Going Public on the OTCBB?
2009-2010 A Field Guide from OTC Listings on the OTCBB
By Knowledge Publishing
Disclaimer: This is a compilation of blogs from www.otclistings.com to form a guide of opinions, none of which are that of any broker dealer,
lawyer, auditor, or official body. These are personal opinions and do not constitute any representations with regards to securities, law, auditing,
or any other such profession of which we are not qualified to give an opinion. OTC Listings is owned by Amalgamated Enterprises Inc, and thus
falls into the jurisdiction of Amalgamated Enterprise’s Incorporation.
None of the companies mentioned within this document have any affiliation to our company and we have not received any payment for the
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Founded August 2008 by Amalgamated Enterprises Inc with the goal to develop a series of Stock
Exchange educational websites. The website was first launched as a blog in February of 2009, with its
first recorded statistics in June 2009. The website has grown from June until December 2009 from 800
unique users per month to 10,000 unique users per month.
OTC Listings is ranked one of the top 300,000 websites in the USA and within the top 1,000,000 websites
in the world according to Alexa.com Traffic Ranking. With over 150 website posts and pages, the content
continues to grow. A newly added initiative launched December 2009 is the permission for third party
websites to publish their content on OTCListings.com. The first two companies to begin publishing with
OTCListings.com were SmallCapVoice.com and QualityStocks.net. Within the New Year, we hope to have
the addition of at least 20 more contributing authors and encourage companies wishing to reach our
audience to contact us to contribute content.
OTC Listings Services
OTCListings.com began as a website focused on educating private companies on listing with the OTCBB
stock market and the going public process and post public management skills. The website has
developed to include information from users and service providers within the marketplace. From this
vast network, we have developed contacts that enable companies to go public for less than $40,000.
Social Media and OTCListings.com
OTCListings.com provides social media marketing services to service providers and companies within the
OTCBB market place. Through-out this guide, you will be exposed to ideas regarding services we offer to
help you build a community for your business.
The Field Guide
This field guide is a compilation of blogs and information from www.otclistings.com. We expect to
publish a new edition per annum. The compilation of the information and social media marketing has
been provided by Knowledge Publishing, www.publishknowledge.com
OTCListings.com – An Information Website for the OTC BB Stock Market Page 2
Being Mentally Prepared For Listing On The OTCBB
With the growing scepticism of the capital markets with the transparency, compliance, and overzealous
financial product market that went bust in the US and therefore globally in 2008, investors are weary.
However, even within the second quarter 2009 respective technology stocks held up markets and
currency Forex trading had an exciting appeal once again. For the most part, big board companies have
underperformed with looming crisis talks in all board rooms across all boards and stock exchanges.
Many who are listed ask themselves how can they overcome these barriers and burdens to the
investment market and meeting their goals and success. As a Director of these types of companies,
looking in the mirror in the morning is much different than being in a private sector company, as the
greatest challenge of one’s mindset as a Director is you are publicly accountable. The business stability,
survivability, results, salaries, share dealings such as option plans and warrants, acquisitions and
takeover bids or lack thereof, regulatory requirements and costs, are just a few considerations of those
challenges. More than any time before in the history of public markets this is a true statement about
who is leading our economy, our markets, and our investments as individuals.
There is no doubt that the requirement of transparency that goes with listing a company is a
complicated set of values that often successful, quality companies don’t have a problem with.
Transparency however is complicated based on the stage of a business, and thus, the more early stage a
company is the more difficult it is due to the lack of resources, the fast pace of events that occur, and
the lack of basic skeletal level reporting mechanism’s built into the fibre of the company and
management. In general, as companies progress through stages of business development, these
mechanisms, such as committees and tracking, all become part of the corporatized listing. In some
cases, such as in the case of the United States Pinksheets or the US Over The Counter Bulletin Board
(OTCBB), reporting requirements are less stringent for the purpose of recognizing the burden on these
new entrepreneurs and directors in order to facilitate small business development. A company should
be run successfully whether it is a listed or unlisted business, especially where capital needs require the
solicitation of individual investors.
Listing on any stock exchange in the world requires the preparedness mentally of directors and not just
the abilities or experience. One such requirement is to be mentally prepared for is the stage of the
business the directors are managing (as many directors are taken from mature companies who cannot
manage a development stage company due to the lack of controls as discussed prior.)
