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Digg it UP - Why are Reverse Mergers Often the Victims of Short Sellers?
Introduction. Accountants come in all shapes and sizes. Some work with businesses, some work with individuals. Some do taxes, while others never do taxes. Many are CPA's, but you don't have to be a CPA to be a good tax accountant. Some are bookkeepers with little or no formal training. Some are authorized to work directly with the IRS, and to file your return electronically. Finding the right tax preparer can ease your burden at tax time. While finding a tax preparer isn't too hard, finding a good one can be a challenge. Here are seven steps to consider, when looking for a good tax accountant.1. Is the Candidate Authorized by the IRS? There are three types of accountants. First, there are bookkeepers who
(2). The shareholder base: In order for a company be listed on the NASDAQ Small-Cap market or the OTC Bulletin Board it must have a specified number of shareholders to qualify for listing.
(2A). Improper due diligence: Prior to purchasing a shell the private company along with the consultant that they retain to assist them in the Reverse merger should do a complete review of the shareholder list. some of those shareholder may have excessive number of shares and the true beneficial owner may be the shell owner or the consultant himself, there are a lot of smooth talking wolves posing as consultant who are operating in conjunction with the shell owner.
Entrepreneurs work harder than most Americans. They spend countless hours and enormous amounts of energy trying to reach business and financial goals that are often elusive. They seem to be doing all the right things: attending seminars, scouring the latest business books, networking, guerilla marketing, hoping, and praying.We all know of business owners who go through the same motions yet they are far more successful and don't work nearly as hard. And, they seem to have more fun. Surely you've seen situations where two people are in the same business, sometimes within a block from each other. The owner of the first business can be successful beyond measure. The other business can be close to bankruptcy.What
The small and micro-cap market is an essential part in bringing small and mid-size companies public through Reverse merger and Regulation D (504) offering, these are the two most popular methods used by small and mid-size companies to go public.
This two avenues are prefer by small and mid size companies because they simpler and less expensive than the traditional IPO, It can be refer to as a simplified fast track method by which a private company can become a public company.
I described the process in detail how small and mid-size companies can go public in previous articles, if you miss them, you can email me and I will be happy to explain it.
I have over 25 years of experience in the securities industry as market maker and trader. In my own brokerage firm and with a couple of the largest wholesalers in Wall Street. I believe my experience qualify me to write on the subject with clarity and honesty from a birds eye view.
I believe in short selling as a legitimate way of providing liquidity to the market as an essential part market making, that is not what I am referring to.
A short position is established when somebody sells a stock they do not own hoping to be able to buy it bac at a later day for a lower price.
There are several reasons why selling short the stock of companies that have gone public through a reverse merger is profitable and easy, I will identify them and suggest ways that this can be stopped once all for all without affecting the legitimate short seller who are willing to sell and bear the risks associated with carrying a short position. Reason number one (1). Corporate shells, in order for an operating private company to go public in a Reverse merger it must merger with a public shell. A public shell is what remains when a public company is bankrupt or liquidated, also some shell are created as Blank Check companies,
A Blank Check company has shareholder and maybe some cash in its books but nothing else, they are created by enterprising entrepreneurs for the sole purpose of merging an operating private company into it.
What happens is that when the shell owner sell the shell to the private company he retains 5-15% of the shares for himself, on top of collecting any where upward of $500,000.00 for himself. And even if he signed and agreement not to sell for a year, most of these people can not be trusted and will at some point dump the stock or have somebody create a short position in their behalf.
Solution: The shell owner must be made to sell the entire position and be content with the money, which in most cases represents an enormous profit. I don’t have anything against anybody making a lot of money, I am all for it because I also stand to make a lot of money, I am against the way they do it.
(2). The shareholder base: In order for a company be listed on the NASDAQ Small-Cap market or the OTC Bulletin Board it must have a specified number of shareholders to qualify for listing.
(2A). Improper due diligence: Prior to purchasing a shell the private company along with the consultant that they retain to assist them in the Reverse merger should do a complete review of the shareholder list. some of those shareholder may have excessive number of shares and the true beneficial owner may be the shell owner or the consultant himself, there are a lot of smooth talking wolves posing as consultant who are operating in conjunction with the shell owner.
