Pinksheets and Reverse Mergers

[rpr]

I've always been skeptical of reverse mergers.

I have a friend who has made millions taking a company public on the Pinksheets a few years ago. But now his stock is very very low. So he's planning to leave as CEO and start a new public company with $25M he has raised.

My questions for the financial people is, if I wanted to take a company public on the Pinksheets should I consider retaining an attorney to do a self-filing SB-2 or 10-SB? The only benefit for doing a reverse merger is time right? I don't particularly want to buy a trading shell or a virgin shell if I can just create my own much cheaper.

I want to go with the new Pinksheet OTCQX for credibility.

Anyone have experience with this?

Thanks.

[rpr]

Also, say I have $3M right now, would going public be a good strategy to raise more money, assuming I have excellent management and a big company that we're partnered with.

This isn't the company obviously, but a certain stock price is 5/100ths of a cent. However, the owners are definitely making money. (One was partial basis for Eric in Entourage.)

They've done like 50+ films and a lot with someone who's done 200 -- not that anyone could name more than 3. For example, they did 16 Blocks, 88:Minutes with Al Pacino (not released) and the new Pacino/Deniro film.

They kind of churn and burn films just for foreign hence why they have so few domestic theatrical releases. So how is their stock value nothing if they make so many films? Using another production company and Hollywood Accounting?

[AvivaSimplex]

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My questions for the financial people is, if I wanted to take a company public on the Pinksheets should I consider retaining an attorney to do a self-filing SB-2 or 10-SB?

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I'm just guessing here, but I think if you're planning to create a publicly traded company, you might need a lawyer for that.

[DesertCat]

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So how is their stock value nothing if they make so many films?

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Are you leveling me? Companies are only worth money if they make money or have valuable assets. Companies that makes lots of films and lose money are valueless. Even when they actually make money, if they skim it straight into management's pockets the company is worthless to shareholders. Even if some sort of famous guy is working there that they ended up making a TV show about.

And you want to take a company public? Why don't you first build a rocket ship and explore Mars, and then solve the middle east crisis? I mean, knock off the easy things you are better suited for?

Or you could learn to read financial statements and answer your own questions.

[rpr]

Wow, that's a hostile response.

My question is really why they have a public company if the stock price is worthless and they don't need to be public to make films. They are clearly making money and lots of films and it has nothing to do with Entourage.

Maybe you missed the part that my friend wants to take a company public with a producer I introduced him to and $25M he already has. I just met this guy recently so I was looking up information since I've always had a negative stigma towards OTCBB and Pinksheet stocks.

Like what is the benefit to going public if he doesn't need to (to raise more money?).

And since I'm doing a smaller separate deal, I was curious if it would be more advantageous for us to consider this option and if we did we'd do it by hiring/retaining the right people.

I can read financial statements. You must have a really [censored] life to lash out at people like an insane person. Thanks for being an [censored].

[rpr]

I was comparing it against buying an already trading shell or a virgin shell for 300-700k vs self-filing for ~100k and waiting.

[rpr]

Maybe I was out of line asking for free advice, but anyway I read their most recent annual report.

It's so low because they have 2 billion outstanding shares. Another part says there are 200 billion shares issued and outstanding and that the two producers own 0.01% of the company?

They're paying them each up to a 1/3rd of the producer fees earned by the company per year ($1.4M for them last year).

I guess they are intending to raise the value by buying back shares, but all this sounds extremely shady and honestly I don't understand what they're doing here.

[pig4bill]

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My questions for the financial people is, if I wanted to take a company public on the Pinksheets should I consider retaining an attorney to do a self-filing SB-2 or 10-SB? The only benefit for doing a reverse merger is time right? I don't particularly want to buy a trading shell or a virgin shell if I can just create my own much cheaper.


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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.

[DesertCat]

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Wow, that's a hostile response.

My question is really why they have a public company if the stock price is worthless and they don't need to be public to make films. They are clearly making money and lots of films and it has nothing to do with Entourage.

Maybe you missed the part that my friend wants to take a company public with a producer I introduced him to and $25M he already has. I just met this guy recently so I was looking up information since I've always had a negative stigma towards OTCBB and Pinksheet stocks.

Like what is the benefit to going public if he doesn't need to (to raise more money?).

[/ QUOTE ]

To monetize ownership in a company you already have. Assume you have a company worth $25M, but it would be hard to sell minority stakes (finding/selling to investors). If it's public you can sell shares in a legal, codified way to a large supply of willing buyers. And assuming you do it right, you'll be able to control the company with little say by the minority shareholders.

Another answer is to swindle or defraud people. You issues lots of worthless stock and pump it with press releases telling the world how great the company is or will be. You then sell some of your shares to the suckers, and have the company issue you more as compensation.

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I can read financial statements. You must have a really [censored] life to lash out at people like an insane person. Thanks for being an [censored].

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I am having a great life, but a pretty crappy week. So I apologize for being so sarcastic. But at least you did read their financials, which is good. Always read the financial reports, usually it's pretty easy to determine if a company is a scam or not. I haven't and won't read that companies reports, but from everything you wrote it seems like a total scam.

[rpr]

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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.