| Traditional Underwriting | | | | tradable |
| Time: | | | | Problems: |
| 6 to 12 months | | | | None |
| Cost: | | | | Advantages: |
| $175,000 to $500,000. (The company will be out | | | | Public company can be "Custom Designed" to the |
| of pocket at least 50% of this amount prior to | | | | operating companies specifications. Shareholders |
| completion. | | | | of operating company receive registered shares. |
| Capital: | | | | New corporation so no "SKELETONS" in the |
| Typically raises more capital than other types of | | | | company. Financial expertise during the transaction. |
| transactions. | | | | Market support after the transaction. Automatic |
| Problems: | | | | shareholder base friendly to the "Small Cap" |
| Underwriting may be delayed or canceled. Issue | | | | market. |
| Price may be changed by market conditions or | | | | Preparation for a |
| underwriter. | | | | Reverse Merger or Public Shell Merger |
| Reverse Merger or Buy an Existing "Public Shell" | | | | Locate a Suitable Public Shell - Public shells can |
| Time: | | | | often be found by consulting with securities law |
| 2 weeks to 60 days | | | | firms or CPA - Audit firms that deal with public |
| Cost: | | | | companies. |
| $150,000 to $400,00 | | | | It is important to start with a clean shell: Due |
| Capital: | | | | diligence on the public shell cannot be over |
| Does not raise money but stock is now valued | | | | emphasized, advice from your securities counsel, |
| and tradable | | | | auditors, and a financial consultant should be |
| Problems: | | | | utilized. As was mentioned, many shells are |
| Potential "skeletons" in acquired shell. Control | | | | created for the express purpose of merging with |
| shareholders of operating company may receive | | | | a private company. These shells have no |
| restricted shares. | | | | predecessor entities, and, as a result, little |
| Advantages: | | | | baggage in the way of a business failure or other |
| Typically Reverse Merger or Public Shell Merger is | | | | skeletons in the closets. |
| the quickest way to get public. Non-control | | | | Comprehensive Business Plan - Potential investors, |
| investors may receive registered or trading | | | | public shareholders, auditors, securities counsel, |
| shares. | | | | brokers and market makers will want to see a |
| Merge with a Brand New Flex Financial Public | | | | well documented business plan. |
| Company | | | | Strong Management Team - Public investors |
| Time: | | | | demand strong management teams. |
| 4 to 8 months | | | | Convincing Marketing Plan - Public companies need |
| Cost: | | | | the ability to show good sales and earning growth. |
| $75,000 to $150,000 | | | | Product or Service - Public companies should be |
| Capital: | | | | able to develop strong or dominant position in |
| May raise money and stock is now valued and | | | | their business segment. |