The fourth quarter of 2007 was the busiest season for reverse mergers. There were 71 deals brought to market but the average market cap per deal dropped 16% from the previous quarter to $37.3 million. We have also seen greater participation of foreign companies using reverse mergers to get their companies listed in the US markets. The OTCBB shell is the perfect vehicle for these companies. It is no secret the SEC is very stringent in their review and approval process of foreign companies seeking to gain entry in the US; especially if the company is from China. A reverse merger into an OTCBB shell allows these companies access to the US markets much quicker than if they chose to file a traditional registration statement with the SEC. I must say the recent deals I have witnessed coming to market from China have been stellar. The companies have a history of success, strong revenues and profits, and they bring their companies to market at low PE ratio’s hoping the stock will trade above $4.00 per share so they can eventually gain listing on an exchange. Most of the Chinese companies I have witnessed will not even consider going public through a reverse merger unless they feel confident their stock will eventually move up to NASDAQ or the NYSE.
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