One should also consider the entrepreneurial spirit of which a founder often holds and motivates the
staff and investors into the venture due to the state of mind, and the ability to accept a certain level of
humility as the open book management requires all the mistakes to be disclosed which is embarrassing
for those running the company. However, one of the greatest signs of a leader is humility, the ability to
fail and drudge on to success. There is no question that a good CEO requires a level of self development
that molds their emotional intelligence and leadership ability. The stock market has rarely nurtured
these characteristics, but they are required. The fact is that a great deal of stress comes with being a
CEO of a public company due to the number of investors, responsibilities, and regulatory requirements.
As an individual, a CEO needs to be mentally prepared and strong.
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The smaller exchange’s play an important role for businesses who are not prepared for the costs of
being on a big board listing or do not meet the requirements but still want to reap the benefits of going
public such as:
Access to capital
Ability to acquire companies by funding through the sale of shares or the issue of new shares
versus cash payment
Negotiating strength with financiers or the later corporate buy-out options
The opportunity for founders, especially family based, to realise capital gains
The expansion of the business
Prestige, such as the status among stakeholders, customers, and competitors
Share pricing mechanism and capitalization based on regulated standards of doing so and
models for the liquidity of equity in the business for attracting new investment post IPO
The ability to compensate staff with compensation that is based on their performance
An ongoing trend in this decade was the acceleration towards risky money preferences by the creation
and birth of Small Cap and lower Board or quotation systems globally. This was complemented by the
improvement in the perception of venture businesses, the viable exit strategy for venture capitalists
who financed between $100,000 and $50,000,000, and subsequently the jump in IPO’s and listings
globally. The positive outlook and small cap gains reaped during 2001 to the present time is directly
related to the stage of the business and amount of equity invested, the preparedness of management,
and the viability of the business. Many people would like to suggest it is related to economic factors,
which does take a major role, but nothing compares to the actual business itself. The responsibility of an
exchange is to provide a platform for companies to raise capital needed for the positive attributes
mentioned prior and taking them to the next level. (Which could be migrating to a larger exchange,
continued success and payout of dividends to shareholders, acquisition due to the easy to measure
value due to disclosure requirements.) Sometimes going public could be the worst option for
management and family businesses with the almost manic experiences with the ups and downs of
capital markets and investor sentiment, especially in the often thinly traded and volatile small board
listings. Many companies have gone public on the whims and promises of capital raising, however, if this
is not something you are prepared to do yourself, going public with the wrong group of financers could
cost you your reputation and possibly even more daunting would be sanctions by regulators which
restrict your god given talent of building businesses. Over the last decade and since the beginning of
lower board listings and otherwise referred to penny stocks, a flood of rubbish was listed on the boards
globally. The majority fall into regulatory or accounting problems, the inability to deliver due to lack of
capital, management, or viability of the business. Many of us have struggled with the lack of capital and
viability of the business in various management consultant roles.
The reality however for the young exchanges or the lower board exchanges is the ability to motivate
companies and investors with an act of faith that listing will work for them.
The level of optimism of the founders and directors is often an indication of its early stage as a business,
otherwise the listing company is applying as a last resort for a turbulent but growing company. The job
of a stock exchange selling the ideas of listing to early stage companies and or businesses in a turbulent
but growing phase is therefore easier. New companies or companies with immediate capital
requirements to expand and grow are attractive to retail investors due to potentially immediate and
long term gains. Therefore, the nature of the small cap market attracts the retail investor who
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understandably knows the volatility of the market but is willing to step into a penny stock situation with
the ambition of making a dollar off optimism.
It is rather graceful of companies and humbling to watch management such as Google to be comfortable
with their success and let a rising share price do all the talking. Leadership style such as that of Google
and Apple are carbon copies of the mature stage of a business, and what one can aspire to become
going public. A good exercise for companies wishing to go public, is to look at businesses that are public
in your area of business, and look at the best. The public filings and disclosures will help assist in
identifying the benefits related to going public, the approach which has been successful in going to the
market, and the capacity of production and cost of success. Many people read filings and identify
mistakes made by management and verbally or silently say to themselves, well I would never do that if I
were public. It may even be a method of raising financing which is mentioning what the competitor has
done in error and how you will capitalize on this weakness. However, I also suggest you look at the
errors and try to visualize how you could have made the same mistake and what you would have
learned from it internally and via the public humility of having to disclose it to the world. If you can
understand this, the lesson is learned.
