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  • Just Other Articles - What Is Reverse Merger, And Is It For Everyone? Part 2

    Many Reverse Mergers have been successful when done properly that is why I never consent to doing one without providing the company with the possible problems that can arise and how to deal with them.

    I also provide the client with the alternatives to Reverse Merger, such as Regulation D Offering, Direct Pub
    According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
    lic Offering and private placement.

    One way to make sure that the Reverse merger is going to work is to buy one hundred per cent of the shares owned by the shell owner, but this is not a guarantee because there could be shares unaccounted for.

    Proper due diligence is a must, and you must be immune to smooth
    ; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

    Examples of combination products may in
    talking salesmen.An alternative to a Reverse Merger is a Direct Public Offering, DPO.

    Direct Public Offerings are increasing in popularity since the shell prices are skyrocketing and companies are becoming aware of the problems associated with Reverse mergers.

    And if a company is trying to obtain financing
    lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

    irect Public Offerings are preferable to a venture capital investment, venture capital firms demand a large portion of the company and will not be passive investors.

    Venture capital investors will be very involved with the company and will make demands that can be detrimental to the company’s success, they m
    here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
    y not give you enough time to put your business plan in place.

    An IPO is probably out of the question because you must convince an underwriter that your company is the next Microsoft, or you will have a difficult time getting someone to do the IPO for you.

    An IPO is more expensive and time consuming and wil
    d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

    Combination pro
    take the decision making out of your hands place it in the underwriters hands.

    A DPO is targeted to affinity groups such as employees, suppliers, distributors and customers. These groups usually are familiar with the company and are loyal to it.

    DPO’s are registered securities offerings that allow you to m
    ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
    rket the securities directly to the public. The Internet can be use to market the securities but if your website doesn’t have a lot of traffic nobody will know about your stock offering.

    So that leaves affinity groups as your best source of funding, unless you are a google and the investors are looking for y
    easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
    u.

    As the large corporations continue to reduce their work force and are leaving a lot of talented people with the option of an unemployment check or starting their on business, we find that a lot of the job creation is being left to small businesses.

    These small businesses must find capital in order to exp
    nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
    nd or to fill order, small business have created over 20 million jobs over the last 15 years while big business has been cutting them. If this creative force had the capital they could propel the economy to unheard of levels.

    DPO’s fall under “SCOR” small corporate registration and are for companies doing
    and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
    nder $25 million in revenues and have a capitalization (share market value) of less than $25 million dollars.

    By doing a Direct Public Offering you are raising capital that will not be costing you monthly interest payment, and is a permanent source of funding.

    You will not have to give a large portion of th
    ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
    company to investors, a venture capitalist will demand a disproportionate Amount. Private funding is always more expensive in terms of equity and control.

    As a public company you can better negotiate future financing requirements, and use the company stock for acquisitions. In a DPO filing you only need
    ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

    Following aspects would a
    years of audited financial as compare to 3 years for other filings.

    All this sounds easy but in reality it isn’t you need somebody with experience to hold your hand and guide you through the process.

    You must make sure that you are ready for the commitment and are prepare to devote the required time to thi
    dd to the challenges in developing combination products:

    Which markets to tap where the combination products can do fairly well?
    Which combination prod
    endeavor. Talk to your affinity groups about the possibility of investing in your company, this will give you an idea as to who is a potential investor.

    Keep updated records of your customers and friends in the community who may be contacted later on. It may become necessary to purchase a mailing list, if
    cts are meaningful and rational?
    Which therapeutic categories to select?
    Which Combinations can address unmet needs of the patients?
    Do combin
    ou are medical product company or laboratory you would know some of the Doctors in your community but not all of them.

    Stay in the planning mode and take necessary step while you are preparing for your DPO, such as having one year of financials audited and having a business plan prepared and printed, so that
    tions increase the patient compliance?
    What would be the developing cost?
    How to tackle the risks encountered during combination product developmen
    you don’t have to incur all the expenses at once.

    Give us a call so that we can start planning together, the more prepare you are the less you will have to rush later, everyone everything done yesterday but the process takes time.

    Regulation D Offerings: This rule provides an exemption from the registration
    t?

    As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
    requirements of section 5 of the Securities Act of 1933. Such transactions are not exempt from the antifraud civil liability, or other provisions of the federal securities laws. (See my article on Regulation D (504) offering.

    Nothing in these rules obviates the need to comply with any applicable state law re
    ping new procedures for reviewing their safety, efficacy and quality.

    Professional from academic institutions, pharmaceutical industries, health care indust
    ating to the offer and sale of securities.

    Rule 506: Provides an exemption for limited offers and sales without regard to the dollar amount of the offering. This offer does not limit the number of accredited investors, but the nonaccredited investors is limited to 35. for a description of accredited and non
    y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
    ccredited investors see my article on Regulation D (504) offering.

    Rule 505: Offerings may not exceed $5,000.000.00 less the total dollar amount of securities sold during the preceding 12 months period under rule 504 or 505. This exemption limits the number of nonaccredited investors to 35 but has no investo
    .

    As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
    sophistication standards.

    Rule 504: Offerings allows business to raise a maximum of $1,000,000.00 in a twelve month period, under Rule 504, Rule 505 or section 3 of the act a business can raise only $500,000.00 by the sale of securities to persons residing in the states of Montana and Alaska, which have no
    elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

    Companies that provide selfless information through particip
    isclosure law. In states that have disclosure laws companies can raise up to $1,000,000,.00.

    Rule 504 has no prescribed disclosure requirements, no limit on the number of purchasers. Offering under Rule 504 are relatively simple to prepare, which reduces the cost and delay and does not require an underwriter


    tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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