Take Your Business Public: Here Is The Process

Becoming a publicly traded company is an exciting and rewarding experience. The following sets forth the method, steps, fees and estimated timetable to go public on the OTC Bulletin Board (OTCBB) \’from scratch\’, or through a self-filing and discusses the 1934 Exchange Act responsibilities after a company\’s registration statement has gone effective (after the company has become publicly traded):

Prior to filing the registration statement, a company that wishes to go public must first obtain an audit of the Company\’s financial statements for the past two fiscal years. For most companies, the financial audit can be completed in about a month and costs typically range between $5,000 and $25,000, depending on the complexity of the company financials.

A public company will also need shareholders. To that end, if additional shareholders are needed, the company going public will need to complete a self-underwritten Regulation D, Rule 506 offering in which the company sells shares of its stock to investors for real consideration. This is not a difficult task, so long as you have a properly prepared private placement memorandum (PPM) and you follow the relatively simple rules of Rule 506. The price per share and number of shares offered can be determined by the Company, but most registered broker-dealers that will eventually submit a Form 211 for an OTC Bulletin Board quotation prefer to have a minimum of 400,000 shares distributed among the investors.

In addition to the minimum number of shareholders requirement, a company must have free-trading shares, called the \’float\’, in order to go public. Upon completion of the private offering and the financial audit for the prior two fiscal years, an S-1 Registration Statement must be filed with the Securities and Exchange Commission (\”SEC\”) to register the shares sold in the private placement, thus creating the free trading shares. The completion of the S-1 process with the SEC will make the Company a 1934 Exchange Act reporting company, which is required in order to obtain a quotation on the OTC Bulletin Board. The SEC will review the S-1 and provide comments within 30 days from the filing date. Comments from the SEC typically relate to the terms of the offering, the Company\’s business and its financial statements. It usually takes between 2 to 3 months for the SEC to approve a registration statement on Form S-1 and for the S-1 to become effective. However, the actual amount of time will depend on the level of review and number of comments given by the SEC and the corresponding response time by the Company in filing its amendments.

Shortly after filing the S-1 registration statement with the SEC, a market maker must be \’engaged\’ to file a Form 211 application with FINRA for the purposes of obtaining a quotation of its common shares on the OTC Bulletin Board. It is important to note that market makers cannot receive compensation for making a market in a stock, thus typically you must have connections to accomplish this. The timetable for approval of the Form 211 process is approximately 3 weeks to 5 weeks. However, the Form 211 will not be approved until the S-1 is approved by the SEC since the approval of the S-1 provides the \”free trading\” shares necessary to obtain the OTC Bulletin Board quotation.

The completion of the entire process to become a public company typically takes approximately 3 to 4 months from completion of the private offering and financial audit, however, the actual time could vary based on the factors discussed herein. If done right, with planning, hard work, the proper foresight, and a good firm guiding you through the process, going public is a truly exciting and rewarding experience.

Go Public With Your Company, call Princeton Corporate Solutions at 267-233-0183Take Your Company Public the easy way!

What Is A Direct Public Offering (DPO)?

A direct public offering is when a company raises capital by selling its shares directly to what is referred to as affinity groups, unlike an IPO which are sold by a broker dealer to its customers and the general public through other broker dealers who have customers interested in buying shares in the company.

In IPO\’s you have a firm commitment underwriting, where the underwriters promise to purchase the securities for their own account if they can not sell them to customers.

Best-effort underwriting: The underwriters do not guarantee any specific number of shares to be sold, they merely act as brokers.

In an IPO the lead underwriter is referred to as the syndicate manager, he keeps the book and invites other broker dealers to join the syndicate. In a firm commitment underwriting, an underwriter\’s agreement makes members liable for any unsold securities, regardless of how much of their allotment they sold. .

In a direct public offering the company sells the shares to affinity groups; who falls in this category? Customers, suppliers, distributors, friends, family, employees and other members of the community. In a direct public offering (DPO) the company places its shares in the hands of those people who are familiar with the company and know the company\’s product and management, and are most likely to hold the shares longer because they feel comfortable with the company\’s prospects for the future.

Direct public offerings are considerably less expensive than IPO\’s and most effective for smaller offerings, for large offerings the sales staff and customer base of a broker dealer are usually necessary.

