WHAT NOT TO DO WHEN REVERSE MERGING

Many private companies get involved with public shells that have lots a negative histories including but not limited to; disgruntled shareholders, unsettled litigation, hidden stock overhangs, or non compliant registrations which nullify the public status the client company is seeking. Companies need to be very careful when dealing with public shells that had extensive operating histories or incomplete filings.

The days of using loopholes to get around the intent of the SEC and NASD new bulletin board listing requirements are over and many shells currently for sale are based on previous transactions that are considered illegal.

For example, creating trading public shells for the sole purpose of merging is considered illegal. In addition, trading companies merging with non-trading shells to avoid de-listing is also illegal. Merging with a trading shell without making and clearing all SEC required filings before the merger closes is illegal. Accepting 144(k) stock from non-insiders or insiders in a shell merger transaction is illegal.

It is essential for the health of the surviving entity, that the transaction is structured properly before the company is merged. To avoid securities law violations, companies need to make and clear all SEC filings before trading.

To trade on the bulletin board, complete information about a company, including audited financial statements, has to be reviewed and cleared by the SEC, before you start trading. In a merger with a trading shell, this means before you close the merger. Similar attempts to evade these requirements have been called “outrageous” by Mr. Richard K. Wulff, Chief of the SEC’s Office of Small Business.

Do not become mislead – there is no such thing as "going public" in 30 days any longer through a reverse merger. If you try to trade without first waiting the several months it will take to draft and clear your filings with the SEC properly, you will almost certainly be involved in an outrageous transaction that violates the law.

Do not be misled by recieving so called 144K "free trading" stock in a merger transaction. The transfer of 144K stock which has passed the 1 year holding period can not be transferred legally to the new owners of the public shell without the holding period starting over again.

In our transaction, your stockholders will receive free trading stock that can be resold without restrictions just like stock acquired in a typical IPO without illegally using so-called Rule 144(k) stock. Note that insiders’ stock is always subject to Rule 144 resale restrictions.

Merging the SCA way, you can determine the number of free trading shares you want because those shares are being registered, as they should be, in a registration statement under our merger. These free trading shares may include stock sold in a Reg. D 506 offering just before your SEC filing.

In addition, companies should avoid market makers demanding fees to file the required 15c-211 in the name of "due-diligence". When a client merges the SCA way, we will refer you to a experienced NASD Market Maker that will submit your application for listing on the OTC Bulletin Board, or if you qualify, on the Small Cap Market. This market maker will not charges any listing fees, which others often disguise in various ways.

Our reverse merger transactions fully comply with all SEC and NASD rules, and our public shells can be accessed on Edgar for everybody to see. When you merge with a SCA company, you can be assured the process will be handled in a professional and proper manner.