Our principals have over thirty years experience in the securities industry. Denver Gardner provides specialized investment banking services utilizing proprietary public shells for a reverse merger solution. Denver Gardner works as a team with management to design a financial plan that compliments the client's business plan. By integrating financial and business plans, we provide timely and cost effective access to public shells, reverse mergers, and sources of financing. Denver Gardner performs specialized financial consulting and investment banking for growth companies either going public or having recently completed a public offering. Denver Gardner works to develop a cost effective plan for going public. Denver Gardner has several flexible options for assisting a company in going public, including:

1. Traditional Underwritings - IPO
2. Reverse Merger - Acquiring existing public shells for sale
3. Registered Spin-Off - Creating a custom public shell company

From reverse merger services in acquiring existing public shells for sale to creating IPOs to creating a custom public shell company for your business, Denver Gardner will provide you with a financial plan that compliments your needs. For more information regarding going public, reverse mergers, public shells for sale as well as our other services, contact us today.

Services

Strategic Financial Planning
Avoiding problems attracting capital now & in the future.

Investment Banking
Securing financing in the most timely and cost effective way.

Reverse Mergers - Public Shells

Financial Broker Relations
Communicating the company's objectives consistently to maximize the shareholders' value.

The financial services provided by Denver Gardner are designed to fulfill a complimentary role with the client's CFO. Denver Gardner provides expertise and assistance in the complex financial planning required in dealing with the public financial markets. The services provided by Denver Gardner fall into three broad categories:

1. strategic financial planning in anticipation of raising capital
2. investment banking consulting specifically related to accessing sources of capital through public offerings of securities
3. financial broker relations services rendered with respect to publicly traded securities with a view to providing continuing access to public financial markets and maximizing shareholder value.

Included in Denver Gardner services are advisory and consulting services to the client with respect to its relationship and interaction with the public financial community and securities industry, including broker/dealers, auditors, underwriters, regulators and underwriter syndicate members. In addition to direct interface with the financial community, Denver Gardner provides continuing assistance and consultation to the client in executing the plan developed for maintaining a successful market for the client's securities.

Strategic Financial Planning consultations usually start prior to the client's going public and continues through the closing. Denver Gardner begins by developing a thorough understanding of the client's company and their industry. We review the company's operational and management capabilities. We then do an analysis based upon the future growth plans and the capital requirements. We assist in developing the plan to go public and secure financing. Denver Gardner has several flexible options including a traditional underwriting (IPO), a reverse merger, or going public through a registered spin-off.

Investment Banking services specifically related to accessing sources of capital through private and public offerings of securities. These can be an IPO that qualifies the company to trade, a bridge loan or a private placement of debtor equity. Denver Gardner advises and assists in the initial development of the market by introducing market makers, brokerage firms, analysts, money managers and stockbrokers. Denver Gardner can interface with outside professionals and the financial community, including issuer's and underwriter's counsel, auditors, underwriters, regulators and underwriter syndicate members with respect to successfully closing an offering.

In addition to public financings, Denver Gardner may arrange a private placement of debt or equity (including warrant exercise), introductions that result in a successful merger or acquisition for a client, or a bridge loan.

Client’s that utilize our services benefit by:

• Saving time and money
• Achieving the maximum price for current and future financing
• Reduce management time dealing with financing
• Avoid false starts and blind alleys

What is a Reverse Merger with a Public Shell?

A Reverse Merger is a transaction where by the private company shareholders may gain control of a public company by merging it in with their private company. The private company shareholders receive a substantial majority of the shares of the public company (normally 85% to 90% or more) and the control of the board of directors. The transaction can be accomplished in as little as two weeks, resulting in the private company becoming a public company. The transaction does not go through a review process with state and federal regulators because the public company has already completed the process. The transaction involves the private and shell company exchanging information on each other, negotiating the merger terms, and signing a share exchange agreement. At the closing the public shell company issues a substantial majority of its shares and the board control to the shareholders of the private company. The private company shareholders pay for the shell and contribute their private company shares to the shell company and the private company is now public.

Upon completion of the reverse merger, the name of the shell company is usually changed to the name of the private company. If the shell company has a trading symbol it is changed to reflect the name change.

Advantages of Going Public Through a Reverse Merger or a Public Shell Purchase

• Increased Valuation: Typically publicly traded companies enjoy substantially higher valuations than private companies.
• Capital Formation: Raising capital is usually easier because of the added liquidity for the investors, and it often takes less time and expense to complete an offering.
• Acquisitions: Making acquisitions with public stock is often easier and less expensive.
• Incentives: Stock options or stock incentives can be useful in attracting management and retaining valuable employees.
• Financial Planning: Public company stock is often easier to use in estate planning for the principals. Public stock can provide a long term exit strategy for the founders.
• Reduced Costs: The costs are significantly less than the costs required for an initial public offering.
• Reduced Time: The time frame requisite to securing public listing is considerably less than that for an IPO.
• Reduced Risk: Additional risk is involved in an IPO in that the IPO may be withdrawn due to an unstable market condition even after most of the up front costs have been expended.
• Reduced Management Time: Traditional IPOs generally require greater attention from senior management.
• Reduced Business Requirements: While an IPO requires a relatively long and stable earnings history, the lack of an earnings history does not normally keep a privately held company from completing a reverse merger.
• Reduced Dilution: There is less dilution of ownership control, compared to a traditional IPO.
• Reduced Underwriter Requirements: No underwriter is needed: (a significant factor to consider given the difficulty companies face in attracting an investment banking firm to commit to an offering.)