There are several professionals in the public markets who act as advisors, in some markets, such as the
Plus Exchange in the UK and ALTX / JSE advisors submit the application to the exchange with the
requirement of assessing how appropriate it is to list, method of listing, capital requirements,
milestones, documents to support viability including detailed models and performance factors. Within
the OTC markets, management prepares the documentation with an auditor and then this goes to a
market maker who acts the role of an advisor. Market Makers and advisors have to sometimes argue on
behalf of the company the merits of the company and value to the exchange to an advisory
committee/regulatory body. For example, FINRA within the United States is the group who inevitably
decides whether the company is to get a symbol, and the process of getting one is often a series of
comments and responses between the committee and the company lawyers and advisor/market
makers. The value of an advisor or market maker is often decided by their success in the commenting
stage of going public, but also, in identifying the appropriate time to submit the application on behalf of
The reality is that going public has a skeletal infrastructure of advisors, professionals, regulators, and
mechanisms for investment, which are designed to realise companies goals but it is up to management
and the system in place to decide if there are more suitable routes to take or if this is the route for you.
The reality is, when you are mentally prepared to go public, have the viable business and are assessed to
be worthy and ready, and are willing to have faith and optimism at the expense of humility to reach
these goals while remaining transparent, with the understanding that you have to do much of it
yourself, such as capital raising and share structuring, then you are ready to consider the process of
going public. In this process of consideration, even if you have been a director of a public company in
the past and understandably have experience, it is advisable to attend some the of training courses and
events held by the potential exchange you would like to list on to further prepare yourself mentally.
If you have read this guide and are considering still going public, and would like to know which exchange
globally would be suitable for a business venture of your nature, I suggest contacting us at
firstname.lastname@example.org it is likely we know of advisors in your market or have dialogue with exchange
representatives or advisors. If you are reading, then continue reading...
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Common Going Public Services and Process
OTC Bulletin Board Requirements
Financial Requirements: No minimum shareholder equity or income. Companies must be
reporting companies, providing an annual report to shareholders, current in all its filings, and
subject to SEC proxy rules.
Distribution and Size Criteria: No minimum number of shareholders or shares outstanding,
other than having a sufficient number of shareholders and shares outstanding to allow a
SEC status: Listed companies must have completed a registration of the company or its
securities and have reporting company status. Companies must be current in all their filings.
New shell companies will not be granted a trading symbol.
What is a Public Company
Many individuals ask what is a public company by definition, when do I need to start reporting to the
SEC, and at which point do I need to have a PPM or offering document in place. Of course, if you are
asking yourself these questions, you probably need to discuss your business with a competent Securities
Lawyer with no bias but to give you the advice you need instead of, like many unfortunately, trying to
jam you into going public or reporting process. Until it is entirely necessary, most companies do not
become reporting due to the costs. Once reporting, the company would likely file a registration
statement that has permission to offer registered securities, stock, bonds, etc for sale to the general
public. In the case of the OTC BB, OTC QX and Pinksheets, this is done via their quotation system.
In the instance of an OTC BB, QX, Pinksheets scenario the company stock trades in the over the counter
(otc) via market makers who use non-exchange quotation services. At some point I believe the OTCBB
was a stock exchange, but the status was changed to just a quotation system. The NASDAQ for example
would be a stock exchange globally recognized.
