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SMKT - Reverse Merger still going forward. It was mentioned in the 11/10/05 Texas Prototypes PR. Has taken longer than expected but per the SEC filings everything is still progressing.
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I currently hold SFTV, because the float is so low, it's cheap, and it's reporting. The outstanding share count is somewhere around 100 million according to the last board poster I know of who called the transfer agent, but it jumps around like there is much less in the float. This makes it interesting for both long and short term plays.
SFTV is currently late on filing their quarterly report (they filed a late-quarterly-report form for an extension) and the quarterly is due next week (before Thanksgiving).
They report late EVERY quarter, but I am still hopeful that the quarterly report will have news of a lucratvie reverse merger.
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I should also mention: I keep a close eye on SMKT because that merger seems to be ready to wrap up soon. I am skeptical because I don't think (although I am no expert) that mergers normally take so long, but that is a real solid company that SMKT will become. I'm watching for a spike or a real low entry point or just merger completion news, and I might jump in.
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I just want to add one more thing to SMKT. Here is a list of companies that Texas Prototypes currently has as clients. When the merger is complete the Ticker will be chaged to reflect Tex Prot as company name. XTera Avaya Intel Fossil Fujitsu Hp Abbott Labs Navini Dell Alcatel TelStaat AFC Texas Instruments Efficient Networks Raytheon ST Micro Technologies Cisco Siemens Ericsson Samsung
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I also like SMKT, but watching it over the past two weeks, the low volume has been mostly sells. I got rid of my position there so I can see what happens post-merger.
All of the sells don't bode well. Imo.
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A shell is basically a public company that went out of business and has no assets.
So why are they important?
Well it takes a lot of paperwork, time, and money to IPO a company. That is the best way to go though. But for a small company it is just too much.
Back to the shell, you may have not made it and your company went out of business but you still have shareholders and stocks on whatever exchange your on. More then likely if your out of business you PPS has dropped so your now on the OTCBB or Pinksheet depending if your still filing. The best shell is a OTCBB though. One that still meets its filing obligations even if they aren't making money. This is valuable to a small business wanting to go public.
So what happens is the shell company, preferably OTCBB, no debts, and no assets, will put there company up for sell. Really all your selling though is the public company name and shareholders.
So now your up for sell and a private company buys you out. Its really not a merger because the shell has no assets to merge with. So they call this process a reverse merger.
Now the private company reverse merges into the public company and now its a viable business again. But there is a caught.
On hype this will run the stock but unlike a IPO which the company makes money selling the initial shares to market a reverse merger already has shares and shareholders. Heres the caught. The private company had to pay good money for this shell. They became public to raise capital not give it away. So now they have to dilute shares to not only cover the cost of buying the shell but to raise capital on top of it. So dilution will be heavy. But this is a have to case. You don't go public to give your business to someone else namely shareholders without them paying you.
The smart investor got lucky and bought the shares before the hype of the shell becoming a company again. It runs on news of a business operations. The smart investor knows what will happen next and sells on the run for a profit.
Well after the dilution the new company usually does a r/s to get the shares structure back in line and moves on from there. Not aways but most of the time. So those caught in that grey area after dilution could lose. Either because of the severe dilution or the r/s. These are great plays for those that know what is going to happen after the hype of the reverse merger.
Hope this helped.
-------------------- Invest with your brain not with your heart.
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And one more question... once that company goes public via the shell, is there a way that the company can leave the shell behind to become it's own legit stock?
-------------------- Life is like a roll of toilet paper. The closer it gets to the end, the faster it goes.
quote:Originally posted by WarpedMind: Ric, how long is a run usually before the diluting begins?
Usually fairly quickly after the run starts, at least they hope a run starts. because the higher the pps goes the fewer shares they have to sell.
As far as leaving the shell behind they really don't. But at some point they will either do a r/s and a name change at that time or after the dilution is finished if they are not r/s'ing they will simply do a name change and sybol change. Time wise it is up to them but I would have to guess it usually around 2-6 months depending on the capital they need to raise.
-------------------- Invest with your brain not with your heart.
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quote:Originally posted by Ric: Good question.....Well after the dilution the new company usually does a r/s to get the shares structure back in line and moves on from there. Not aways but most of the time. So those caught in that grey area after dilution could lose. Either because of the severe dilution or the r/s. These are great plays for those that know what is going to happen after the hype of the reverse merger.
Excellent explanation, Ric. 'Twas the best overview I've read on this topic yet.
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quote:Originally posted by Enjoys$: Perfect explanation, thnx.
Yup--this is the kind of stuff we need to save and have available on a forum of its own...I keep saying a "newbie forum," but maybe that new one Explorer started...
-------------------- Nashoba Holba Chepulechi Adventures in microcapitalism...
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