INFORMATION ON GOING PUBLIC IN THE US

COST FACTORS

TYPE OF OFFERING -- The length or complexity of the type of offering (REG D private placement, REG D 504 public offering, REG A, SB-1, etc.) will affect the cost of your legal and preparation fees ($10,000 to $300,000+).

FILING FEES -- The type of offering above, plus the number of states you file in, and whether or not you have to file for broker dealer registration as well as registration and/or exemption of stock sales will affect your filing fees ($0.00 to $100,000+).

SELF-UNDERWRITING OR BROKER DEALER -- Self-underwritings are less expensive as the company advertises for investors and the officers and directors of the company sell stock directly to these interested parties. Broker Dealers are more expensive as they will charge you a sales commission, plus they usually want a large part of your company (20-40%), plus they want you to cover their legal fees for doing due diligence on your company ($10,000 to $50,000). 

AUDITED FINANCIALS -- Audited financials can cost anywhere from $750 to $50,000 depending on the age of your company and condition of your financial records. In an extreme case your company may not be able to get audited financials at all. Some types of offering require audited financials, some don't.

STOCK EXCHANGE LISTING FEES -- You can get listed on the OTC Pink Sheets without any filing fees. All you need is a sponsoring market maker. There are no minimum requirements for this listing and it allows your stock to be quoted and traded publicly. (Note, however, this is currently changing. Please see http://www.pinksheets.com/otcguide/categories.jsp ) However, it is better to voluntarilly comply with Pink Sheet requirements so plan on spending about $5000 a year. The OTC Bulletin Board now requires a company to be a reporting company to be listed. This requires a 12(g) registration and audited financials, or alternatively doing an S1 registration with audited financials. NASDAQ, NEW YORK STOCK EXCHANGE, etc. are more prestigious and can be available to companies that meet their requirements for minimum net worth, income, number of stock holders, etc. Alternatively, some companies opt for a STANDARD and POOR listing, which can usually be obtained for under $5000 and gives you BLUE SKY in about 35 states.

REVERSE MERGERS - You can get listed on the OTC Pinks by purchasing a percentage (usually 90%) of a non-trading, non-reporting shell for about $80,000. The process generally takes about 9 to 12 months. You can get listed on the OTC Pinks immediately (less than a week) by purchasing a percentage (usually 90%) of a listed, non-reporting shell for about $150,000 to $250,000. You can get listed on the OTCBB or higher exchange by purchasing a percentage (usually 90%) of a listed, reporting shell for about $350,000 to $ 450,000.

TIME FACTORS AND TYPE OF OFFERING

PRIVATE PLACEMENT -- You can raise any amount of money on a private placement. However, you are limited to contacting a very few people in most states, and you may only contact people you already know. No advertising is generally allowed. Stock received in a private placement is NOT free-trading stock, but restricted and generally may not be sold for several years. Private placements can be ready to solicit in as little as 30 days and do not require approval from the SEC and state, just notification. Self- underwritings may be allowed in some states, but not others.

504 REG D -- You can raise up to 1 million in a 12-month period. It can be ready to solicit very fast (30 days) as it does not require any approval from SEC. If all federal and state laws are complied with, the offering can be public and investors can have free-trading stock. The offering can be a self-underwriting (officers and directors sell stock, not broker dealers) in some states with no filing required. No audited financials are needed in most states.

SCOR -- This is a federal 504 REG D that is also registered in a particular state or states and has additional guidelines beyond 504 REG D. SCOR states require Broker Dealers, so a self-underwriting is usually not possible unless the company qualifies and registers as a Broker-Dealer in the state. State registrations require approval from the state, which can take 30 days after submitting your paper work in easy states or 6 months in more difficult states. Stock from this type of offering can be free-trading. Audited financials are usually needed, and there are some SCOR guidelines, which may need to be considered before doing a SCOR (such as $5.00 minimum offering price and no dividends or stock splits are allowed for 2 years).

REG A -- This is an exemption that requires both federal and state approval. It usually takes about 3 months after paper work is submitted to obtain federal approval, and in many states a coordinated approval is given by the state as soon as the federal approval is given. With the New Reg A and A+ rules, you can raise up to $20,000,000 under the tradiitional Reg A and up to $50,000,000 under the new Reg A+ in a 12-month period with this type of offering. Stock from this exemption/registration can be free-trading stock. You can do a self-underwriting in some states, and audited financials are not required in most states.

FULL OFFERINGS -- Full offerings are fully registered with the SEC and states (S-1, etc.). These offerings allow for unlimited capital to be raised and the stock issued is free-trading. These kinds of offering usually take a year or two to get approval and require audited financials.

REVERSE MERGER - This is not an offering, but another method of "going public". A private company merges with either a company that has already done a public offering and is ready to be listed or a public company that is already listed on a stock exchange. Companies utilizing this method of going public can be public in a matter of days (usually 7 to 14 days for a merger into a PINK or about 30 days for an OTCBB).

SUMMARY

A 504 REG D offering is the fastest and least expensive way to do a PUBLIC OFFERING. If you do a self-underwriting and get listed on the Electronic Bulletin Board, your legal and preparation costs will run about $75,000 and you will probably have about $1000 to $3000 in incidental other costs. No audited financials are needed. You can be ready to legally solicit in as little as 30 days.

A SCOR offering will cost you about the same as above, plus additional costs for State filing fees (usually about $1000 per state), audited financials and Broker Dealers. It will take about 60 days to be qualified to sell stock in the easy states and up to 7 months in the more difficult states.

A REG A offering will cost roughly about $5000 more than a SCOR. You will not need audited financials or broker dealers in some states, but you will in others. It will take about 4 months in an easy state and about 7 months in a more difficult state.

A full offering (S-1, etc.) will usually start out at a cost of at least $75,000. It will allow for unlimited capital to be raised and the stock issued is free-trading. These kinds of offerings can take a year or so to get approval and require audited financials.

A Private Placement offering can also be done fast and for very little expense - approximately $15,000 for a simple offering (a complex Private Placement offering can cost significantly more). Simple Private Placement offerings do not require audited financials, but more complex ones do. The stock sold will be restricted and less attractive to most investors because it is not as liquid as a public offering.

A Reverse Merger can be accomplished for as little as $75,000 and can be listed in as short a time as 6 months. On the other hand, a company can go public within days by a reverse merger for a price of about $150,000 to $ 450,000.

We can also take companies public in Canada and Bermuda. CSE listings can be achieved in 3-4 months and qualify for a dual listing on Frankfurt. Bermuda lisitngs can be achieved in 2-3 months and also qualify for a dual listing on Frankfurt. Call us to get price quotes.