A Public Company has:
Companies with over 500 shareholders who are required to report under the Securities
For some it may be also an asset test, such as over $5,000,000 in assets and over 500
Voluntarily become a reporting company, and have filed with a Market Maker to obtain a
symbol on a quotation system such as OTC BB or Pinksheets
A Public Company Advantages:
Raise capital through the sale of securities
Transparency of company operations for investors
Compensation for employees and consultants can be done in equity
Liquidity for the shareholders which would not be typical of a private company, typically a fair
market value develops in a public company
Analysts and International exposure could be beneficial to the companies
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A Public Company Disadvantages:
The requirement to disclose is expensive and exposes information to competitors and the world
that you may want to be private that must be disclosed (such as Sarbanes Oxley doesn’t apply to
The rigid structure of reporting is time consuming and may take focus from smaller businesses
from building their business in preparing for filings and reporting
Major shareholders/stockholders must be disclosed, which silent partners may or may not like
Companies with securities quoted on the OTCBB are subject to periodic reporting of financial
information to the SEC. Issuers who file with the SEC via EDGAR are not required to submit hard copy
filings with the OTCBB or the NASDAQ. Unlike all other exchanges, stocks trading on the OTC Bulletin
Board cannot be shorted. If you are even thinking of going public, you should subscribe to EDGAR Online
just for the informational products for following filings by reporting companies.
Reasons for Subscribing to Edgar Online
#1. You can gain competitive knowledge by searching companies in your industry and reading their
#2. The format of the S-1 filing and different offerings that have already been accepted by the SEC and
FINRA are clear and available within the system
#3. It is the single best source of all public information in our opinion, for personal sources of
information on interests, research on potential clients who may also be public, potential partners and
buy-out opportunities, and tracking of topics of interest
#4. Your firm will eventually be within the system, it is a good source for reading your own filings and
managing what is being communicated in the market. Becoming familiar with the platform is a positive.
#5. By reading the filings, especially regarding financings and IPOs, one can get a good idea of who is
raising capital in the market. This could be used for targeting potential financing for your business.
Especially if you would like to use examples of large amounts of funds being raised by competitors with
other venture capital firms, at least this would validate your business to potential investment firms. In
addition, you can look at their model and development as a MODEL for your business.
Competitive and constructive information is the key to success in general for business developers, if you
are interested in going public or are interested in using competitive information to your advantage, we
can make a report for you similar to the 5 top uses above.
The Going Public Process:
Stage 1: Conduct organizational meeting. Incorporate your company, prepare articles, share structure,
board minutes and minute book. Prepare the information required for filing an S1 Registration
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Statement. Agree on a corporate structure, and ensure the funds are deposited into the lawyers escrow
account to direct. Engage the auditor and SEC Lawyer. Sign and prepare the document.
Stage 2: Incorporate the company. Draft and distribute SEC registration statement; hold additional
drafting sessions. Ensure the Lawyer will give an opinion and approve the S1. Ensure the auditor has all
the information needed and that the S1 is accurate.
Stage 3: File registration statement with the SEC; Get comments from the SEC on registration statement.
File first amendment to registration statement with the SEC; addressing comments. Prepare and
distribute preliminary prospectus; commence acquiring in escrow investment from 35 investors. SEC
declares offering effective; company acts as its own underwriter.
Stage 4: Close and deliver offering proceeds. Proceed with filing and reporting of Q if the timeframe
between filing the S1 and obtaining the investors went into the next quarter, organize filings for
reporting purposes. Contract the transfer agent and the market maker. Complete Market Maker due
diligence questionnaire and representations of the company. Prepare and file the 15 c 211 with the
market maker. Upon approval of the market maker, apply with FINRA.
Stage 5: The company applies for a symbol with FINRA. FINRA will go through a round of comments,
which may include proof of funds being paid by each individual investor. The proof would be part of the
initial documentation recorded by the Lawyer who manages the trust account for this purpose. FINRA
approves the filings, provided all answers are sufficient and the symbol is issued.
Services One Would Purchase:
Preparation of a Professional, compliant PPM by a Business Plan
Incorporation Fees and Filings
All Form D filings
Preparation, legal review and filing of the S-1 registration statement
Answering all S-1 registration SEC comments including legal review
Initial S-1 Audit fees for new companies and ongoing auditor fees
Transfer agent set-up fees and market maker
DTC set-up fees
Having the 211 filed by a market maker to obtain stock quote
All legal costs and legal opinions
(Financial Audits of Companies with over 1 year in business or the quarterly filings after the S1 increases
the cost of going public in general)
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Are Your Preparing Your PPM?
