Disadvantages of being Public either via
a Reverse Merger or an IPO

● Less Confidentiality – complete financial disclosure is required to become publicly held.

● More Public Reporting – Reporting expense is greater because of the need for full disclosure.

● Ownership Dilution – Owners give up some equity percent.

● Greater Time Involvement – Management must devote additional time to public company operations.

● Greater Liability – More company visibility brings a higher level of liability exposure.

● Increased Expense – Higher costs of regulatory compliance for audit, legal and investor relations.

Preparation for a Reverse Merger or Public Shell Merger

● Locate a Suitable Public Shell - Public shells can often be found by consulting with securities law firms or CPA - Audit firms that deal with public companies. Go Public Institute owns a number of public companies available for merger.

● It is important to start with a clean shell: Due diligence on the public shell cannot be over emphasized, advice from your securities counsel, auditors, and a financial consultant should be utilized. As was mentioned, many shells are created for the express purpose of merging with a private company. These shells have no predecessor entities, and, as a result, little baggage in the way of a business failure or other skeletons in the closets.

● Comprehensive Business Plan – Potential investors, public shareholders, auditors, securities counsel, brokers and market makers will want to see a well documented business plan.

● Strong Management Team – Public investors demand strong management teams.

● Convincing Marketing Plan – Public companies need the ability to show good sales and earning growth.

● Product or Service – Public companies should be able to develop strong or dominant position in their business segment.

● Financial Audits – SEC qualified audited financial statements for your last two fiscal years.

● Experienced Securities Counsel – Your attorney must be qualified to deal with regulatory compliance, and the ongoing reporting requirements of all public companies.

● Have Public Company Experience: Your company should have at least one person in senior management that has significant public company experience. Financing consultants, such as Go Public Institute, can often assist management in the complex issues of being a public company and maintaining a good relationship with the financial community. In fact, many actually have a couple of shell corporations and, upon request, can manufacture a clean public shell. A made-to-order shell without the baggage of a business failure in its background can sometimes be the way to go, but there's often a cost involved. You will most likely end up with the financing consultants as minority shareholders in the new company, holding between 2 percent and 5 percent. However, in almost any reverse merger transaction, the principals of the shell company keep a small equity position in the company going forward. Therefore, this surrender of equity is simply a cost of doing business.

● Devise your financing strategy: A reverse merger is an indirect route to raising capital. Entrepreneurs must first consider how additional capital will be raised after the deal is done. An experienced financial consultant, like Go Public Institute, can be very beneficial in this area.