Core Viewpoint - The Nasdaq's proposed rule changes significantly raise the IPO thresholds for companies operating primarily in China, impacting the path for Chinese companies to list in the U.S. and altering the ecosystem for Chinese stocks in the U.S. market [2] Group 1: IPO Pathway Challenges for Chinese Companies - The Nasdaq's proposed rule changes require companies operating mainly in China to meet a minimum fundraising requirement of $25 million for IPOs, with the minimum public holding market value increasing from $5 million to $15 million [4] - In Q1 2025, the average fundraising amount for Chinese companies going public in the U.S. was below $2.5 million, with over half raising less than $1 million, indicating that many small and medium-sized enterprises will be blocked from IPOs under the new rules [4] - The traditional IPO process takes an average of 12-18 months, with significant delays in the Chinese regulatory approval process, leading to increased costs and uncertainty for companies [4] Group 2: OTC Shell Acquisition as an Alternative Pathway - OTC shell acquisitions are emerging as a viable alternative for Chinese companies facing IPO challenges, allowing them to acquire control of a U.S. shell company and inject their core assets, achieving a "reverse merger" [5] - The OTC shell acquisition process can be completed in 3-4 months, significantly faster than the traditional IPO process, which can take 12-18 months [5] - While OTC shell companies offer flexibility in issuing new shares, they face challenges in traditional financing, requiring companies to build market trust through stable operations and compliance disclosures [5] Group 3: Advantages of Using Dormant Shell Companies - Dormant shell companies have no profits, which helps avoid historical tax risks and reduces the costs and time associated with tax compliance and due diligence [8] - The absence of pending litigation in shell companies mitigates risks related to liabilities and legal responsibilities, ensuring compliance and certainty in transactions [9] - The cost of acquiring a shell company is approximately $240,000, which is more manageable compared to the higher costs associated with IPOs, making it a more attractive option for companies looking to enter the U.S. capital market [10]

Group 1 - The core concept of reverse mergers involves acquiring a publicly listed shell company to achieve a rapid listing goal in the OTC market [1] - The reverse merger process consists of four main stages: preparation and shell company search, transaction execution and integration, compliance filing and renaming, and post-listing maintenance and development [1][2][3][4] Group 2 - The first stage includes self-assessment, hiring professional advisory firms, finding a clean shell company, and assembling a listing team [1] - The second stage involves negotiations, signing agreements, bridging funds, equity swaps, and injecting business and assets into the shell company [2] - The third stage requires submitting the SEC Form 8-K, completing audits and financial filings, and applying for a stock code and name change [3] - The fourth stage focuses on maintaining compliance and information disclosure, introducing market makers for liquidity, and managing market capitalization and development planning [4] Group 3 - Reverse mergers can bypass the complex IPO review process, allowing companies with solid business foundations and stable cash flows to access international capital markets without meeting IPO standards [4] - It is essential for companies to engage a reputable and experienced professional institution for evaluation and guidance throughout the reverse merger process [4]