Are you preparing a PPM for your Company? Things to consider…
Then you are probably wondering how long it will take, how much it will cost, and what Securities Law
Firm you should go with. You might even have downloaded a few other companies PPMs and reviewed
and compared or began researching your competitors. All good thoughts. At www.otclistings.com we
have reviewed several 1000 PPMs as professionals via the Edgar Filing system, and discussed PPMs with
many different lawyers. The vital factors are:
Type of Business, and a Business Plan
Nature of Investors being solicited,
Offering being sold by the company management or broker or both
The deal terms and description and long term vision or flexibility within this definition
How many third parties are in the offering or deal
Generally speaking, the more simple the deal the faster and less expensive. The more complex, the
larger number of different players, the more expensive this will get for you. Simple terms to deal with is
the commission. Commission can vary, even in these markets I have seen 5-8% commission, but typically
brokers want 10%+ for what they sell and may have expenses from 1 – 3% that are covered as part of an
arrangement. Equity placements are also often parts of the offering process, but not the document
itself. It would be however disclosed what the broker has received in compensation for the offering
process, which includes legal, road shows, accounting, etc, if equity is involved. If there is no equity
involved, than its likely the companies costs directly.
Once again, this depends on the complexity of the PPM. Often there are many examples that create a
framework, but every deal is different, and its often quicker for a Lawyer to draft an entirely new PPM
for a complex project than it is to work from a template of any kind. Most securities lawyers will give
you a flat fee versus charging $500 an hour, but flat fee projects generally take 1 month to 2 months
where hourly billing which is often more expensive often gets quicker results as the lawyers prioritize
their time on a billing by billing basis. A way to motivate the Legal to move faster is a success fee upon
completing the offering based on getting the document out in a timely fashion. This however is also
often secured by a retainer deposit.
With a retainer deposit the timing can take as little as 2-3 weeks and as long as 2-3 months.
Timing has a lot to do with the information on the company being prepared and accurate. If the
company and its management is not prepared, that it could take even longer. from a little as a couple of
weeks to a couple of months to get the PPM done and ready to start selling. Such as;
Contracts in Order
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Company Corporate Files in Order
Financials in Order
Information on Directors
History of the Company
Valuation based data
The time to raise capital via a placement can be as little as a couple months to 6 months or a year in bad
conditions. Your expectations need to be realistic. I have seen an offering within Canada take 18 months
from start to finish given the current crisis to now.
You will want to have a lawyer conduct an analysis that all of the key requirements are present in the
document, which includes all the disclosures required by law so investors can make an informed
decision, so that the broker or placement company is covered in representing the company and
document, and so that the Directors and Company removes liability to the best of their ability. The PPM
makes clear the transaction and risks associated with it. A mining company for example would have
many different risks, such as environmental law, changing regulations, speculative nature, currency
changes, etc, that may be different to risks listed for a Software start-up company PPM. A good lawyer
builds this document to your specific needs and relevant and up to the current moment details you need
within your PPM. The PPM and Subscription Agreement show the due diligence of the company and of
the investor was sufficient, and helps curb future disputes or issues of non-compliance.
I personally have gotten into the habit of doing nothing unless so advised by my Lawyer. Having a lawyer
on a retainer makes this possible, I would be happy to recommend him for you. If an issuing company
fails to qualify for the Private Placement exemptions relied upon, it can face severe penalties and
possible criminal repercussions. In other words, securing competent counsel is the single most
important step in conducting a Private Placement offering.
Documents related to this topic would be Form SB2, Form S1, and Offering Documents, all of which
serve a purpose as offering documents and registration of stock to sell.
Are You Looking for a Good Securities Lawyer For Your Company
If you are an OTCBB Company, than you need a good securities lawyer. We know of several lawyers we
would recommend if you contact us, but for your own good I will discuss what we have found is a good
way to discern and find a lawyer.
Size is not everything, bigger law firms often bill more than a good sole proprietor, and more attention
is spent on your matter with a smaller firm than a larger firm. This is mainly true with processes such as
PPMs, 15c211, having review of your reporting requirements, such as 10Q’s, Ks, 8Ks, Proxy, etc. Drafting
and filing of registration statements, coordinating EDGAR, corporate compliance, mergers and
acquisitions, employee compensation, change in control, PIPEs, contract work, and debt transactions. In
actual fact, two of the top 10 S1 filers in 2009 have been one man operations.
