Over The Counter Bulletin Board – 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.
Take My Company Public The Easy Way
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!
Regulation D – Private Placement Memorandums and OTCBB: The Easy ‘Go Public’ Process
Are you a business owner raising capital with a Regulation D Rule exemption (504, 505 or 506) also referred to as a Private Placement Memorandum, PPM or Offering Memorandum? If you are using this mechanism to raise capital then you’ll, no doubt, have to have a solid comprehension of the most distinct and important part of the Private Placement Memorandum referred to as the ‘Offering Circular’.
When your consultant or attorney is asking you for details on everything from business location to management, from dividends to risk details, you need to make sure that this information is complete and accurate. You’ll need to audit the documents after they are completed. A solid Offering Circular has kept countless companies from being sued by investors that didn’t get the investment return they were anticipating.
While the business plan is meant to grab the initial attention of the investor or funding source, the Offering Memorandum is meant to spell out the down and dirty details of the venture so that you are protected from lawsuits down the road, while simultaneously exposing the various ins and outs of your venture to give a ‘reality check’ to the investor before they hand over the cash.
The offering circular needs to be powerful yet very compact without the redundancies of using space to say the same things over and over again to pull the investors attention from the negative to the potential profit margins or management’s impressive pedigree. With all this said, yes it’s true the offering circular is one of the parts of a PPM spells out the technical aspects of the enterprise with a focus on inherent risk of investing but this can be done in a balanced way to also demonstrate the positive aspects of your venture by giving solid descriptions of your management team and, in place, distribution centers and contracts in place ready for capitalization.
When authoring the offering circular demonstrate the risks with a well balanced demonstration of the system in place to overcome these risks and dominate your market niche.
Go Public With Your Company, call Princeton Corporate Solutions at 267-233-0183Take Your Company Public the easy way!
Over The Counter Bulletin Board – OTCBB: A Must Read Before You Do Anything!
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.
Private Placement Memorandum: Now, Get the Investors You Want, FAST!
Entrepreneurs are being turned onto Regulation D in droves. Regulation D Rule 504, 505 and 506 allow companies a more lenient fund raising process than those who choose to go public by other means. In the past year I’ve seen more PPM consultants pop up on the internet than ever before and I have to admit I’m concerned. As a veteran in this field I’ve seen it all, now we have a legion of self proclaimed Reg. D gurus who buy templates, add some text and tell their clients that they are delivering a customized offering memorandum; here’s where things go bad and a difficult situation gets even worse. You have this worthless document, now what?
You need to gain the confidence and capital of accredited investors without soliciting as dictated in Regulation D Rule 502c. Now you have a worthless document that you can’t solicit investment capital for (which your guru consultant never told you but took your cash anyway) so how are you suppose to raise funds for your company? First, you’ll find that you’ll eventually need to make your way to an actual PPM author, not a broker so that you can get a PPM that protects you from lawsuits and gives the investor a real breakdown of the upside and downside of your business.
Next you’ll need to find a “Investor Finder”, yes this is an actual term for an individual or corporate entity that is completely submerged in the accredited investor realm and is able to match your opportunity with friends that he/she has in their database of real, accredited investors. This is the second half of the PPM equation.
Don’t kid yourself and don’t allow yourself to be lied to; you’re going to need a seasoned professional to help introduce you to investors that have the capital to help you get to where you need to be. Friends, family and employees will commit to investing in your company until your PPM is completed and it’s time to make good on their commitment; all of a sudden little Johnny needs braces and Sally is in the hospital with pneumonia, this happens all the time. Now what? With a real Private Placement Memorandum and a solid Investor Finder you’re problems are basically over. Investigate where the author and I.F. stand in the Internet public domain and after you find a company that meets your needs, get moving and start raising capital.
The internet tells all when it comes to reputations, you’ll be able to tell the difference between a seasoned veteran and a startup consultant after on Google Search and a phone call. A PPM can make raising capital quick and easy if you have the right firm in your corner.
Private Placement Memorandum, call Princeton Corporate Solutions at 267-233-0183Take Your Company Public the easy way!
Take Your Business Public Without Breaking The Bank
In these gloomy times businesses are looking outside the box for a localized injection of economic stimulus. Banks are hording their bags of government bailout money while the small business owner is forced to fend for themselves. Nothing but doom and gloom seem to infest all aspects of present and near future financial forecasts.
There is, however, a fiscal niche being carved out as we speak by wealthy, aggressive and eager angel investors. Angel investors, private investors, micro ticket investment partnerships and other alternative financing groups are spearheading a global rally to buy into promising mid-size companies from all industry genres. The elements of a viable company prime for investment are solid and realistic growth potential, talented ‘who’s who’ executive staff with the right educational and professional pedigrees, minimal debt, a solid business plan laying out every minute intricacy that could affect growth, financial return and the exit strategy.
