Taking Your Company Public

Strad has assembled a team of professionals who will thoroughly analyze your business, its objectives, and finances. We will prepare and file all necessary corporate documents, including re-incorporation if necessary, and the required securities documents.

Upon completion, your company will be approved and issued it own stock symbol on the OTC Bulletin Board. Our fees are all-inclusive and there will no hidden costs except the fees associated with the financial audit paid to your accountants.

Our turnkey program gets your company trading faster and more cost-effectively than most investment banks. Our program is also hundreds of thousands dollars cheaper than your typical public shell transaction. It is easier to attract private placement investment capital if your company’s common stock is already publicly traded. A ticker symbol provides liquidity for shareholders and is a great corporate tool to attract private placement capital. This tool provides assurances to the restricted capital investors that there is a ‘light at the end of the tunnel’ and that they will be able to realize an eventual return on investment.

There are several different options available to companies desiring to go public. Each has its own advantages, disadvantages, state and federal requirements, time constraints, and costs. Careful consideration should be given as to the method used to achieve a public company, and the advice of professionals should be sought.

Disadvantages of going public:

• Public Reporting. As a publicly trading company, there are certain reporting requirements to the government and shareholders such as audited financial statements and required reporting of financial results on an quarterly and annual basis. This usually means time and expense.

• Confidentiality. As a publicly traded company, full disclosure is required on all transactions. Management can no longer keep the actions and progress of the company confidential.

• Dilution. By becoming a public company, whether through an initial public offering (IPO), direct public offering (DPO) or a “shell merger”, the current shareholders will give up some equity of the company through dilution of their percentage of ownership.

• Liability. Management has a certain additional liability required by law to the shareholders and to the public. Being public allows additional visibility, which automatically increases the level of liability.

• Maintaining Stock Value. Being a public company requires a certain amount of public relations, both to the public and to the financial community. The stock should also be trading at a certain level and accurately reflect the value of the company. This requires both time and money.

Advantages of Going Public

• A public offering of company stock will improve the company’s net worth, enabling the company to obtain capital or borrow money on more favorable terms. A public company can more easily expand through acquisitions, using its own stock rather than depleting needed cash.

• The company may be better able to attract and retain more highly qualified personnel by offering stock options, bonuses, or other incentives involving company stock with an ascertainable market value. Through public ownership of its securities, the company may be in a position to gain prestige, become better known nationally, and improve its business operations. It becomes easier to convert debt to equity and to strengthen the company’s balance sheet.

• An equity offering from a lender’s perspective strengthens the financial condition of the company as it reduces leverage. Future financing may be obtained more easily since the company can offer investors a security that is liquid, more freely tradable, and with an ascertainable market value.

• Liquidity for the owners of the company, including founders, venture capital and other professional investors, can be achieved under Rule 144. Taking a company public may enable the company to eliminate existing personal guarantees to lenders and others and generally allow the company to avoid any future personal guarantees.

• Establishing a public market for the stock usually allows the founders and owners to achieve a sense of success and fulfillment and also enables them to plan for an exit strategy.

How Can We Help

The public markets are not just for big companies. In fact, the public markets can offer an excellent environment for small businesses to grow. We are focused and dedicated on providing your company with the following tools.

• Education. Our first objective is to educate business owners about the process of going public and the numerous benefits offered by the public markets.

• Registration. If your company is a good fit for the public markets, our second goal is to help you register your securities at the state or federal level. Contrary to popular wisdom, it’s possible to begin trading on the public markets without mountains of red tape. We can guide you through the process and help you to keep costs down. Our network of world-class professionals truly cares about small businesses, and when you consult with them and let them help you produce your paperwork, you will save hundreds of thousands of dollars in the process of joining the public markets.

• Compliance. Finally, through our professional associates we work with small public companies to help them maintain compliance with SEC regulations in order to remain listed as a public company.

The basic registration form is Form S-1. It requires companies to disclose the following:

› A description of the company’s business;
› Its properties;
› Material transactions between the company and its officers and directors;
› Competition;
› Identification of officers and directors and their remuneration;
› Certain pending legal proceedings;
› The plan for distributing the securities; and
› The intended use of the proceeds.

The S-1 is not prepared as a fill-in-the-blank form like a tax return but is similar to a brochure, with information provided in a narrative format. There are also detailed requirements concerning financial statements, including the requirement that such statements be audited by an independent certified public accountant (PCAOB qualified).

In addition to the information expressly required by the form, the company must also provide any other information necessary to make the statements complete and not misleading.

Does your Company qualify?

1. The company is earning revenue, or the company can show that it is a real business with one or more employees working full-time in the business. The company can be in business for a short time, as little as one month. The company needs to be incorporated as a ‘C’ corporation, have a bank account and have auditable financial records.

2. The company has or can obtain no less than 40 shareholders in order to be “public”. If a company is unable to secure 40 shareholders on their own, we may be able to help to obtain the minimum number.

3. The non-insider shareholders (excluding management) must have purchased a minimum of 400,000 shares of the company’s stock that can be registered with the SEC as the “float” when the company is listed and trading publicly.

4. In order to be eligible to go public the company needs to hire an auditor and obtain a SEC qualified audit.

5. From the time the audit is complete and the registration statement is filed, the quickest the company can become public with a stock symbol is 60 days. Occasionally, it may take up to six months if the SEC has questions about the history of the company or other items contained in the registration statement or audit. Once the company is cleared by the SEC (referred to as “going effective”) it needs to be approved by FINRA, which usually takes about 30 days and the company needs to be sponsored by a Broker-Dealer, whom we will assist you with.

6. Once a company has its stock ticker symbol it can proceed to arrange various different funding programs that are not available to private companies. We, along with our resources, will help to arrange this. PIPE funding (Private Investment in Public Equity) would be one of the sources for funding, which may include a line of credit as much as $10 million to help a new public company get started.

Will we be successful in going public?

The short answer is, YES. As long as the control persons (is this the right phrase? Do you mean persons in charge) of your company don’t have issues that you have not disclosed to us, and you are cooperating with us during the process, you will become publicly traded.