STRUCTURING THE SHELL TRANSACTION

1. Determine the market capitalization of the private company. Compare the sales and earnings of your company to those companies in the same industry that are no public.(example: if your company is earning $5 million per year and the average public P/E ratio of public companies in your industry is 20, then your initial market capitalization should be $100,000,000.)

2. Divide that number by the initial share price you would like to have on your stock. This price should be at least $5.00 per share. (example: $100,000,000/$5 = 20,000,000 shares.)

3. Multiply that number by the percentage of the shell shares that you have negotiated with the representatives or officers and directors of the shell (example 90 - 10% = 18,000,000 shares)

4. Subtract this number from the total number of shares outstanding as determined in "2" above. (example 20,000,000 - 18,000,000 = 2,000,000 shares)

5. The outstanding shares in the shell will then be reverse (or forward) split to equal the number obtained in "4" above.

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