Requirements Necessary to Close a Reverse Merger or Public Shell Merger

● Business plan of merger partner. Sufficient information to complete and file the required 8-K with the SEC.

● Management information, including completion of the "Officer and Director Questionnaire," for all Officers and Directors designated by the private company merger partner.

● Agreement on structure and terms of merger.

● Letter of intent with escrow payment made to public company or its principal shareholders. (This must happen for the public company to cease negotiations with other merger prospects.)

● Audited Financial Statement, conformed to US, GAAP for the private merger partner. The audit statements of the private company have to be consolidated with the public company's financial statements.

● Agreed merger fee in escrow with the securities attorney representing the merger partner.

● Consent from the majority, preferably 100%, of existing shareholders of the private company to merge or exchange their shares for shares of the public company.

● Agreement for the Officers and Directors of the public shell to be replaced with the Officers and directors designated by the private company merger partner.

● List of all shareholders in the private company that will make the share exchange.

● Number of shares to be outstanding “post merger”, and a complete breakdown of share ownership post merger. Note: It is often necessary for the public shell to do a reverse split and/or cancel shares owned by the affiliates of the public share prior to completing the merger.

● Agreement on state the company will be domiciled in post merger.

● Satisfaction of warranties and representations between public shell and merger partner.

● Designation of securities attorneys and SEC qualified auditors that will represent the private merger partner.

● Preparation of the share exchange agreement, stock purchase agreement, definitive merger agreement, and all other documents necessary to complete the merger.

● Final preparation of the 8K that is required to be filed with the SEC within 4 days of closing the merger. The 8-K must disclose the same type of information that it would be required to provide in registering a class of securities under the Securities Exchange Act of 1934. (See Sec Final Rule 33-8587, pdf file)

Examples of Successful Reverse Mergers with Public Shells

Armand Hammer, world-renowned oil magnate and industrialist, is generally credited with having invented the “Reverse Merger”. In the 1950s, Hammer invested in a shell company into which he merged multi decade winner Occidental Petroleum.

In 1970 Ted Turner completed a reverse merger with Rice Broadcasting, which went on to become Turner Broadcasting.

In 1996, Muriel Siebert, renown as the first woman member of the New York Stock Exchange, took her brokerage firm public by reverse merging with J. Michaels, a defunct Brooklyn Furniture company.

One of the Dot Com fallen angels, Rare Medium (RRRR), merged with a lackluster refrigeration company and changed the entire business. This was a $2 stock in 1998, which found its way over $90 in 2000.

Acclaim Entertainment (AKLM) merged into non-operating Tele-Communications in 1994.

Filing a Form 211 to Receive a Trading Symbol

Rule 15c211 was designed to allow non-reporting public company’s securities to be quoted on the National Association of Securities Dealers’ (“NASD”) Over-the-Counter Bulletin Board (“OTCBB”) by filing some simple disclosures.

Now, companies seeking to obtain a quote on the NASD OTC/BB are required to file reports with the Securities and Exchange Commission (“SEC”), under Section 15D of the Securities Exchange Act of 1933 (the “Act”), as amended, or section 12G of the 1934 SEC Act. A company who has filed a registration statement with the SEC using an SB-1, SB-2, or Form 10, will become a reporting company when the SEC declares the registration statement effective. Once the company is reporting, it is eligible to have a market maker file a Form 211 with the NASD. The 211 must be approved by the NASD, which normally takes 3 to 6 months, before the company can trade its stock on the OTC/BB. The NASD will require 40 to 50 shareholders and sufficient public float to approve the 211 application.