About a year or so ago the national news told us that scientists in Europe cloned a sheep. As a watched the story I fantasized about cloning myself.One Mary would take care of all the logistics to run my business like e-mails, phone calls, sending out packages, filing, bills, etc. Another Mary would dedicate all of her time to networking, marketing, and following-up on sales calls. When the story was over I was snapped back into reality. The two additional Marys vanished and I was left with just myself to do it all. And I was exhausted.If you’re like me, one of the reasons you went into business for yourself was to feel more satisfied and fulfilled. The constant feeling of never getting enough done or
I described the process in detail how small and mid-size companies can go public in previous articles, if you miss them, you can email me and I will be happy to explain it.
I have over 25 years of experience in the securities industry as market maker and trader. In my own brokerage firm and with a couple of the largest wholesalers in Wall Street. I believe my experience qualify me to write on the subject with clarity and honesty from a birds eye view.
I believe in short selling as a legitimate way of providing liquidity to the market as an essential part market making, that is not what I am referring to.
A short position is established when somebody sells a stock they do not own hoping to be able to buy it bac at a later day for a lower price.
There are several reasons why selling short the stock of companies that have gone public through a reverse merger is profitable and easy, I will identify them and suggest ways that this can be stopped once all for all without affecting the legitimate short seller who are willing to sell and bear the risks associated with carrying a short position. Reason number one (1). Corporate shells, in order for an operating private company to go public in a Reverse merger it must merger with a public shell. A public shell is what remains when a public company is bankrupt or liquidated, also some shell are created as Blank Check companies,
A Blank Check company has shareholder and maybe some cash in its books but nothing else, they are created by enterprising entrepreneurs for the sole purpose of merging an operating private company into it.
What happens is that when the shell owner sell the shell to the private company he retains 5-15% of the shares for himself, on top of collecting any where upward of $500,000.00 for himself. And even if he signed and agreement not to sell for a year, most of these people can not be trusted and will at some point dump the stock or have somebody create a short position in their behalf.
Solution: The shell owner must be made to sell the entire position and be content with the money, which in most cases represents an enormous profit. I don’t have anything against anybody making a lot of money, I am all for it because I also stand to make a lot of money, I am against the way they do it.
(2). The shareholder base: In order for a company be listed on the NASDAQ Small-Cap market or the OTC Bulletin Board it must have a specified number of shareholders to qualify for listing.
(2A). Improper due diligence: Prior to purchasing a shell the private company along with the consultant that they retain to assist them in the Reverse merger should do a complete review of the shareholder list. some of those shareholder may have excessive number of shares and the true beneficial owner may be the shell owner or the consultant himself, there are a lot of smooth talking wolves posing as consultant who are operating in conjunction with the shell owner.
A few years ago, I analysed the statistics of where one of my clients, M & M Pest Control in Sydney, generated all their leads from. As a result of this, Ray Milton, the director of the company said:“Scott measured the results we were getting from our advertising, and as a result, this confirmed my decision to eliminate over $42,000.00 in unnecessary expenses – because it wasn’t paying it’s way”$42,000 is a lot of money… in anyone’s language!What did I do? I simply analysed his advertising expenses… and identified whether or not the ads were generating a strong yield for his investment.And I’m willing to bet you could do the same for your business.Right now, you're probably thinking... ible to buy it bac at a later day for a lower price.
There are several reasons why selling short the stock of companies that have gone public through a reverse merger is profitable and easy, I will identify them and suggest ways that this can be stopped once all for all without affecting the legitimate short seller who are willing to sell and bear the risks associated with carrying a short position. Reason number one (1). Corporate shells, in order for an operating private company to go public in a Reverse merger it must merger with a public shell. A public shell is what remains when a public company is bankrupt or liquidated, also some shell are created as Blank Check companies,
A Blank Check company has shareholder and maybe some cash in its books but nothing else, they are created by enterprising entrepreneurs for the sole purpose of merging an operating private company into it.
What happens is that when the shell owner sell the shell to the private company he retains 5-15% of the shares for himself, on top of collecting any where upward of $500,000.00 for himself. And even if he signed and agreement not to sell for a year, most of these people can not be trusted and will at some point dump the stock or have somebody create a short position in their behalf.
Solution: The shell owner must be made to sell the entire position and be content with the money, which in most cases represents an enormous profit. I don’t have anything against anybody making a lot of money, I am all for it because I also stand to make a lot of money, I am against the way they do it.
(2). The shareholder base: In order for a company be listed on the NASDAQ Small-Cap market or the OTC Bulletin Board it must have a specified number of shareholders to qualify for listing.