Since the affinity group is already familiar with the company and its practices it doesn\’t put pressure on the company to change the way it does business, and will remain loyal to the company because of it\’s presence in the community.

DPO\’s are preferable to venture capital financing because it allows the present management to execute its business plan without outside interference. When a small company turns to a single large investor they tend to surrender the freedom to make all the decisions.

In a DPO like other methods of going public today audited financial statements are required. Unlike a reverse merger you choose your shareholders and you don\’t have to deal with shady, unscrupulous shell owners.

Shell owners usually keep between 5-15% of the shares outstanding and are quick to liquidate, and they do not have an interest in the well being of the company\’s share price. Even if you insert a stipulation in the contract that they can not sell for a year they will find a way of shorting the stock and destroying the share price.

This makes the DPO a preferable option even for companies that don\’t need financing but would like to go public.

A DPO does not always require audited financials but if you plan on going public you will need them. So you must hire an auditing firm that is \”peer review\” or PCAOB.

If you wish to take your company public then you must file a form S-1 with the Securities and Exchange Commission and a form 211 must be filed with FINRA.

A DPO is an alternative to an IPO or Reverse Merger for a company wishing to go public or obtain financing; it allows the company owner(s) to call the shots instead of an underwriter or a shell owner.

Take Your Company Public, call Princeton Corporate Solutions at 267-233-0183Take Your Company Public the easy way!

How To Take A Chinese or Indian Company Public In The United States

With global economics the way they are it would be redundant to rant and rave about the downsides of corporate fund-raising. Quick infusions of cash from venture capital firms and institutional lenders are on hold and it is what it is but companies are becoming creative and corporate attention is steering away from the problems and toward the solutions.

The US and Chinese markets are intertwined in many ways and now a new trend in finance is making the relationship even closer. It\’s a fact that Chinese corporations are still trying to figure out how to make their domestic stock market profitable and stable. Many of these companies have global ambitions with unique technology solutions business products and strategies but because of the week Chinese economy (compared to the power of other currencies) they have no choice but to head to the Frankfurt Exchange or the OTCBB market here in the United States.

As a corporate consultant that facilitates the process of going public for both domestic and global entities I have received maybe 5 to 10 calls per year from Chinese companies wanting to set up American corporate subsidiaries to absorb their foreign corporations and trade on the Bulletin Boards but all that has changed. I now receive 5 to 10 calls from Chinese and Indian companies per week to take advantage of the global market place that centers around America\’s gravitational pull.

Here is how you can take your foreign entity public: set up a domestic corporation (I usually have corporations set up in Delaware because its fast, easy and the states statutes go back to the original 13 colonies so there is sufficient case law and precedence to protect a public entity affectively). Next you will need a professionally written business plan in English. Translated business plans don\’t work as Western investors look for different details in transactions than their Asian counterparts. Write a new business plan based off of this new corporate entity.

After this you will use the Regulation D Rule 504 exemption to offer discounted stock to a core group of investors via DPO (direct public offering) we have spent 11 years putting our core group of investors together that can finance around 80% of the public process so it becomes extremely reasonably priced for foreign companies. Then the S1 is put together while simultaneously their SEC audit begins which is simple and fast because the company in the US is a startup. We go through and get the SEC approval, then FINRA and then the market maker that we have attached to the deal goes to work.

Now here is the kicker. If you have any experience with taking companies public you\’ll see one common thread throughout all the companies that you work with and that is the fact that the company executives who started this company and are more than likely the majority share holders, want to retain as much equity as possible so this is simple. When the company is publicly trading, limit the issuance of stock specifically to your original core group and let the stock price stabilize then you simply take some of the company owned shares and use them as collateral for equity loans and lines of credit.

Once you\’re public the last thing you want to do is liquidate shares to raise capital quickly. Instead, use your shares as collateralized bartering chips and you\’ll never have a problem with cash flow or fund raising or the threat of losing control of your company. Foreign companies that want to go public in the United States are often intimidated by the strenuous process and the concern of \’who to trust\’. Find a consulting firm with experience in turnkey \’go public\’ facilitation and you\’ll be fine.

