What are the main challenges in doing a “Reverse Merger”?
As you probably can guess by my previous comments, the accounting and auditing are huge challenges. In doing a reverse merger, all of the common stock issued in the formation of the company is issued “restricted.” Then, the capital stock has to be registered. To file the registration statement with the Securities and Exchange Commission (SEC), the company has to have audited financial statements. This can be anywhere from “not too difficult” to a nightmare. This is the challenge. Once two years of audited statements have been done and accepted under the standards of the Sarbanes-Oxley Act of 2002 (SOX), and the Public Company Accounting Oversight Board (PCAOB), everything else is manageable.