Someone who understands business, this is vital whether it is a small firm or a large firm, you need to
feel that the person you are dealing with simply understands business. It doesn’t matter how technically
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good they are at formatting a document and piling in the disclosures, if the essence of the agreement
and intent is not completely understood the document could be a hindrance to the actual business. A
good inclination of such as firm, especially in the smaller ones is one closer to a securities law firm that
has a wide focus, for example, mergers, acquisitions, filings, PPMs, Contracts, Incorporations and
Operating documents, and regulatory advice, with experience in commercial litigation whereby their
client is pursuing and being pursued, and successfully representing their clients in these matters.
Avoiding problems from experience is vital for choosing a good lawyer, who focuses on the best way to
avoid and or mitigate damage. These are lawyers who have dealt at a personal level with regulators
before, who have had large clients and small clients, and can most likely quote off the top of their head
sections of securities law that most others would have to look up. They would be the type of lawyer who
receives updates, go to educational meetings and updates on a regular basis, not only because they are
required to but because it is their interest. This is the time and place for an adapter, someone who is up
to date, someone who understands the needs of a small to medium sized public company.
Problem solvers who can mitigate damages and solve problems are key for lawyer attributes, and this
is only possible to detect if they are keen and understand the securities laws, have had the experience,
and fought the battles. Often they can inform you that they have dealt with similar issues and state
successes within this sector and failures and give a feeling of what your chances are in the matter.
Larger firms generally don’t give clients an answer as far as chances go, they deal with facts. Individual
law firms allow for individuality in opinions and they tend to have more emotion for your cause if its an
issue they tackled before. Whatever you do, don’t have a lawyer who is going to learn from your case, or
has a bone to pick with a case they lost before but “think” they could win this time. They either know it
or they don’t, you can simply ask “have you seen a case like this before that you have personally worked
on, and what was the general outcome?”
Someone who draws the line where you should not cross as many lawyers will draw up the
agreements, but do not explain why they did it or why they are there. Inadvertently, clients often cross
the lines of their own agreement because the lawyer never explained to them the true meaning of the
document, historically, regulatory wise, and in practice. It is like giving the answer of the math problem
without explaining the theorem, how then could one practically apply the solution. If you are a
responsible operator of a public company, have the entire document explained until your governing
knowledge of Securities Laws is high enough that when you see a theorem you understand its purpose
in its simplicity and the complexity of the document its being used in. If you understand it in principle,
but don’t understand it in a document, have your lawyer explain why its being used within this
document in particular. Those of you who have run public companies know exactly what I mean. Be the
student and the client.
If you are looking for a lawyer who takes this type of attention with their clients, then we can likely refer
3-4 that you could choose for your needs. Go through them, check to see what their time schedule is like
and whether they can help you.
Finding A Market Maker for your Form 15c211 or Form 211
Filing a 15c211 requires more than simply sending a form to FINRA. Current regulations require the
broker-dealer submitting a Form 211 to gather, analyze and maintain current financial and operational
information relating to the issuing company. The process is an interactive one with FINRA, and requires
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a significant time commitment on part of both the broker-dealing submitting the 211 and the issuer
wishing to become quoted.
One of the more reliable firms has been Spartan Securities and Island Stock Transfer who works
diligently with its client companies to obtain a symbol and quote in the most timely and efficient
15c211 is often needed when a company has been delisted and is attempting to relist from the grey
sheets, a newly listing company, merger with a shell company, etc.
“Rule 15C211 Under SEC Rule 15C211, a U.S. securities broker or dealer may not publish a quotation for
any security unless certain information concerning the issuer is available and the broker or dealer has a
reasonable basis for believing that the information is accurate.”
The information requirement is satisfied, in simple terms, if:
1. a Securities Act registration statement (F-6, F-1) has been filed within the last 90 days,
2. the issuer is complying with filing requirements and has in its records the issuer’s most recent
3. the issuer is complying with Rule 12g3-2(b),
4. the broker or dealer has on record information relating to the issuer, its securities, its business,
products and facilities. Management information, financial statements of the issuer and certain
other data must also be on record.