Indian and Chinese Companies, Take Your Company Public, call Princeton Corporate Solutions at 267-233-0183Take Your Company Public the easy way!

Take Your Company Public: A Must Read About Disclosure Obligations

Are you taking your company public? Here is what you need to know. Disclosure Obligations: \”If my company becomes \”public,\” what are its disclosure obligations?\”

The Securities Exchange Act of 1934 requires a company to file certain periodic reports once its registration statement has been declared effective. This obligation continues indefinitely unless:

At the beginning of any subsequent fiscal year, the class of securities offered is held of record by less than 300 persons; or

At the beginning of any subsequent fiscal year (except the two fiscal years immediately succeeding the year the registration statement became effective), all securities offered are held of record by less than 500 persons and the issuer has had less than $5 million in total assets for each of its last three fiscal years.

In these cases, the reporting obligation may be suspended. Otherwise, a company must continuously disclose certain information about:

Its operations; Its officers, directors, and certain shareholders (including salary, various fringe benefits, and inside transactions between the company and management); The financial condition of the business (including audited financial statements by an independent certified public accountant); The Public Company Accounting Oversight Board (or PCAOB) (sometimes called \”Peekaboo\”) is a private-sector, non-profit corporation created by the Sarbanes-Oxley Act, a 2002 United States federal law, to oversee the auditors of public companies. Its competitive position, material terms of certain contracts or lease agreements; acquisitions and mergers, creation of certain financial obligations, and material impairment of assets; unregistered sales of equity securities; changes in its accountant; and changes in its board of directors and management;

In addition, a company must promptly disclose to the public any information that would be considered important to its present or prospective stockholders.

All companies with total assets exceeding $5 million and a class of equity securities held by 500 or more persons are required by the Securities Exchange Act of 1934 to file the same supplementary, periodic, and current reports as noted above. Companies with these characteristics must also comply with the Commission\’s proxy rules if proxies are solicited from holders of its securities. In such a case, the company must furnish all shareholders proxy statements disclosing all material facts concerning matters on which they are being asked to vote. If the proxy solicitation by management relates to an annual meeting at which directors are to be elected, the Commission\’s proxy rules also require the company to furnish each shareholder an annual report disclosing certain information about the company, including audited financial statements for its latest fiscal year.

Exemptions

The Securities Act of 1933 provides several exemptions from the registration requirements; the most common are discussed below. Nonetheless, purchases or sales of securities (even in exempt transactions) are subject to the antifraud provisions of the federal securities laws. This means that issuers are responsible for false or misleading statements (whether oral or written) which may be redressed through private or government legal action, including criminal sanctions. Also, if all conditions of the exemptions discussed below are not met, purchasers may seek to have their purchase price refunded. In addition, the fact that an offending may be exempt from certain provisions of the federal securities laws does not necessarily mean that it is exempt from the notice and filing obligations of various state laws.

Go Public With Your Company, call Princeton Corporate Solutions at 267-233-0183Take Your Company Public the easy way!

You Need Strategic Alliance For Your Company To Grow! Here\’s How To Do It Fast!

Do You Need Capital For Your Company? Build Strong Strategic Partnerships! In this economy, companies who survive have more than just a strong business model; they have aligned themselves with strategic partners in a joint effort to create a win/win relationship where each contributes to a pool of contacts, promotional initiatives and industrial knowledge.

Strategic alliances are the number one way to strengthen your company if you are trying to raise capital from venture capital firms, angel investors, hedge fund lenders, angel investors or if you are trying to take your company public. Empirical evidence companies who demonstrate a track record of unified success strengthens the package and puts you on the radar as an invest-able entity and you\’ll start to get attention from the big players as you watch the value of your company soar.

The big question is, \”Where do you find these partners and who can help you speed up the search?\” You should start by having an executive meeting and put all your industry contacts together and invite these contacts to a networking \’meet and greet\’. Make it nice. Have a caterer, have giveaways etc. After you\’ve done this the next step is to talk to your accountant, attorney, members of professional organizations in which you are a member, your banker, your billing service (if you outsource your invoicing), your financial adviser and/or consultant and any other professional that you\’ve used in the past who has access to corporations in your industry or in a complimenting industry and can introduce you to new partners. This is exactly how \’in demand\’ executives and powerful CEO\’s, CFO\’s and consultants do it.

