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    FAQs

    Frequently asked question have been answerd here. You can contact us for any sort of help.

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Frequently Asked Questions

1. What does “going public” mean? Going public is a process in which a business owned by one or more individuals (usually less then 50) is converted into a business owned by many. Being public means that companies can offer equity securities and debt to the general public.

2. Can any company go public? Yes! A company does not need any minimum level of sales, profits or assets to become public.

3. Why would I want my company to become a public company? Having a public company and being public has its advantages and disadvantages and is not for everyone. Some of the advantages include access to the public markets to raise funds, liquidity for you and your other shareholders, prestige, using your public stock to make acquisitions and providing an exit strategy to attract investors. For a full list of the many advantages that being a public company has to offer please click here.

4. I’ve heard the term IPO. What exactly is an IPO? An initial public offering (IPO) An initial public offering (IPO) is the first sale of a private company’s common shares to public investors. The main purpose of an IPO is to raise capital for the corporation and usually involves the services of an investment banking firm. While IPO’s are effective at raising capital, the vast majority of companies will not meet the asset, income, growth, revenue or capital requirement standards that many investment banking firms have. IPO’s also impose heavy legal compliance and reporting requirements and are a costly undertaking. Many companies never complete the process.

5. What does it cost to do an IPO? YThe average IPO costs US$500,000 plus companies usually have to give up 25% or more of their equity.

6. Do you have to do an IPO to go public? No you don’t. There are also two other ways that most companies use. They are:1. The direct public offering (DPO) - The direct public offering (DPO) is exactly the same as an IPO and is the least expensive way to go public. The advantage is that that there is no investment banking firm involved in the process and any legitimate company can go public this way. It’s not only fast but it also allows the owners to retain the maximum percentage of ownership and there are no asset, income, growth, revenue or capital requirement requirements. 2. The reverse merger - A "reverse merger" is a method by which a private company goes public by merging into a company that is already publicly traded. The publicly traded corporation is called a "shell" since all that exists of the original company is its corporate shell structure with no operations. The private company obtains the majority of the public company’s issued and outstanding shares (usually 90%) and will usually change the name of the public corporation to its own name. The new merged entity will then appoint and elect its own management and Board of Directors. By merging into such an entity, a private company becomes public. The cost of purchasing a public shell is from $250,000 and up. A disadvantage of this method is its costliness, hidden liabilities that may be there and not having any prior relationship with any of the shareholders in the “public float”. These shareholders could start unloading their stock into the market once they see the stock trading again.

7. Do you need an underwriter to do a Direct Public Offering? No, there is no underwriter involved in a Direct Public Offering.

8. If I decide to take my company public can I get it listed on one of the major exchanges? Yes if your company meets their rigid qualifications. Major stock exchanges like the NASDAQ and the NYSE are elite clubs - their only want the best companies to trade on their exchanges. A few of the companies that list on NASDAQ include Intel, Microsoft, Cisco, Oracle, and Sun Microsystems. The NASDAQ, for example, has three sets of listing requirements. A company must meet at least one of the three requirement sets, as well as the main rules for all companies. These include: a) Each company must have a minimum of 1.1 million publicly-traded shares upon listing. Shares held by officers, directors or any beneficial owners of more then 10% of the company do not count. b) The minimum bid price of the stock upon listing must be at least $5. c) Companies must also have at least 400 shareholders holding at least 100 shares each. For a list of all of the requirements please visit the NASDAQ website.

9. If my company does not have the necessary qualifications to go public on one of the major exchanges what can I do? You can take your company public on the Over-the-Counter Market (OTC).

10. What is the OTC? The term "Over-the-Counter" refers to stocks that are not trading on a stock exchange such as the NASDAQ, NYSE or American Stock Exchange (AMEX). Generally companies that trade their stocks on the OTC market cannot meet the requirements to trade on one of the major exchanges. However some strong companies that can trade on the major exchanges choose instead to trade on the OTC market because of the costly fees and regulatory and administrative burden that the major exchanges impose on them. Companies can either trade on the Over-the-Counter Bulletin Board (OTCBB) or the Pink Sheets. Neither of these networks is an exchange, in fact, they describe themselves as providers of pricing information for securities.

11. What is the OTCBB? The OTC Bulletin Board® (OTCBB) is a regulated quotation service that displays real-time quotes, last-sale prices, and volume information in over-the-counter (OTC) equity securities. An OTC equity security generally is any equity that is not listed or traded on NASDAQ® or a national securities exchange. OTCBB securities include national, regional, and foreign equity issues, warrants, units, American Depositary Receipts (ADRs), and Direct Participation Programs (DPPs). Unlike the national security exchanges there are no minimum quantitative standards (assets, revenues, etc.) which must be met by an issuer for its securities to be quoted on the OTCBB. Companies however, must be current in their reports that are required to be filed with the SEC and other regulatory authorities.

12. What are the Pink Sheets? The Pink Sheets® LLC is the leading provider of pricing and financial information for the over-the-counter (OTC) securities markets. They provide products and services that increase the transparency of information available in the OTC (Over-the-Counter) markets so as to make them more efficient for all participants. Their centralized information network includes services are designed to benefit market makers, issuers, brokers and OTC investors. Pink Sheets information enhances the efficiency of OTC trading, provides better executions for OTC investors and improves the capital formation process for OTC issuers.The origins of the Pink Sheets go back to 1904, when the National Quotation Bureau began as a paper-based, inter-dealer quotation service linking competing market makers in OTC securities across the country. Since that time, the Pink Sheets and the Yellow Sheets have been the central resource for trading information in OTC stocks and bonds.

13. What is the Grey Market? Companies that have a trading symbol and are not quoted on either the OTCBB or the Pink Sheets are sometimes said to be on the "gray market".

14. Are there any requirements to get listed on the OTCBB? There is no minimum level of sales, profits or assets to become public on the OTCBB. However companies do require audited financials statements to get listed. They also have ongoing filing and reporting requirements with the SEC and the NASD.

15. Are there any requirements to get listed on the Pink Sheets? There are no audits, asset or revenue requirements and no periodic SEC reporting for Pink Sheet listed companies.

16. So are the pink sheets the best alternative for a small company to go public in today’s marketplace! We think so. Especially for companies that cannot afford to have their financial audited. Going public this way saves companies 70 to 80% over the cost of doing an IPO or a reverse merger. And it’s very fast. Once they’re public they can easily trade on the OTCBB later.

17. Who are some of the companies that trade on the Pink Sheets? YSome of the best-known companies in the world trade on the US Pink Sheets: Heineken, Nestlé, Nintendo, Rolls Royce, Volkswagen, BAA Plc, BAE Systems, Cathay Pacific Airways, Liberty International, Peugeot, L'Oreal, Marks & Spencer and Neorx Corp are just a few.

18. What does it cost to go public on the Pink Sheets? In most cases we can take a company public on the Pink Sheets for less than US$40,000. This can vary though and costs could rise if you don’t have a business or your financials are not current. However we will work closely with you to keep the costs down.

19. How can this be done for less than $40,000? Audited financials are not required. This can saves thousands and thousands of dollars. There is no underwriter required. This also saves thousands of dollars.

20. What percentage of my company do I have to give up to go public on the Pink Sheets? Usually less than 15%.

21. Are there any ongoing reporting requirements once we’re public on the Pink Sheets? Yes! You will be required to file a number of reports including unaudited quarterly financials.

22. How long does it take to go public on the Pink Sheets? It generally takes four to six months from start to finish. It can happen sooner (or later) but once we submit the paperwork it’s in the hands of the SEC and the NASD and out of our control.