Following are the requirements to file with the SEC to go public on the OTC Bulletin Board:
The company is earning revenue, or if not earning revenue, the company can show that it is a real business with one or more employees working fulltime in the business. The company need only be in business for a short time, as little as one month. The company also needs to be incorporated, have a bank account and have auditable financial records
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.
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 publicly trading, e.g. 40 shareholders pay $2,000 each and buy shares at 20 cents so they get 10,000 shares each. Those 10,000 shares x 40 shareholders equals 400,000 total shares or $80,000 which in most cases will cover the entire cost of going public.
In order to be eligible to go public the company needs to hire an auditor and obtain an SEC qualified audit.
From the time the audit is complete and the registration statement is filed by H2GO, the fastest the company can become public with a stock symbol is 60 days. Sometimes it can take up to six months if the SEC has a lot of 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 (Financial Regulatory Authority). That process takes about 30 days and the company needs to be sponsored by a Market Maker (MM), whom we will assist you with.
Once a company has its stock ticker symbol it can proceed to arrange various different funding programs that are not available to private companies which we and our resources will help to arrange. 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 newly public company get started.
CAN FOREIGN COMPANIES GET TRADING ON THE OTCBB?
Yes, they can. We have been very successful with Asian and European clients
Will you be successful in taking us public?
The short answer is, YES! As long as the control persons of your company don’t have issues that you have not disclosed to us, and as long as you are cooperating with us during the process, you will become publicly traded.
What do you charge for your service?
A flat fee of $40,000 with $20,000 due on signing our agreement and the balance of $20,000 when you achieve trading status.
What would it cost to buy an existing OTCBB “shell”?
Fair market value these days is in the $400,000 range and about 10-15% of your company.
Will you raise money for me when you take us public?
No, we take companies public by self-filings. No money is raised as an actual part of this process. That said, we do have many real investment bankers we can refer you to.
Is there a possibility that there will be any extra costs involved?
No, except for your financial audit, our fee will include all services to get your company listed publicly on the OTC Bulletin Board with a stock quote. With the exception of your Audits, EDGARIZING costs and Transfer Agent (TA).
Who pays for the company’s audited financials, if needed?
You pay for your own audit. We will recommend a very reasonable and experienced auditor if you need one.
How much does the financial audit cost?
An audit can cost anywhere from $4,000 for a startup company with limited operations to $25,000 or more for an extremely complicated company audit.
Do you have an accounting firm you can refer us to for our financial audit?
Yes, we have PCAOB registered accountants who we refer to and, because of the volume of business we send them, give considerable discounts to our clients. Our recommended auditor can give you an estimate of cost after an initial free consultation.
What is the difference between the Pink Sheets and the OTC Bulletin Board (OTCBB)?
The Pink Sheets and the OTC Bulletin Board are competing for quotation services for OTC securities. The Pink Sheets is a privately owned company, while FINRA operates the OTCBB. Unlike the OTCBB, issuers do not have to be fully reporting companies with the Securities and Exchange Commission (SEC) to be quoted on the Pink Sheets. It is widely accepted as fact that the OTCBB is a better and more established trading market than the Pink Sheets. Thus, we only take our clients public on the OTCBB, except in special circumstances.