I have personally built a database of 10,000\’s of contacts from using these methods, in fact I\’ve never gone into a consulting situation where I couldn\’t introduce my client to 1,000+ new strategic partners and I just cherry pick to find the best partners for my client. Your contact portfolio is the most powerful thing you\’ll have in business. Contacts are your bartering chip when you\’re in a crunch or when your board of directors is all looking at you waiting for a miracle. I have made it a point to create contacts in every industry no matter how polar opposite the industries may seem because it has allowed me to step into any situation with companies of any size and immediately start putting the pieces together and building an infrastructure based off of the powerful knowledge of dozens of industry experts.

Take the initiative and find a consultant who can help you launch your company into a whole new realm with the power and knowledge and expertise of a contact base built to induce growth and stability.

For Strategic Alliances and Partnership Services or Investor Finder Services, call Princeton Corporate Solutions at 267-233-0183Take Your Company Public the easy way!

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Investor Finders: Don\’t Try To Raise Capital Without One

If you own or run a company that is trying to raise capital in the current economic conditions you\’ve undoubtedly been challenged by the limited funds available. Investors are more difficult to find and the individuals that are actually willing to part with their cash are even tougher to find. You\’ve talked to friends, family members, your cpa and your attorney but trying to get them to invest is like drawing blood from a stone, it\’s just not happening.

There is an easier way. Most broker dealers and market makers have an emergency number in their Rolodex that reads \”Investor Finder\”, these specialist consultants are brought in when there is nowhere else to turn for cash. A true Investor Finder has 1,000\’s of investor contacts that they can call on to get funding for their clients and are constantly using online viral strategies to attract more investors to their database.

An investor finder usually is not a licensed securities broker/agent or attorney; instead they are traditionally consultants that are active in the investment banking facilitation aspect of the industry. Being that they are not licensed they do not accept equity payments or percentages; instead they work on a flat fee basis.

A good consultant in this genre can bring in 30 to 70 real investors per day and it\’s up to the client to sell the opportunity from there. A typical lead from an investor finder will be an investor or investment firm that is responding to the consultant\’s opportunity introduction email or snail mail mailing, they have read about the opportunity and they respond one of two ways, either they are calling into a phone room to be screened and qualified or they are contacting the client directly.

Many times the investor doesn\’t know that they are part of the \”finder\’s\” database but do recall signing up to receive investment opportunity updates, so either way the investor is solid and active. If you are trying to raise capital and need real results quickly and can\’t afford to waste time begging for cash, you need to seek out a qualified Investor Finder consultant and make your fund-raising efforts fast and easy.

Investor Finder Services, call Princeton Corporate Solutions at 267-233-0183Take Your Company Public the easy way!

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How To Raise Money For Your Business

If you own or run a company that is trying to raise capital in the current economic conditions you\’ve undoubtedly been challenged by the limited funds available. Investors are more difficult to find and the individuals that are actually willing to part with their cash are even tougher to find. You\’ve talked to friends, family members, your cpa and your attorney but trying to get them to invest is like drawing blood from a stone, it\’s just not happening.

There is an easier way. Most broker dealers and market makers have an emergency number in their rolodex that reads \”Investor Finder\”, these specialist consultants are brought in when there is nowhere else to turn for cash. A true Investor Finder has 1,000\’s of investor contacts that they can call on to get funding for their clients and are constantly using online viral strategies to attract more investors to their database.

An investor finder usually is not a licensed securities broker/agent or attorney; instead they are traditionally consultants that are active in the investment banking facilitation aspect of the industry. Being that they are not licensed they do not accept equity payments or percentages; instead they work on a flat fee basis.

A good consultant in this genre can bring in 30 to 70 real investors per day and it\’s up to the client to sell the opportunity from there. A typical lead from an investor finder will be an investor or investment firm that is responding to the consultant\’s opportunity introduction email or snail mail mailing, they have read about the opportunity and they respond one of two ways, either they are calling into a phone room to be screened and qualified or they are contacting the client directly.

