Pinksheets and Reverse Mergers

[rpr]

Most of the people I've known involved in OTCBB or Pink Sheet companies have been fraudulent or questionable at best.

Apologies for my negative comment. Also I don't own that stock, so I wasn't trying to promote it. It just seems like an anomaly since they are producing Al Pacino films and if they had a credible public company they could position themselves for bigger growth.

As for my friend, the point of a film fund is to leverage more bank debt and use less equity per film and eventually you build a large asset -- the film library. So I suppose he wants to go public to raise more money, build a bigger library with aspirations of being the next Lions Gate in 5-10 years. But it just seems like a scam.

Thanks for your info.

[DesertCat]

I used to own a company (OCCF at the time) ironically because it was doing a reverse merger to stay on Nasdaq. Supposedly CEO/Founder had originally taken it public simply by hiring his own lawyers and filing the proper legal paperwork in every state.

[pig4bill]

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Much cheaper? Why do you think people do reverse mergers? Because you can't do it yourself "much cheaper".

But why does he want to be public if he doesn't need to raise money? It's a huge pain in the ass, with filings and Sarbox and all that crap. It costs a small fortune to keep up with the paperwork.

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Well self-filing for $100K and buying a trading shell for $700K seems like a considerable difference. I believe the only advantage is time, although I'm not certain. I'm curious how much these people are profiting off setting up shells, especially when they retain equity in the new company.

He said something about getting paid twice and eventually getting listed on the AMEX. And I suppose he wants to raise hundreds of millions. But to me, building a successful private company over years and then doing an IPO seemed more legitimate and profitable.

Also Sarbanes-Oxley doesn't apply to the Pink Sheets.

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You can buy a shell for a helluva lot less than $700k. You can buy one for a helluva lot less than $100k.

Hundreds of millions? You're not going to raise that in an ipo. Not unless you're google.

Pinks? You're not going to raise any money staying on the pinks. You'll have to get it listed as soon as you can, and then you can peddle some stock.

[stephenNUTS]

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Most of the people I've known involved in OTCBB or Pink Sheet companies have been fraudulent or questionable at best.
Apologies for my negative comment. Also I don't own that stock, so I wasn't trying to promote it. It just seems like an anomaly since they are producing Al Pacino films and if they had a credible public company they could position themselves for bigger growth.

As for my friend, the point of a film fund is to leverage more bank debt and use less equity per film and eventually you build a large asset -- the film library. So I suppose he wants to go public to raise more money, build a bigger library with aspirations of being the next Lions Gate in 5-10 years. But it just seems like a scam.

Thanks for your info.

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You kinda said it all right there.The MAJORITY of pink sheet stocks...are GARBAGE,with pump and dump schemes,shelf offerings,etc

Lets face it... a REAL company that makes REAL money does not trade at 3/5ths of a penny?
C'mon...even an average lay person can/should see that

The ONLY ones usually making any money are the insiders or management.

There are still very high prohibitive costs though,that are associated with being and staying a public entity on any exchange however

SF [img]/images/graemlins/cool.gif[/img]