List of Market Makers
BMA Securities Rolling Hills Estate, CA 310 544-3545
First London Securities Corporation Dallas, TX 214-220-0699
Glendale Securities, Inc. Sherman Oaks, CA (818) 907-1505 http://www.glendalesecurities.com
Hudson Securities, Inc. Jersey City, NJ 800-624-0050
Network 1 Financial Securities, Inc. Red Bank, NJ (732) 758-6533
Pennaluna & Company Coeur D’Alene, ID 800-535-5329
Spartan Securites St. Petersburg, FL (727)823-2058
Spencer Edwards, Inc. Englewood, CO 303-740-8448
Sunstate Equity Trading Tampa, FL 813-961-4649
Westminster Securities Spokane Valley, WA 509-892-5590
Wilson-Davis & Co. Salt Lake City, UT 801-532-1313
If you are a Market Maker and want to be put on this list or taken off this list, please contact us. In
addition, if you know of any of these market makers having been removed as FINRA member
companies, please notify us as well so they can be removed.
Example: You are a reporting company and would like to file your Form 211. You also would like to have
a transfer agent, and have been looking for one that is decently priced. You have done your research
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and found Spartan Securities and Island Stock Transfer, most likely through a Google Adwords
You contact the transfer agent and the market maker and they have asked you to go into an
engagement letter for the transfer agent and for the Form 211 filing.
The following documents are sent for you to fill-out by the transfer agent and the Market Maker:
Transfer Agent Agreement: http://www.otclistings.com/ExampleTransferAgentAgreement.pdf
Market Maker Documents:
211 Due Diligence:
Directors and Officers Questionnaire: http://www.otclistings.com/D & O
Market Maker Agreement Form 211 Part 1: http://www.otclistings.com/Form 211 Filing
Market Maker Agreement Form 211 Part 2: http://www.otclistings.com/Form 211 Filing
The Form 211:http://www.otclistings.com/Form 211.doc
Upon filling out the information, the process of applying for a symbol from FINRA begins with your
Finding and Engaging a PCAOB Registered Auditor
As a company applying to go public on the OTCBB you require to be audited by a PCAOB registered
public accounting firm on an ongoing basis and they have to comply with the Sarbanes Oxley.
Main Requirements for an OTC Bulletin Board Listing
Audited Financials by a PCAOB registered auditor
Must comply with Sarbanes-Oxley
OTCBB issuers may choose to have an audit committee, and certain OTCBB issuers may be required to
have an audit committee by virtue of an applicable law or rule. However, the OTCBB rules do not
separately require OTCBB issuers to establish or maintain an audit committee.
Effective October 22, 2003, auditors of all domestic public companies must be registered with PCAOB.
As specified in Section 102 of the Sarbanes-Oxley Act, it is unlawful for an auditor of a public company to
issue an audit opinion if they are not registered with PCAOB. Filings with audit opinions of an
unregistered PCAOB auditor are considered to be incomplete and not in compliance with Rule 6530.
You are looking for an independent accountants for public companies, with representation on
Pinksheets as well as the OTC Bulletin Board (OTC-BB). Ideally, specialists in serving small and mid-
market public companies.
OTCListings.com – An Information Website for the OTC BB Stock Market Page 13
The firm will require knowledge in:
Small Public Company Audit Services (Pinksheets, OTC-BB, OTC-QX)
Development Stage Company Audits (SB-2, 10-QSB, 10-KSB)
Private to Public Process Audits
Full Accounting Comment Letter Support
SEC and FINRA regulated audited annual reporting and un-audited
interim reporting for reporting companies (1934 Act Compliance)
Registration statement Support (1933 Act Compliance)
Compliance with PCAOB inspection and AICPA peer review standards.
Ideally you find a firm with an exclusive focus on emerging companies that works towards a cost
competitive audit with quality and experience.
There are over 2300 PCAOB Registered Firms, the list is available here:
Once again, like looking for a good Securities Lawyer, bigger is not always better. I prefer working with
the smaller practitioners who give your file their full attention, you generally are not dealing with a
rookie working under a major partner, but an auditor who has experience and is doing the work for you
personally. In addition, the smaller firms can be a third of the cost of larger firms, not because they do
less quality work, but because for a long time there has been a shortage of companies that would work
with OTC BB companies, therefore, many of the existing firms had the leisure of raising their rates.
An initial audit of a new company shouldn’t be more than $2,000 to $5,000. Anything else, you are likely
going to an auditor who specializes in large companies, and unless your audit is complicated and your
firm has the capital to spend, then find an auditor within this range with good references.
