Consultation on Public Listings

Identifying & Evaluating APO Opportunities (Reverse Mergers, Shells and Reg A+)

If you are looking to take your company public, there are viable Alternative Public Offering (APO) opportunities that can be explored by way of reverse-mergers with existing registered or non-registered “shells”. There are also numerous pitfalls associated with APOs. In addition, the landscape of intermediaries and available public shells is diverse and complex. We can help you determine the most viable route toward the APO market and make introductions to help you decide on what shells to choose. We can map out this process for you to find the best pathway for your company while you are able to dedicate your valuable time to other business activities.

Congress passed the 2012 Jumpstart Our Business Startups Act (the JOBS Act) on a bipartisan basis that was intended, in part, to to help small entrepreneurial start-ups raise capital. Previously, Regulation A had such a low fundraising limit and high compliance cost that it was almost never used. Companies could only raise up to $5 million in capital, and they had to file the offering in every state in which they were selling (the so-called ‘blue sky laws’). The new Regulation A+ raises that limit to $20 million for the existing Tier 1, and creates a new Tier 2, in which companies can raise up to $50 million, $15 million of which can be offered by current shareholders. In addition, Tier 2 will not require companies to be reviewed by every state, significantly reducing the cost of compliance. The new Reg A+ essentially will create a new kind of IPO as a way for companies to go public with less initial and ongoing expense compared to a traditional IPO.

Initial Public Offering (IPO) Planning and Filing

The planning for a traditional IPO, the audit preparation, the preparation and filing of a registration statement, as well as the continuing reporting requirements under the Securities Act of 1934 are both intense and time-consuming. We have the expertise to work with you every step of the way and to seamlessly interact with your SEC counsel and auditors so that you can focus on your daily operations.

SEC Self-Registration

Unlike a reverse-merger with an existing public shell, self-registering with the SEC (filing an S-1) can be highly appealing as a custom-taylored approach to going public. However, it involves a significant degree of planning, diligence and time and is just the first major step toward becoming a publicly-traded company. Our expertise with SEC filings is very valuable to this process and we assume an integral role in the construction of a registration statement while coordinating the process with SEC counsel and auditors to make the process as cost-effective and efficient as possible.

FINRA Regulatory Filings

Maintaining relationships with key market-makers and staying actively involved with the filing of FINRA-related filings (i.e. Form 211) is a critical component to the electronic trading side of going public. Companies need a firm to work alongside them for these functions; our expertise and connections enable us to do that. We have relationships with the market-makers that can sponsor these filings and that can make a market in company securities.

Pink Sheet to Fully-Reporting Transitioning

We encounter many small companies whose stocks trade at a relatively low price and market capitalization. These stocks are typically known as microcap or penny stocks (by definition, microcap stocks have a market capitalization under $500 million). Many of these companies trade over-the-counter (OTC) and are quoted on OTC systems such as the OTC Bulletin Board (OTCBB), OTCQB, OTCQX and OTC Pink, formerly known as the “Pink Sheets.”

To many, companies that trade on such exchanges are typically categorized as “riskier” investments. This is due to the lack of public information on these companies as well as the fact that there are no minimum quantitative listing standards for these exchanges. Many institutional investors have by-laws that prevent them from investing in companies that trade on OTC exchanges and retail investors are usually asked to sign a waiver from their broker/dealer stating they understand the risks associated with OTC exchange traded stocks. Even online brokerages have restrictions when it comes to OTC stocks.

 We can outline the criteria a company needs to uplist and implement the steps necessary once a company is ready to uplist to the NASDAQ Capital Market and NYSE MKT (formerly known as the AMEX). These two exchanges are typically the next step for a company uplisting from one of the OTC exchanges. Companies must adhere to additional requirements, such as corporate governance and exchange listing fees, in order to uplist to a higher exchange. If the management team is successfully executing on a company’s growth strategy and producing a constant flow of news, an uplisting not only benefits the company but also benefits shareholders.