Today, more and more companies are opting to trek the reverse merger route to become public entities, and virgin shells are considered to be ideal candidates for going public. Virgin shells are new corporations that are created through a standard restructuring process. They are neither offshoot corporations nor blind pool enterprises. In fact, they are created by formally signing a contract with a recognized merger business.

Typically, virgin shells are created in a fairly straightforward manner. The process of their creation is embarked with the formation of a blank check firm, which consists of a handful of directors and officers. In a bid to become a virgin shell, the newly constituted blank check firm carries out the following three activities:

1. Voluntarily files Form 10-SB, in a bid to subject itself to SEC reporting requirements.
2. Issues initial shares at a nominal price.
3. Files audited financial statements.

Within two months of filing Form 10-SB, the virgin shells can submit the registration statement to SEC. Usually, virgin shells, also called Form 10-SB shells, do not face any complications during the SEC registration process because of two reasons; firstly, they honestly disclose the fact that they are shell companies, and secondly, they are formed without public offering. Once, the SEC registration process is over, the virgin shells become eligible for reverse merger with a private company.

Virgin shells are considered to be the best reverse merger vehicles because of the following advantages that they offer:

• Virgin shells are inactive corporations with no assets and liabilities.
• They are publicly owned firms that have an authenticated shareholder pool of over 300 individual. Each shareholder holds a minimum of 100 shares. Moreover, virgin shells also have a public float of over 500 000 shares of free trading stock.
• Virgin shells are non-reporting corporations. Hence, they can raise capital under SEC Regulation D offering. Even foreign companies can use virgin shells to raise capital under SEC Regulation S offering.
• They are the least expensive reverse merger vehicles. Typically, a virgin shell can be created with an initial investment as small as $25 000. After fulfilling all the formalities, the total cost of acquiring a virgin shell doesn’t exceed $60 000.
• As virgin shells are publicly owned enterprises, therefore they can be listed and traded on the Pink Sheets without becoming a SEC reporting company. For this the services of a market maker are required. The market maker submits Form 211 along with two copies of requisite issuer information to NASD OTC compliance unit. If NASD OTC compliance unit is satisfied with the submitted information, it will notify the market marker to enter the quotation on the Pink Sheets.
• A fully registered Direct Public Offering (DPO) can be done via the virgin shells. For this, FORM 10-SB is filed with the SEC, which enables an entrepreneur to register an unlimited number of company’s stock. These registered stocks can then be detained as treasury stock, used for acquisition, or sold through an offering. 

Virgin shells may not be as glamorous as Initial Public Offering (IPO), but they are also not inflicted with hidden problems that are normally associated with ‘Trading and Reporting’ shell corporations. Thus, in nutshell, virgin shells are cost-effective and reliable means of achieving the objectives of reverse merger.