Disadvantages of being Public either via a Reverse Merger or an IPO

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

Preparation for a Reverse Merger or Public Shell Merger

• Locate a Suitable Public Shell - Public shells can often be found by consulting with securities law firms or brokers or accountants that deal with public companies.
• It is important to start with a clean shell: Due diligence on the public shell cannot be over emphasized, advice from your securities counsel, auditors, and a financial consultant should be utilized. As was mentioned, many shells are created for the express purpose of merging with a private company. These shells have no predecessor entities, and, as a result, little baggage in the way of a business failure or other skeletons in the closets.
• Comprehensive Business Plan – Potential investors, public shareholders, auditors, securities counsel, brokers and market makers will want to see a well documented business plan.
• Strong Management Team – Public investors demand strong management teams.
• Convincing Marketing Plan – Public companies need the ability to show good sales and earning growth.
• Product or Service – Public companies should be able to develop strong or dominant position in their business segment.
• Experienced Securities Counsel – Your attorney must be qualified to deal with regulatory compliance, and the ongoing reporting requirements of all public companies.
• Have Public Company Experience: Your company should have at least one person in senior management that has significant public company experience. Financing consultants, such as Denver Gardner, can often assist management in the complex issues of being a public company and maintaining a good relationship with the financial community. In fact, many actually have a couple of shell corporations and, upon request, can manufacture a clean public shell. A made-to-order shell without the baggage of a business failure in its background can sometimes be the way to go, but there's often a cost involved. You will most likely end up with the financing consultants as minority shareholders in the new company, holding between 2 percent and 5 percent. However, in almost any reverse merger transaction, the principals of the shell company keep a small equity position in the company going forward. Therefore, this surrender of equity is simply a cost of doing business.
• Devise your financing strategy: A reverse merger is an indirect route to raising capital. Entrepreneurs must first consider how additional capital will be raised after the deal is done. An experienced financial consultant, like Denver Gardner, can be very beneficial in this area.

Requirements Necessary to Close a Reverse Merger or Public Shell Merger

• Business plan of merger partner.
• Management information, including completion of the "Officer and Director Questionnaire," for all Officers and Directors designated by the private company merger partner.
• Agreement on structure and terms of merger.
• Letter of intent with escrow payment made to public company or its principal shareholders. (This must happen for the public company to cease negotiations with other merger prospects.)
• Financial Statement, for the private merger partner. The statements of the private company have to be consolidated with the public company's financial statements.
• Agreed merger fee in escrow with the securities attorney representing the merger partner.
• Consent from the majority, preferably 100%, of existing shareholders of the private company to merge or exchange their shares for shares of the public company.
• Agreement for the Officers and Directors of the public shell to be replaced with the Officers and directors designated by the private company merger partner.
• List of all shareholders in the private company that will make the share exchange.
• Number of shares to be outstanding “post merger”, and a complete breakdown of share ownership post merger. Note: It is often necessary for the public shell to do a reverse split and/or cancel shares owned by the affiliates of the public share prior to completing the merger.
• Agreement on state the company will be domiciled in post merger.
• Satisfaction of warranties and representations between public shell and merger partner.
• Designation of securities attorneys and qualified auditors that will represent the private merger partner.
• Preparation of the share exchange agreement, stock purchase agreement, definitive merger agreement, and all other documents necessary to complete the merger.
• It has been our experience that the private company's ability to deal with all these issues is instrumental in determining the timing in closing the merger, and the long term success after closing a reverse merger or public shell purchase.

Examples of Successful Reverse Mergers with Public Shells

• Armand Hammer, world-renowned oil magnate and industrialist, is generally credited with having invented the “Reverse Merger”. In the 1950s, Hammer invested in a shell company into which he merged multi decade winner Occidental Petroleum.
• In 1970 Ted Turner completed a reverse merger with Rice Broadcasting, which went on to become Turner Broadcasting.
• In 1996, Muriel Siebert, renown as the first woman member of the New York Stock Exchange, took her brokerage firm public by reverse merging with J. Michaels, a defunct Brooklyn Furniture company.
• One of the Dot Com fallen angels, Rare Medium (RRRR), merged with a lackluster refrigeration company and changed the entire business. This was a $2 stock in 1998, which found its way over $90 in 2000.
• Acclaim Entertainment (AKLM) merged into non-operating Tele-Communications in 1994.

Benefits of a Public Company

• Public companies are normally valued higher than private companies.
• Founders suffer less stock dilution when raising capital.
• Making acquisitions with stock is easier and less expensive.
• Stock and stock options are useful in attracting management.
• Management and employee stock options have more value.
• More liquidity for founders, minority shareholders, and investors.