Our Reverse Merger Service is a turnkey NASD listing process designed to allow a domestic or foreign company to immediately become a reporting company and cause its securities to be eligible for trading In the United States market. We have several new, clean shell companies available for reverse mergers. These companies are currently non-trading, but seasoned so that they can be trading within 60 to 90 days.

NOTE:

• We do not clean up existing companies, but prefer to create only now companies and register their securities. Therefore, our companies have somewhat different characteristics than older companies. Our public companies are designed to cause a target company to become public in the United States efficiently and quickly. We will provide all the services necessary to accomplish this.
• Our public companies are structured to afford the greatest flexibility for a target company in its capitalization, provisions of its certificate of incorporation, and bylaws. Rather than merge, a target company may also exchange its stock and become a wholly owned operating subsidiary or may contribute assets to the public company.

DESCRIPTION OF COMPANIES

1. Our public companies have no prior operating history other than the registration of their securities under the Securities Exchange Act. Each has audited financial statements showing no liabilities and no material assets. Our public companies are fully reporting companies under Section 12g of the Securities Exchange Act of 1934, as amended, and are, and continually have been, current in their SEC filings.
2. Our public companies are closely held to avoid any problems with excited shareholders. Our experience has been that a large base of shareholders prior to merger can be a major impediment to the trading price of the target company's stock following merger, either keeping it from rising or depressing it. Our preference is to increase the shareholder's base by putting the existing free-trading stock into the market in a manner matched to demand. Shareholders that buy at a current price will be less inclined to sell until the price increases, whereas prior shareholders have often bought at bargain prices, and may exit when an initial trading price is established.
3. From time to time, however, a target company may want an initial shareholder base in order to qualify for the NASDAQ Small Cap Market or an exchange listing. In such cases we are able to make a dividend distribution of the public company stock to the shareholders of a corporation with which we are affiliated. Because of our relationship with them, the problem of exciting early into the market is significantly reduced.
4. Our public companies are also able to issue free-trading stock through form S-8. Form S-8 stock may be issued to officers, directors and consultants to the target company for bona fide services rendered except in connection with a capital-raising transaction. A form S-8 registration is brief, can be quickly prepared, and is effective upon filing.
5. Because our public companies are closely held, they can easily change the amount and types of authorized and outstanding securities prior to merger. You can structure a transaction with our public companies at any level of capitalization. You may wish, however, to take advantage of the existing structure of our public companies.
6. Our public companies have no prior trading history for their securities. This avoids the problems that can occur if following merger the trading price is significantly higher or lower than the trading price at times prior to the merger. It also avoids any inquiries which may be ongoing or planned by any regulatory agency into prior erratic market prices or activities.
7. We cause our public companies to obtain a trading symbol immediately following a merger. Our public companies may trade initially either on the NASD OTC Bulletin Board or, if the target company meets the required financial and other criteria, on the NASDAQ Small Cap Market, If a target company wishes, and it also meets the requirements, we will apply for listing on a regional or national exchange, such as the American Stock Exchange.
8. The securities of our public companies are currently qualified for secondary trading in every state. Since the adoption in 1996 of the National Securities Mirket Improvement Act, securities of reporting companies are "covered securities" and their resale in the secondary market under sections 4(1) and 4(3) of the Securities Act is no longer regulated by the states.
9. We will provide for the merger and the initial required filings with the Securities and Exchange Commission. The first filing is a form 8-K which reports the merger and is due 15 days after the merger. Thereafter, a target company will file quarterly reports on form 1O-Q (or form 1O-QSB) and annual reports on form 1O-K (or form 1O-KSB). A target company will have until 75 days following the merger to file its first audited financial statements.

Direct Combination

DIRECT COMBINATION WITH THE REPORTING COMPANY

If a private company's purpose is simply to become a reporting company, we take the following steps:

• The private company is acquired by the reporting company. The acquisition can be a merger of the private company into the, reporting company or the exchange of shares of the reporting company for all the outstanding shares of the private company. In the latter case, the private company becomes a wholly-owned subsidiary of the reporting company. (It is also possible to have the reporting company acquire all the assets of the private company, which has very much the same results as a merger).
• Whenever free-trading stock is desired, the reporting company can file a registration statement on Form S-1 (or Form SB-2). Note that a reporting company cannot issue Rule 504 stock. New or existing shares, or both, can be included in a registration statement.
• The reporting company would arrange a market for any free-trading stock it issues. For free trading on the NASD OTC Bulletin Board, a market maker would file a form 211.

In our experience there are various reasons for a company to want reporting company status. In one case, a mortgage firm was better able to obtain state insurance approval of its licenses if it was reporting, Subsequently we filed a Form SB-2 registering the shares of existing shareholders. It is now trading. In another case, the company wanted to be reporting to better obtain underwriters. We have filed a $42,000,000 registration statement for it.

Triangular Combination

TRIANGULAR COMBINATION WITH A REPORTING COMPANY

If a private company's primary purpose is to have its securities trade in the United States market, we take the following steps:

• The private company is combined with one of our non-reporting Delaware companies. This may be by merger or stock exchange at the preference of the private company. Our Delaware non-reporting companies have 300 round lot shareholders each in order to comply with Rule 12g-3 (discussed below). Otherwise, they have no operations, assets or liabilities.
• Stock is issued under "new Rule 504" to create the public float. Rule 504 stock cannot be issued by a blank check company nor by a reporting company. This is why it is issued following the business combination but before the company is reporting. For current OTC requirements we suggest not less than 500,000 shares distributed relatively equally among not less than 50 shareholders.
• The Rule 504 shares can be issued to persons selected by the private company or, if they wish, by us. If the Rule 504 shareholders are selected by the private company, we file a Form U-7 with one or more states and, as soon as cleared, the stock may be issued. If one of our brokers provides the Rule 504 shareholders, we do not need to file a Form U-7.
• Although the primary purpose of the use of Rule 504 is to provide the required free-trading shares, it is possible to raise up to $1,000,000 U.S. under Rule 504. If the private company intends to raise capital by a stock issue, it may wish to use Rule 504 for some or all of that stock.
• As soon as the public shares are issued, the Delaware private company acquires one of our reporting companies. Since the private Delaware company had at least 300 round lot shareholders, it can become a "successor issuer" to our reporting company under Rule 12g-3.
• A Form 8-K is filed with the Securities and Exchange Commission describing the acquisition of the reporting company and the election to be a successor issuer and report under the Act.
• A market maker files a Form 211 to commence trading on the NASD OTC Bulletin Board.