Many times the investor doesn\’t know that they are part of the \”finder\’s\” database but do recall signing up to receive investment opportunity updates, so either way the investor is solid and active. If you are trying to raise capital and need real results quickly and can\’t afford to waste time begging for cash, you need to seek out a qualified Investor Finder consultant and make your fundraising efforts fast and easy.

Investor Finder Services, call Princeton Corporate Solutions at 267-233-0183Take Your Company Public the easy way!

categories: company go public,corporate structuring,how to go public,how to take a company public,princeton corporate solutions,how to take company public,how to take your company public,investor relations services,small business corporate structure

Are You Ready To Raise Capital for Your Company? Most Likely . . . You\’re Not!

Whether you\’re trying to raise debt or equity capital there are still certain unwritten rules that apply that cater to the mentality of today\’s investor and funding community. Certainly there are scores of private placement memorandum and business plan chop shops that wouldn\’t know how to properly consult with your company or write a fundable document even if they wanted to but they will gladly take your money to throw together a template and try to pass it off as custom work.

The issue is this, it\’s not necessarily the consultant, though these fly-by-nights shoulder a large portion of the blame, but the client usually doesn\’t even have the proper structure in place to attract a funding source even if they had the most incredible PPM and business ever to hit the venture capital marketplace. Here is a simple (very basic) way to evaluate your company to find out if you are properly structured to attract capital. Have a corporate meeting and ask yourselves the following questions: What type of corporate structure do you have and why did you choose that particular structure? Break down your executive infrastructure, where do your individual executives stand in your industry, do the unthinkable, Google everyone\’s names; are the people running your company real industry players? Are all the basic positions accounted for (president, CFO, controller etc)? Next, look at your advisory board and board of directors. If by some miraculous act of God you actually have these two groups represented in your company, how did you qualify them? Sorry but if you have an attorney on your board because he\’s, um…well, an attorney, that\’s not good enough.

You need an industry specific legal guru who not only spells out the intricacies of your business genre\’s regulation but they must also be actively qualifying potential strategic partnerships as alliances for your company. He should be reaching into his client base and actively picking companies that could enhance your company in distribution or in any other way that will have a profitable outcome for all involved. Each of the members must be serving a similar purpose.

Next, on what criteria are you basing your share price or loan amount? If you don\’t have a clear cut \’use of proceeds\’ model, you need one. This and many, many other questions need to be asked before you are actually ready to raise capital and in all reality, until your corporate structure is in place you shouldn\’t even attempt to write a business plan or a private placement memorandum. If you are serious about setting up your company to attract investors you need a turnaround consultant, you can\’t do this on your own. There is an entire industry that centers around structuring companies for their first and ongoing capital raise.

Before you blackball your company by prematurely attempting to raise capital, the critical concepts you need to keep in mind are (precisely in this order): corporate structure, infrastructure, advisory board, board of directors, use of proceeds, business plan, private placement memorandum, investor finder, funding. Look at each aspect listed here as its own item, break it down and analyze every minute aspect of each element and look at everything objectively and eventually your company will evolve into a structure that is fundable and stabilized for years to come.

For Corporate Turnaround Services or Investor Finder Services, call Princeton Corporate Solutions at 267-233-0183Take Your Company Public the easy way!

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Take Your Business Public: Don\’t Do Anything Until Your Read This!

Take Your Company Public: A Must Read Before You Do Anything! As a consultant in the business of structuring companies, setting up strategic alliances for clients, writing business plans and PPM\’s and taking companies public on the OTCBB, I must admit I\’ve seen my share of scams and swindling of uninformed clients. One sad issue that permeates the industry is clients who believe that their only option is to give up substantial equity while paying hefty fees to consultants who take your company public.

Here is the reality. When you are investigating the industry to find a consulting firm to work with to facilitate your \’go public\’ process, the first thing you need to do is make sure you are hiring a \’turn-key\’ solutions consulting group; meaning they need to offer everything soup to nuts in house because the second your consultant outsources anything, accountability is lost.

Next, on the issue of paying fees and also giving up equity, it should be either or, not both. If a company tells you that they want you to pay them in both upfront fees and in equity, you should laugh and walk away. In actuality the best deals for the client are those that are simply fee based, not equity based.

