REVERSE MERGERS - STEP BY STEP

A walk-through on a reverse merger:

( a) A public company acquires a proportion of the assets of a privately held
company, giving in exchange the majority (above 51%) of the shares of the
public company.

( b) A public company may merge with a private company and, through a stock
swap, the private company keeps control over the public company.

(c) A public company acquires a proportion of the shares (i.e. acquires rights
over assets, liabilities and financial flows) of the private company, giving in
exchange the majority (above 51%) of the shares of the public company.
Then the private company becomes a subsidiary of the public company and
therefore also public.

In all these cases, the privately held company obtains more than 51% of the shares of the public company, becoming a public company. Usually, the private company changes the name of the public company and removes its managers and board of directors. Legally, the activities of the public company (if any) continue until the new shareholders decide to cancel them.