Another important document that is often overlooked but is a mandatory prerequisite for the SEC regulated exchange of cash for equity is a Private Placement Memorandum. A Private Placement Memorandum takes advantage of three powerful Regulation D Rule exemptions (Rule 504, Rule 505 and Rule 506) these are technical documents that spill the beans to the potential investor. In a PPM all the financial and industry risks are put on the table as well as stock prices, a breakdown of fund raising benchmarks and what the money will be used for etc.
A Private Placement Memorandum can be costly if you hire a law firm to custom author the package for you but there are consulting firms that will do this for as little as $5000.
If you are serious about raising capital for your company you need to add a Private Placement Memorandum to your list of necessary documents to hand off to the investors in order to get the cash you need in an expedient manner.
Want to find out more about Private Placement Memorandums, then visit Princeton Corporate Solutions site on how to choose the best Offering Memorandum for your needs.
A Corporate Consultant’s Power Is In His Contacts: Take Your Company Public
If you’re seeking the services of a consultant you’re most likely in need of corporate structuring or a strategic company turnaround for a capital raise or to go public. Hiring the right consultant is crucial if you are going to succeed with your venture.
Your consultant should, obviously, have the knowhow and track record for succeeding in fine tuning companies to cater to what industry investors are seeking but they must also possess the contact base to streamline the process so that you don’t lose time to gain that stealthy edge over your competitors who are attempting to do the same thing.
Your consultant should maintain an active database that acts as his ‘special forces’ munitions arsenal of 10,000′s of real, viable contacts in scores of industries so that he can assist you in even the most mundane, minute aspects of your strategy with solid corporate alliances and contacts that will make your venture stand out like a beacon of light in your industry that beams its florescent light in the windows of potential clients, partners, contractors and anyone else that can assist your company in achieving its desired ambitions. Your consultant will structure and categorize parts of your company that you didn’t even know existed yet are crucial to its development.
The reality is that you should have a separate group of strategic partners for every individual product and ever individual service that your company offers. For example, when I consult with companies that have, say, 10 products, my goal would be five to seven strategic partners per product for a range of fifty to seventy strategic partners that my client will work with for co-op advertising and marketing efforts, branding strategies and sales initiatives. Most companies don’t even consider this aspect to their business but it is absolutely vital.
When you find a consultant or corporate strategist that you are ready to hire, after you have thoroughly evaluated them, have an in-depth conversation about their ideas for strategic partners and how they intend on facilitating this process to help you achieve your goals.
For Corporate Turnaround Services or Investor Finder Services, call Princeton Corporate Solutions at 267-233-0183Take Your Company Public the easy way! We Have 10,000′s of contacts.
Take Your Company Public OTCBB: S1, 211 Here Is What You Need To Know
So many companies dream of going public both as a growth and exit strategy but unfortunately few succeed with this process. The third party audit, sponsoring of the S1 and 211 by a market maker and SEC comments stage is just one of the obstacles involved with taking a company public. The attempt at going public and actually achieving a symbol are two entirely different things and if you are lucky enough to achieve a symbol there’s a completely separate area of expertise needed to keep your stock trading and to preserve a company’s longevity in the marketplace.
Here are some things you need to keep in mind when gearing up to take your company public. Forget everything that you’ve read and heard and pay attention to what you’re about to read because this is the straight forward, objective reality of the process. First, do not hire an attorney to take you public as they will take you on a long drawn out process to get as many billable hours as possible, instead, hire a consulting firm whose sole business model is to take companies public and take advantage of the relationships that they have with attorneys. This is the first rule: hire a consulting firm that offers a complete A to Z turn-key solution for taking a company through the process of going public, achieving a symbol and preserving the trade with a solid, ongoing post public investor relations strategy.
Next, when you’ve decided on a consulting firm evaluate their team, don’t ask for references to call to research their track record, better yet, ask for symbols of previous clients and links to the Edgar database to check out current deals in the comments stage. The proof is in the empirical track record, not potentially fraudulent phone references that are easily engineered and BS.
Now look at their team. Make sure that the consulting group has a solid legal team, market makers, investor relations team, auditing group and someone well versed in the comments stage response as this can be one of the major hang-ups in achieving your symbol in a timely manner. Also, most important, they absolutely MUST have a solid group of investors to fund the process for equity and to sell their shares into the marketplace post public to create a market for your stock as well as a network of market makers familiar with your deal to piggyback off of the sponsoring market maker’s 211.
About one month away from symbol achievement you’ll want to meet with your consultants to get a solid IR strategy together for a big offering dbut. You will want to set up a strategy for 30 day IR intensives every other month with general corporate publicity strategies in between. I suggest changing your IR firm each quarter to keep it fresh and open up your trade to a new network of investors.
One special note to consider is that when you are raising your initial round of capital from seed investors, the fastest way to do this is to have a fist full of contracts and purchase orders in hand to strengthen your position and publicize this reality with an arsenal of press releases. Its 100 times easier to raise capital if you are showing seed investors a handful of ‘soon to be’ cash than to solicit them empty handed.