Microcap Alliance, Inc.'s Go Public Now program specializes in providing the tools necessary for a small developmental stage company's stock to become listed on a public trading medium.

Reverse Mergers with Public Companies

ADVANTAGES

· Saves Time - Less time than doing an initial pubic offering ( IPO) - 3 to 6 months versus 6 to 9 months at minimum.
· Saves Money - Total costs of $100,000 to $300,000, usually under the costs of a traditional IPO, plus no underwriter commissions or fees.
· Saves Legal Hassles - The legal work is considerably less than an IPO.
· Private Fund Raising - Can be completed prior to the registration.
· Public Fund Raising - Can be initiated after the initial registration is complete. This may result in your receiving more money at higher valuations.
· Acquisitions - Can be made for public stock after your public company starts trading. · Convert - debt to equity using stock.
· You Don't Have To Be Sexy - Most IPOs need to be in an industry with public investor sex appeal. Any type of company can complete a merger to become publicly held.
· Liquidity - Investors can buy and sell your stock, original investors have an "exit" for their investment.
· Incentives - Management incentives via stock bonuses/options and to attract and motivate employees are more powerful using public company stock.
· Control - You and your current private company shareholders will generally own a large majority of the public company.
· Prestige - Publicly traded companies are held in higher regard. This visibility reinforces marketplace and financial standings.
· Growth - Grow through acquisitions using stock instead of/or in combination with cash.
· Estate Planning - Assists in establishing stock values and the value is easily monitored.
· Exit - Provides inside investors with a known exit.
· Higher Valuation of Stock
· Foreign Companies - Reverse mergers are a simple way to obtain control of a United States publicly traded company without subjecting your foreign operations to U.S tax. (Venture Associates offers confidential service to all foreign firms.)

DISADVANTAGES

· Confidentiality - Complete financial disclosure is required to become publicly held.
· Public Reporting - Reporting expense is greater because of the need for full disclosure.
· Dilution - Owners give up some equity percent.
· Time Involvement - Management must devote additional time to public company operations.
· Liability - More company visibility brings a higher level of liability exposure.
· Expense - Higher costs of regulatory compliance for audit, legal and investor relations.

What Do You Need?

· Comprehensive Business Plan - to present to potential investors and market makers.
· Strong Management Team - public investors demand strong management teams.
· Convincing Marketing Plan - indicating good sales growth.
· Product or Service - which shows a good growth potential.
· Financial audits - SEC qualified audited financial statements for your prior fiscal year.
· Legal counsel - qualified to deal with regulatory compliance.

A Reverse Merger with a public corporation allows you to:

· Have all your shares registered and free-trading in the merger transaction.
· Know exactly who owns the "Public Float".
· Keep up to 90 to 95% of the public company for your shareholders.
· Comply with all NASD Bulletin Board listing requirements.
· Have a trading symbol per your designation.
· Be registered with EDGAR at the SEC World Wide Web site www.sec.gov.

Some Additional Comments On:

Trading Versus Non-Trading Shells - Trading shells are usually existing publicly traded companies that have fallen on hard times. Frequently, they are companies that went public some years past. They may or may not still be active companies and they may or may not be current in their SEC document filings. Most often, they have a clouded past as regards their business operations and financing activities. Many can be on the verge of bankruptcy or have a large number and amount of outstanding liabilities, both money wise and in their past business practices. While acquiring these trading companies may short-cut some of the time or avoid the registration process, and while they may have a shareholder base in the hundreds or even thousands, you and your new shareholders may run a larger risk in assuming past problems, old liabilities and an unhappy shareholder base.

Usually, the time saved is small (30 days) and the costs are usually much greater. We caution you to claims that you would receive "free-trading" stock. Our experience indicates that many shell promoters will tell you that they can obtain free-trading stock for you and your shareholders. Commonly, these shares fall under Rule 144 transfer restrictions. The SEC has recently taken a clear position that these types of so called "free trading" shares obtained in a "shell" transaction do not qualify as free trading. Acquiring control of a "clean" trading company requires sophisticated, experienced counsel in the performance of due diligence.

Percent of Public Company Held - Most reverse merger transactions are normally structured so that 90% PLUS of the outstanding stock will be held by the owners of the privately held company. Keep in mind that some amount (150,00 - 200,000 shares or 5% to 20%) of the total outstanding stock needs to be "trading stock" (not owned by insiders and company affiliates) for the public investors.

Tax Implications - Almost all public shell/reverse mergers take advantage the tax free, stock-for-stock reorganization provision of the Internal Revenue code. Capital gains tax is paid when the individual shareholder sells the stock in the public stock market (usually after the minimum one year holding period for control persons). The timing of the stock sales can be determined by each individual investor to suit their investment or tax consequences. They don't have to wait for the principals of the company to decide to sell the company.

Establishing The Initial Stock Price - Once a reverse merger is completed, a broker/dealer must decide to make a public market in the stock. The market makers, in conjunction with the company, determine the initial price for the stock. Perceived value, the "sex appeal," track record and potential growth of the company usually have more to do with initial pricing than earnings multiples and current book values. Competent investor relations and supportive market makers as well as management's ability to relate the company's potential to investors are of key importance.Ultimately, the public market acceptance of the company will determine the market price for the stock.

On-Going Financing - Once a public reverse merger company is trading, the company then has a number of ways to raise additional funds. Recognize of course, that management has to have a top notch plan and be capable of executing the plan. Positive results enable most companies to continue to raise capital via shareholder rights offerings, warrants, secondary offerings, institutional private placements, conversion of debt to equity, do stock splits and make acquisitions for stock as well as offer combinations of stock and debt. Once management has control, there are numerous possibilities to promote the increasing value of their stock holdings.

Restricted Stock - The U.S. Securities and Exchange Commission (SEC) has many rules and regulations that must be complied with. One of these regards the buying and selling of restricted stock. Restricted stock is stock that is not registered with the SEC, OR stock held by insiders (even if registered). Insiders are generally directors, executive officers and persons or entities that they control or who control them. These persons/entities may sell stock under Rule 144 in any three-month period limited to the greater of: 1% of the outstanding shares of common stock and/or the average trading volume during the four calendar weeks proceeding a sale. Sales under Rule 144 must be made without violating: manner of sale provisions (in the market through a broker/dealer at current market prices), notice requirements (proper forms must be filed with the SEC), and the company must be current in its filing of the required SEC reports.

Restricted stock can be sold or resold privately at any time. It cannot however, be sold through a stockbroker into the public stock market until the "restriction legend" is removed, usually by a Rule 144 transfer after a one year holding period or until the shares are fully registered.