(2A). Improper due diligence: Prior to purchasing a shell the private company along with the consultant that they retain to assist them in the Reverse merger should do a complete review of the shareholder list. some of those shareholder may have excessive number of shares and the true beneficial owner may be the shell owner or the consultant himself, there are a lot of smooth talking wolves posing as consultant who are operating in conjunction with the shell owner.
The success of a small business depends upon a steady stream of good customers. To build that stream of customer a business owner must examine five critical points in their business operations. This is the first in a series of five articles that examines those critical points.Target Your Customers---The Key to Your SuccessThe heart of every small business is getting a steady stream of good customers. Other things can be less than perfect with your business, but without a steady stream of good customers, your business will eventually die.If you worry about getting more customers to your business, you are not alone. The stress and worry of getting enough good customers is the number one reason small books but nothing else, they are created by enterprising entrepreneurs for the sole purpose of merging an operating private company into it.
What happens is that when the shell owner sell the shell to the private company he retains 5-15% of the shares for himself, on top of collecting any where upward of $500,000.00 for himself. And even if he signed and agreement not to sell for a year, most of these people can not be trusted and will at some point dump the stock or have somebody create a short position in their behalf.
Solution: The shell owner must be made to sell the entire position and be content with the money, which in most cases represents an enormous profit. I don’t have anything against anybody making a lot of money, I am all for it because I also stand to make a lot of money, I am against the way they do it.
(2). The shareholder base: In order for a company be listed on the NASDAQ Small-Cap market or the OTC Bulletin Board it must have a specified number of shareholders to qualify for listing.
(2A). Improper due diligence: Prior to purchasing a shell the private company along with the consultant that they retain to assist them in the Reverse merger should do a complete review of the shareholder list. some of those shareholder may have excessive number of shares and the true beneficial owner may be the shell owner or the consultant himself, there are a lot of smooth talking wolves posing as consultant who are operating in conjunction with the shell owner.
Behavioral economics is a new science that sheds light on some of our most important decisions. It is the study of how and why people make money-related choices. Here are some of the things the studies have shown thus far:Decision ParalysisOne study showed that customers spent more when given four samples of jam to taste than when they had twenty to choose from. Too many choices seemed to lead to an inability to decide. Limiting options may be a useful sales technique, according to this research finding.Sunk-Cost FallacyPeople are more likely to attend an event if they paid for the ticket than if they got it free, even with the same information and interest. The money is spent, anr it because I also stand to make a lot of money, I am against the way they do it.
(2). The shareholder base: In order for a company be listed on the NASDAQ Small-Cap market or the OTC Bulletin Board it must have a specified number of shareholders to qualify for listing.
(2A). Improper due diligence: Prior to purchasing a shell the private company along with the consultant that they retain to assist them in the Reverse merger should do a complete review of the shareholder list. some of those shareholder may have excessive number of shares and the true beneficial owner may be the shell owner or the consultant himself, there are a lot of smooth talking wolves posing as consultant who are operating in conjunction with the shell owner.
Solution: First run the consultant’s named and his previous employer through google and see if he has been convicted of any securities related crimes and has been barred from participating in any stock related transactions. Second write the regulator and request that consultants be required to have a website with their name on it, most of this unscrupulous character operate in a stealth manner so that regulators can’t detect their activities.
Petition the Securities and Exchange commission requesting a reduction in the number of shareholders require for listing, and if a shell has too many shares outstanding don’t buy it!
(3), Market Makers: Market makers in OTC Bulletin Board Securities are permitted to maintain a short position in securities that they are acting as market makers, but what some trader do is they register for a stock and go out sell stock on the bid (the price other market makers are willing to pay) and immediately cease to make a market in the stock and keep the short position.
Technically when a trader does this, he is circumventing the intent of the rule which allows market makers to short a stock in his role as a market maker.
Solution: Require traders to remain acting as market makers until they purchase the stock back, also regulators must make clearing agent to enforce the rules concerning the delivery of the securities on settlement or execute a buy in (buy the stock back and charge the seller) if the seller fails to deliver the stock within the prescribed period of time.
I believe that these reforms will go a long way in altering the climate for participant in Reverse merger, and in removing the vultures the prey on unsophisticated business owner from the market place.
But until the regulators act the responsibility is on the business owner to perform the proper research, if I sound like a crusader maybe that is because the industry has been good to me and I hate to see the vultures taking it over.
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