management is getting the shell company ready for a reverse merger.

www.shellstockreview.com/ssrShellValues.htm

[fastwalker]

;D FYI..COULDN'T DECIDE WHERE TO PUT THIS...?

The Reverse Merger
The term reverse merger refers to an alternative strategy by which a private company seeks and acquires public listing and becomes a publicly traded company. In a reverse merger, a private company merges with a public company and continues as the dominant successor entity. Optimally, the public entity has no assets, liabilities or operations prior to, or concurrent with the merger. Public companies actively seeking such mergers are sometimes referred to as blank check companies or public shells, given the fact that ideally only their corporate structures and status as publicly listed entities and fully reporting issuers are the dominant features of interest in such a merger. By merging into a shell, a private company becomes public in an expeditious and cost-effective manner.

The private company merges into a public company and obtains the majority of its stock (generally ranging from 80-95%) Once the merger is consummated, the post-merger, combined entity changes its name to that of the private company, appointing and electing key officers and directors and the discretion of the private company.

The advantages of public trading status notably include the possibility of a greater likelihood of capital formation. Relative to a private enterprise, a public company is potentially more successful in attracting potential investors and investment banking firms for the purposes of raising additional funds. Going public through a reverse merger allows a private company to go public rather relatively quickly, at a substantially lesser cost and with less resultant dilution than traditional initial public offering (IPO) or direct public offering (DPO) strategies. While the process of going public securing fully reporting status and raising capital is combined in an IPO, in a reverse merger these two functions are unbundled; secures public listing first then seeks additional capital formation Via this unbundling operation, the process of going public is significantly simplified. The advantages of public listing or going public include:

Increased liquidity of the ownership shares of the company
Higher share price and thus higher company valuation
Greater access to the capital markets through the possibility of a future stock offering
The ability of the company to make acquisitions of other companies using the company's stock
The ability to use stock incentive plans to attract and retain key employees
Going public can be part of a retirement strategy for business owners.
The benefits of going public through a reverse merger, as opposed to the traditional IPO process, include the following:

The costs are significantly less than the costs required for an initial public offering
The time frame requisite to securing public listing is considerably less than that for an IPO
Additional risk is involved in an IPO in that the IPO may be withdrawn due to an unstable market condition even after most of the up-front-costs have been expended
Traditional IPOs generally require greater attention from senior management
While an IPO requires a relatively long and stable earnings history, the lack of an earnings history does not normally keep a privately-held company from completing a reverse merger
There is less dilution of ownership control
No underwriter is needed: (a significant factor to consider given the difficulty companies face in attracting an investment banking firm to commit to an offering)
Typically publicly traded companies enjoy substantially higher valuations

;D FOR INFORMATIONAL PURPOSES...

[azesm]

Good find! Thank you!