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 )  .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. NASDAQ, PACIFIC COAST STOCK EXCHANGE, 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. The PACIFIC COAST STOCK EXCHANGE has the easiest requirements to meet for a new company ($750,000 net worth, no income requirement, SCOR or REG A offering, 250 stockholders or more, minimum price per share of $5) and will cost about $10,000 to get listed. 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 $500,000 to $ 800,000.

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. You can raise up to $5,000,000 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 (SB-1, 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).

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 (SB-1, 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 $800,000.

European Listing Service

     German Exchanges

Frankfurt ExchangeBerlin Exchange

     UK Exchanges

Plus MarketLondon Stock Exchange

Artfield Investments Inc. is able to assist private and or US listed public companies obtain a public listing and/or money raise in Europe.

Artfield though associates in the US and Europe provides established North American and international client companies with growth capital and liquidity through private fundings and IPOs on Europe’s emerging equity markets.  Over the past 10 years Artfield’s associates have raised more than $1,000,000,000 + for private and public US companies in Europe, and listed clients on five different stock exchanges there.

FRANKFURT LISTINGS

Germany is still where the money is. Listing procedures have changed since 2012 but you can still get listed on the Frankfurt Stock Exchange in  as little as 120 days. Regulated Exchange companies (NYSE, AMEX, NASDAQ, etc.) can do it in as little as 7 days. CLICK HERE for more information.

UK LISTING

Plus Exchange – 

PLUS Stock Exchange (PLUS-SX) is a London based stock exchange providing UK and international companies with access to European capital through a range of fully listed and growth markets. The growth market offers cost-effective access to capital for businesses seeking the first step onto a public market. The market is supported by a quote-driven trading platform with competing two-way prices at all times, and it is the price formation venue for these securities.

PLUS-SX supports the execution of retail flow across a wide range of UK and European securities. Investors benefit from best execution and low transaction costs with immediacy of trading, single execution fill, price improvement on the primary best bid and offer and commitment in size for illiquid securities.

Listings can be achieved on PLUS-SX in as little as 30 days.

London Listing

New Trend of companies looking to go public

Increasingly, businesses are seeking innovative ways to make today’s global marketplace work for them. For companies looking to go public, this could mean raising capital and listing their shares in the London market either in lieu of or in addition to the U.S. market, and we are at the forefront of this emerging trend.

Over the past four years, the London Stock Exchange’s Alternative Investment Market (AIM), the U.K. equivalent to the NASDAQ Small Cap Market, has in particular attracted a number of U.S. companies. After all, the AIM is not only a more cost-effective alternative to its U.S. counterpart, it is also smaller and more focused than the vast U.S. market, allowing new smaller and mid cap companies to garner far more coverage than they would in the United States.

Why London?

Taking a company public in London offers U.S. companies some distinct advantages over doing so in the United States. For example, at 4% to 5%, the costs of capital in terms of underwriting discounts in London are generally lower than the U.S. costs of 7%.

Although large amounts of investment capital are managed in London, the number of target companies there is also much smaller than in the vast U.S. market. Smaller companies that could get lost in the U.S. can therefore attract far more investor and analyst coverage in London than they would at home.

Turning to London also offers companies considerable long-term benefits, such as the potential to split a business, raising capital in London to finance European and international business while at the same time raising capital in the U.S. to develop the U.S. business. Several London-based investment companies, too, offer an indirect route to access the London markets through a listed equity swap fund structure, which allows companies from the U.S. (and other countries) to issue their shares in exchange for shares in a London ­listed investment company. The U.S. company can then sell the investment company shares for cash in the open market in London, although some structures provide for contractual commitments to hold these investment company shares for some period of time.

Why the AIM?

While NASDAQ has been relatively inactive for new issues since 2000, the London AIM has continued to function. In 2003, there were 100 new listings (IPOs) on the AIM, more than the combined total for NASDAQ (55), the NYSE (47), Deutsche Boerse (6), and Euronext (7)during the same period, and the AIM raised approximately $3.0 billion. Moreover, through February 2004, the AIM completed 19 additional IPOs and raised over $500 million.

The costs of an IPO on the AIM are also significantly less than a U.S. IPO, with AIM rules allowing certain U.S. SEC reporting companies to use their SEC disclosure documents as their IPO prospectus without having to create a new prospectus. Furthermore, it is less likely that a company listed in the AIM will be orphaned, since the AIM requires that all companies have a nominated advisor and a nominated broker at all times who will make a market in the stock and provide research. For more information, please refer to “AIM Market Statistics March 2004.”

Who Should Consider Listing on the AIM?

Thus far, there exist some common traits among U.S.-based companies that have successfully accessed the AIM, and companies that fit this profile are the most likely to benefit from entering the London market.

The AIM has to date attracted technology or other growth companies in the late stages of development that need the funds to commercialize their technology. It has also drawn private or quasi-public companies such as those listed on the OTC Bulletin Board or the NASDAQ Small Cap Market that have historically had difficulties attracting investor and analyst coverage in the U.S.

Not surprisingly, many of the U.S. companies listed on the AIM already had existing European operations or investors or had contemplated expansion into Europe. While European connections are not mandatory, companies with some form of a European footprint are better candidates for going public in London.

Who Has It Worked For?

In May 2003, a bio-technology company, did an IPO in London. At the time, it was trading very low volumes on the OTC Bulletin Board in the U.S. for approximately the USD equivalent of £0.16 per share, raising £5 million at £0.16 per share. Seven months later, it raised £7.3 million at £0.50 per share, and three months later, it raised £11 million at £1.10 per share. It has also broken records for the largest number of trades in its shares in both one day and in one minute, indicating a much more liquid market than when it was listed on the NASDAQ Bulletin Board.

In March 2004, the developer of a system to reduce emission pollutants in automotive exhaust, issued its shares in exchange for shares of a London listed trust, which are valued at $2.1 million and are listed in London. The trust shares that the developer received can now be freely sold in the London market to provide working capital to the developer.

On April 27, 2004, a privately held company, a developer of a shielding against electromagnetic interference for electronic devices, successfully completed its IPO on AIM through a new U.K. holding company. The company raised approximately £1.5 million by issuing new shares at 72 pence per share, and the first day of trading, its shares closed at 88.5 pence per share.

If you have interest in exploring a listing on the London Exchange, give us a call.

London Listing Requirements

The markets of the London Stock Exchange put UK and international companies from all sectors in touch with one of the world’s deepest pools of investment capital. Our markets contain every kind of company – from start-ups to some of the world’s largest and most successful businesses.

 There are two primary markets to choose from:

The Main Market 

AIM –  the Exchange’s global market for growing companies

Your company’s size, objectives and funding needs will help you decide which market is right for you – the main differences in the admission criteria for the Main Market and AIM are listed below:

Main MarketAIM

Minimum 25% shares in public hands

Normally 3 year trading record required

Prior shareholder approval required for substantial acquisitions and disposals

Pre-vetting of admission documents by the UKLA

Sponsors needed for certain transactions

Minimum market capitalisation

 No minimum shares to be in public hands

No trading record requirement

No prior shareholder approval for transactions*

Admission documents not pre-vetted by Exchange or UKLA

Nominated adviser required at all times

No minimum market capitalisation

Specialist market segments

The Exchange has developed specialist segments within the markets to highlight the potential of companies with similar attributes:

·         techMARK and techMARK mediscience, two segments in the Main Market, are dedicated to the dynamic technology and healthcare sectors

·         landMARK, a geographic grouping in both the Main Market and AIM, highlights companies by region in every area of the UK and Ireland.

Issuing and listing bonds

The London Stock Exchange is also one of the world’s major centres for the issuing and listing of bonds.

* Not applicable to reverse takeovers

If you have interest in exploring a listing on the London Exchange, give us a call.