It\’s better to pay 100k in a few easy installments than to pay millions in stock that will only be liquidated after the IPO which will completely obliterate your stock price and almost certainly ruin your company\’s chances of success. It baffles me to see the scenarios that uninformed company owners accept. Currently there is a company that is promoting all over Google Adwords that they will take your company public for $25k and after a month of talking to the company, when you finally agree to use them they break the bad news that they are not going to charge you $25k or anything even close to that, they are, in fact, going to charge you $125k upfront, plus $10k to $20k for your initial SEC audit and on top of all of that they are going to take 30% of your company! It\’s shocking but this group of consultants, because of their extensive advertising, has no problem bringing in clients and turning the tables on them at the last minute and sadly, because the client is uninformed, they accept the contract and pay the fees.

If you are going to give up any amount of equity in exchange for the process of going public, it should be with a licensed broker dealer and there should be zero out of pocket expenses from you. Your broker dealer should pay for the SEC audit, S-1 filing, SEC approval, FINRA approval, Symbol achievement and ongoing investor relations to keep your stock price solid. Unless your broker dealer is doing all of this, you need to find a new, full service broker.

Keep in mind, each consulting firm you talk to will give you a million reasons as to why their fee structure and process is the best but here are some comparable facts so that you can make the right decision on how to proceed. First of all, if you get an emotional consultant that acts like he is excited about your project and \’can\’t wait to get started\’ this is bogus and you should walk away. The best consultants keep clients at arm\’s length and never get emotional because it clouds the process and makes them ineffective. Besides, if they are acting so excited about your company it\’s probably because they are trying to convince you of their legitimacy that won\’t stand on its own merit.

Next you want to make sure that you are getting a quote on your specific company type which includes at a minimum: corporate structuring, strategic alliance facilitation, board of directors evaluation, business plan authoring built for IPO, investor finder service, SEC audit (the should be able to give you a general idea of the cost of the audit and have a company that you can use as most consultants don\’t employ an auditor on staff), S-1 filing, SEC approval, FINRA approval, symbol achievement, market maker or broker dealer relationship/contract setup and investor relations for long term success.

For Corporate Consulting or Investor Finder Services, call Princeton Corporate Solutions at 267-233-0183Take Your Company Public the easy way!

categories: company go public,corporate structuring,how to go public,how to take a company public,princeton corporate solutions,how to take company public,how to take your company public,investor relations services,small business corporate structure

You Need an OTCBB or Reverse Merger Consultant. Beware of the Hard Sell by Management Firms!

Private Placement Memorandum authoring and the process of taking one\’s company public are services that require extensive experience and the ability to look at a deal objectively and peripherally to evaluate all the angles to enhance the ability of the client to achieve funding in a timely manner.

Many times, when I\’m hired to structure a company before funding, they will be under the impression that my evaluation is a mere formality and they are ready to go. Often I\’m the bearer of bad news when I have to break it to the client that their company has more holes than Swiss cheese and 30 to 60 days away from starting the fund raising process.

They will often get a second and then third opinion and usually run into the same thing before they eventually find their way back to our firm. As they call around to consulting firms they perpetually experience the \’hard sell\’ by firms who \’need\’ the business because they lack the rewards and referrals that come with cultivating each client relationship because they take on and spit out deals so fast they hardly remember their client\’s name during the transaction.

This mentality dominates the larger firms because of their gargantuan overhead while the boutique firms can take a more personal approach because they have a steady flow of business and referrals because they are not stressed about bringing in the next big deal so they can meet payroll and keep their lights on. The smaller companies that focus on turnaround consulting, private placement memorandum authoring, top tier business plan writing and taking companies public usually take a one on one approach to the consulting process and will rarely pressure clients to sign on because their phone is ringing off the hook with previous clients who want to hire them for the next stage in the evolution of their company\’s growth.

This business is all about relationships. Ditch the consultant that applies the high pressure sales tactics and seek out the smaller, more personalized groups that don\’t \’need\’ your business but will cultivate and value it.

Investor Finder Services, call Princeton Corporate Solutions at 267-233-0183Take Your Company Public the easy way!

categories: company go public,corporate structuring,how to go public,how to take a company public,princeton corporate solutions,how to take company public,how to take your company public,investor relations services,small business corporate structure

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