There are many ways to go public in the US and there are many different listings and quotations.

The three major levels of listing are:

THE OTC PINK SHEETS: Often referred to as “pinks”, These companies are listed by the National Quotation Bureau (NQB). As of today, neither the NASD nor the SEC require Pink Sheet companies to maintain current reporting status nor undertake costly annual audits. However, this is soon changing. (Note, however, this is currently changing. Please see http://www.pinksheets.com/otcguide/categories.jsp )

THE OTC BB: The OTC Bulletin Board is operated by the National Association of Securities Dealers (NASD) and requires that all companies whose stock is traded on the OTC Bulletin Board (or Nasdaq or Amex) maintain their current reporting status with the Securities and Exchange Commission (SEC), which includes current audited financial statements.

EXCHANGES: While the OTC PINK SHEETS and the OTC Bulletin Board are excellent stock markets, some clients are interested in trading on one of the more mature U.S. stock markets – Nasdaq Small-Cap, Nasdaq NMS, NYSE or AMEX. There are varying levels of qualification for each exchange including asset levels, number of shareholders, required Board level committees, and market capitalization. All exchanges require the company to maintain a current reporting status with the Securities and Exchange Commission (SEC), which includes current audited financial statements Typically, a company wishing to trade on one of these exchanges will need a minimum of $20 – 100 million in annual revenue and net profits of at least $2 million annually.

For a US company a quotation on the US stock markets is a way to:

1)Leverage a larger retention of ownership;

2)Grow your company faster and make it more powerful by attracting top personnel without necessarily huge cash outlays;

3)Grow your company faster and make it more powerful by attracting top notch team members to your board of directors;

4)Raise money faster and cheaper by increasing the “liquidity” factor for your investors;

5)Grow your company faster and make it more powerful by increasing your ability to attract “mergers”, “acquisitions” and “strategic partners;

6)Grow your company faster and make it more powerful by increasing its ability to compete for large corporate contracts;

7)Leverage your personal return on investment as an owner by decreasing the amount of time it will take you to make money on your investment, as well as increasing the valuation of your company, as well as, changing the liquidity of your asset to a much more liquid form than that of a private company;

8)Grow your business faster and make it more powerful by increasing your status in the eyes of all those you do business with.

For a foreign corporation a qutation on the US stock markets is a way to:

1)Increase liquidity for the owners of the corporation by tapping into a liquid US market;

2)Tap into the US capital market (the largest in the world) for expansion of business at home and internationally;

3)Hedge against foreign currency – by diversifying your holdings into US dollars it is a way to hedge against the foreign markets volatility;

4)Tap into the huge leverage possible on the US stock market as detailed in leverage point above. Often time foreign laws and exchanges do not permit the owners the huge leverage available on the US stock markets. For example, being able to raise 100million dollars and keeping 70-80% control of the US corporation is not something you can do on all foreign exchanges;)

5)Expand your business into the US and tap into strategic alliances– US companies are more likely to do business (and do business on more favorable terms) with a US public corporation than a foreign corporation;

6)Tap into US and International personnel pools. Key US and INTERNATIONAL personnel are more available to a US public corporation;

7)Tap into the international MERGER and ACQUISITION market. US and INTERNATIONAL businesses are more likely to become an acquisition or merger candidate for a US public corporation.

(c) 2007 Charlene Kalk

Charlene Kalk is a consultant that has been assisting companies “going public” for over 10 years. Charlene is the president of Artfield Investments which provides full services for companies that want to go public. Additional information on this topic is at http://www.artfieldinvestments.com.

Well, I first started assisting taking companies go public around 1987. I started off as a paralegal and quickly learned my way up to being a consultant.. For the last 5 or 6 years I and my associates often operate as what we describe as “Senior Consultants” to the companies we advise.

Over the last 20 years, the most common mistake I see companies, large and small alike, making while going public is: 1) letting their “money raising” investment banker be their “senior consultant” and 2) not having a “senior consultant” at all, but rather letting one of their junior consultants (such as an investment banker, attorney, accountant, broker dealer, investor relations guy) act functionally as their “senior consultant.”(Of course there are more mistakes, but we will save those for another day.)

What is a Senior Consultant? Well, when you go public, you will have and need a team or crew of consultants helping you: investment bankers, broker dealers, market makers, attorneys, accountants, investor relations consultants, PR consultants, marketing consultants, etc. Your senior consultant is the guy who understands all of the functions of these other consultants, can help you select and put together your team of consultants, and can educate you on the process, role, cost efficiency, and anticipated products of these various consultants.

A Senior Consultant should have hundreds of connections in these other consulting groups and yet be independent of them, not taking any finder fees from or beholden, in anyway, to any of these other consultants, and certainly able to recommend their dismissal when they are not working in the best interest of the company.

So let us address common mistake number one. NEVER, NEVER, NEVER let the guy who is raising or giving you money be your senior consultant. Why? Well simply put, his loyalty is always to himself or his money first. Your company will always be second if even that. There are no absolutes, but the guy who raised you the money will most always give you advice that is “best for him” not best for you. You need a senior consultant between him and you.

Your Senior Consultant should be someone who works for the company first, and foremost. He is your most senior and trusted advisor. He should be someone who educates you and gives you choices, and tells you the consequences of pursuing each of your choices. Not someone who is going to get a finder’s fee or commission for referring someone you hire or someone who gives you money.

Common mistake number two. Let me give you some examples. I have seen companies let an SEC attorney with little or no connections at all with other consultants, and with little or no knowledge of other areas (such as investment banking) act as their senior advisor. I have seen such attorneys structure a public company that while legally sound, violated all investment banking principles. The result: no market maker would sponsor the company to go public, or the company failed miserably, once public, because of the poorly devised structure.

On the other side of the coin, I have seen investment bankers as senior consultants, try to save some money by using cookie cutter legal forms, or legal forms from some past deals they did (rather than hiring attorneys) and make gigantic legal mistakes that prevented a company from ever getting through their SEC legal filings, or worse yet ending up in trouble with the SEC.

A senior consultant knows you need a complete team of professionals, has connections in all these areas and doesn’t sell you short. A senior consultant will help you save money by helping you select the most cost efficient professionals for the situation, not by cutting out “functions” that are totally vital to your success. Let me give you another example of what I mean.

As a senior consultant I currently have some 5 or 6 SEC attorneys that I recommend for various jobs to my clients. These attorneys range in prices from $150/hr to $500/hr. I had one client come to me, after we took him public, because he needed an opinion letter. The attorney he consulted wanted $10,000. It was a rather routine job and that was way over priced. I got him an attorney to do it for $200.

On the other hand, must companies put out press releases either written by investor relations consultants, or public relation consultants, with no legal review or review by a transactional attorneys only. Now that is a missing function.

I, as a senior consultant fill this missing function for my client. Not only do I fill the missing function but I fill it right. I refer a $500/hr criminal litigation SEC attorney to all my clients to review all their press release before they put them out. Why? There is noting that will get you in trouble faster with the SEC than a faulty, misleading, or inaccurate press release. Criminal litigating attorneys who are facing the SEC in court every day know a lot more about what will get you in trouble than even the best transactional attorneys. Even at $500 an hour the cost is only about $100 – $150 or so to review an average press release. The potential savings from doing it right: immeasurable.

If you are going to go public, do it right, get yourself a senior consultant, or don’t do it at all.

(c) 2007 Stan Medley

Stan Medley is a consultant that has been assisting companies “going public” for over 20 years. Stan is a consutant to Artfield Investments which provides full services for companies that want to go public. Additional information on this topic is at http://www.artfieldinvestments.com.