Example: You have gone through the list of PCAOB Registered Firms to find an auditor for your public
company. You have contacted three different firms, possibly Chang Park, DeJoya, and Mackay. After
review you find the rates range from $2,000 to $8,000. After requesting recommendations, you find that
Chang Park and DeJoya have come back with positive references.
For the sake of this example, you decide to engage Chang Park as the auditor. An example of the
engagement letter is below:
OTCListings.com – An Information Website for the OTC BB Stock Market Page 14
Audit Engagement Letter
November 1, 2010
To the Board of Directors of
Company Mailing Address
We are pleased to confirm our understanding of the services we are to provide for Your Company (“the
Company”) for the year ended October 31, 2010.
We will audit the balance sheet of the Company as of October 31, 2010, and the related statement of
operation, stockholders’ equity, and cash flow for the period from January 1, 2009 to October 31, 2010.
The objective of an audit of the financial statements is to express an opinion on the financial statements
in accordance with generally accepted accounting principles accepted in the United States (GAAP). Our
audit of the financial statements will be conducted in accordance with the standards established by the
Public Company Accounting Oversight Board (PCAOB) and will include tests of the Company’s accounting
records and other procedures we consider necessary to enable us to express our opinion. If our opinion
is other than unqualified, we will discuss the reasons with Company management in advance. If, for any
reason, we are unable to complete our audit or are unable to form or have not formed our opinion, we
may decline to issue a report as a result of this engagement.
We will plan and perform the audit of the financial statements to obtain reasonable assurance about
whether the financial statements are free of material misstatement, whether from (1) errors, (2)
fraudulent financial reporting, (3) misappropriation of assets, or (4) violations of laws or regulations that
are attributable to the entity or to acts by management or employees acting on behalf of the entity. The
audit will include examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements; therefore, our audit will involve judgment about the number of transactions to be
examined and the areas to be tested. Our procedures will include tests of documentary evidence
supporting the transactions recorded in the accounts, tests of physical existence of inventories, and
direct confirmation of certain assets and liabilities by correspondence with selected customers,
creditors, and financial institutions. In connection with our audit of the financial statements, we will
obtain an understanding of internal control sufficient to plan the audit and to determine the nature,
timing and extent of audit procedures to be performed. At the conclusion of our audit, you agree to
provide certain representations from management about the Company’s financial statements and
Because our audit is designed to provide reasonable, but not absolute, assurance and because we will
not perform a detailed examination of all transactions, there is a risk that material misstatements or
material weaknesses in internal control may exist and not be detected by us. In addition, our financial
statement audit is not designed to detect immaterial misstatements or violations of laws or
governmental regulations that do not have a direct and material effect on the financial statements. We
will, however, communicate to the audit committee and management of the Company, as appropriate,
any errors, fraud, or other illegal acts that come to our attention during our audit, unless clearly
OTCListings.com – An Information Website for the OTC BB Stock Market Page 15
Our audit will include obtaining an understanding of internal control sufficient to plan the audit and to
determine the nature, timing, and extent of audit procedures to be performed. An audit is not designed
to provide assurance on internal control or to identify significant deficiencies or material weaknesses in
the design or operation of internal control. However, we will communicate in writing to the audit
committee and management any significant deficiencies and material weaknesses relating to internal
control over financial reporting identified while performing our audit. Any significant deficiency or
material weakness identified because the audit committee’s oversight of the Company’s external
financial reporting and internal control over financial reporting is ineffective will be communicated in
writing to the Company board of directors.
We are also responsible for communicating with the audit committee about certain other matters
related to our audit, including (1) our audit responsibility under PCAOB standards; (2) information
relating to our independence with respect to the Company; (3) the Company’s critical accounting
policies; (4) the quality of the Company’s accounting principles; (5) management’s judgments and
sensitive accounting estimates; (6) significant audit adjustments; (7) any disagreements with
management about matters that could be significant to the Company’s financial statements or our
report; (8) any consultations management made with other accountants; (9) any issues discussed with
management prior to retention; (10) any significant difficulties encountered in performing the audit;
(11) other information in documents containing audited financial statements, such as the Company’s
annual report; and (12) other matters as considered necessary. