Public Shell Company

Public Shell Companies Defined.

The following contains information about public shells. The definition of a public shell is a company that has been registered with the SEC and is allowed to trade its shares on the public markets but has little to no income or assets. There are a handful of public shell companies for sale (also known as shell corporations for sale). These companies were usually established with the intent of being acquired by an operating company whose principals want to go public quickly.

We have Public Shell Companies For Sale that you can have in as little as 24 hours.

What kinds of public shell companies are there?
    1. Blank Check Public Shell Companies also known as Virgin Shell Companies
    A Blank Check Public Shell is a company that is in development state. It has documented that its business plan is to merge with a yet to be named corporation that is actively engaged in business. These entities     have not been issued ticker symbols. Likewise, they are not yet quoted on the Pink Sheets or the OTCBB securities markets. They have simply completed and filed the proper documents with the Securities and Exchange Commission (SEC). On their Form 10 Registration Statement, the business activities section classifies the entity as a ‘blank check company,” so that they are legal public shell corporations. (Form 10-SB was used previously. The use of this form ended on February 8, 2007.) Its common stock has been registered with the SEC pursuant to section 12(g) of the Securities Exchange act of 1934. They can be merged with existing businesses to go public quickly.

    So, if speed is an important issue, buying a public shell company that is for sale might be a very attractive option for you. You can go public within weeks with a public shell company instead of taking several months to a year or more.

    2. Pink Sheet Shell Companies or "Pinks"
    This type of public shell that does have a ticker symbol. However, they are not required to (though they may) maintain current reporting status or maintain annual audits. The pink sheet shell companies come in a variety of forms. There are reporting and non-reporting in addition to trading and non-trading. For our purpose we are talking about trading pink sheet public shells. Pink sheet shell companies are often priced lower than Over the Counter Bulletin Board (OTCBB) companies because they are not bound by the Penny Stock Rules outlined in the Securities Exchange Act of 1934. Incidentally, these companies can only trade on the Pink Sheets.

    3. OTCBB Public Shells
    The most desirable public shells for reverse mergers are the OTC Bulletin Board Shells. They are transparent so that investors are able to make intelligent decisions before investing. They are fully reporting to the SEC. So, they are required to file the Form 10-K, Form 10-Q, and regular Form 8-K reports and to file other reports that the SEC requires. Because of the increased trust resulting from greater disclosure, it is substantially easier than other types discussed herein to draw a larger group of investors. Moreover, it require less effort to attract much larger investments.

Moreover, because it is an OTCBB Shell it is easier to operate and maintain than a company listed on a major stock exchange. For example, it is not bound by added rules of companies listed on the exchanges such as the requirement to maintain a separate audit committee, to hold annual meetings for proxy requirement or to have set number of directors. Like the pinks, they have ticker symbols.

One of our clients had a very large real estate investment and financial education firm. He acquired and merged his company with an OTC BB Public Shell. He was extremely pleased with the substantially rapid increase in his net worth. He and his staff conducted hundreds of investment seminars across the country. In the meetings, they would let the audience know that the company was publicly traded and if interested, they could contract their brokers. A large number of investors in the stock were the students that attended their seminars. As a result the value of the stock increased substantially. This afforded our client to increase his advertising and expand rapidly. Though he managed his finances well he was also able to buy some of the toys he had always dreamed of and reap the harvest of years of hard work. He built a fabulous house on the water. He purchased a Rolls Royce automobile and acquired a corporate jet, which was this CEO’s most prized possession. More importantly, it freed up cash and allowed his business to grow debt-free.

This is what happens when a public shell company merges with your existing company. The two businesses become one. The surviving company is the public shell corporation so that the stock in your business can be sold to the public. Thus the term “reverse merger,” because the active business conducts a shell company merger or shell merger with a relatively inactive public shell company. The active private company and the inactive public shell meld together and the documents state that the organization that is already public remains. The name of the resultant company is then changed to that of the previously active business. You generally end up with the vast majority of the issued and outstanding shares of stock (80-90%).

There are different ways public shell companies can be formed. As we have mentioned, your business can go public my merging with a Blank Check Public Shell Company (Virgin Shell Company). The benefit is that there is very little likelihood of existing liability. Alternatively it can merge with a Pink Sheet Public Shell or with an Over the Counter Bulletin Board Shell (OTCBB Shell). Either one of these last two are often companies that have, for one reason or another, not remained in business. Alternatively, you can take your company public without using a public shell. Nonetheless, it is wise to get and keep the counsel of an experienced securities attorney because there are SEC and other regulations concerning public shells. So, none of these items discussed herein should be construed as legal advice because none are considered do-it-yourself projects. We have experience lawyers who handle these activities. Plus, our stock promotion team is second-to-none.

Many sophisticated experts suggest that a reverse merger with a public shell is an attractive option to borrowing from financial institutions. Selling shares generates money that does not have to be repaid and that does not create a debt. The public shell can be used to raise large amounts of capital comfortably and rapidly.

Selling the business is another reason to go public. One expert quipped, “Why in the world would anyone sell a successful private company when he can take the company public and then sell the shares?” The sales prices for private firms are generally only 1.5 times earnings. The purchaser almost always wants the seller to sign a non-compete agreement preventing him from re-entering the same or similar line of work for typically 5-6 years. Venture capital (VC) firms often want to take 30-60% of the company from you in order to invest. Most growing public companies, on the other hand, sell for 15 to 25 times annual earnings. You keep 80-90% of the company. Plus, selling all of your stock in the public company does not trigger someone to ask you to sign a contract that bars you from continuing to profit from your expertise. So, if you so choose, you can sell the shares in your public company and use the proceeds to start a new business anytime you wish.

Feel free to give a call to the number located above or complete the contact form on this page. If you want to go public via a reverse merger with a Virgin Public Shell, Pink Sheets or OTCBB shell or you want to go public directly, we can help. If you want to go onto the OTCBB then rapidly go to NASDAQ or another exchange, our licensed professional associates can guide you in the right direction.

Get information on the reasons why you may soon decide to go public. Is a reverse merger, an initial public offering (IPO) or a direct public offering (DPO) right for you? Call and learn more.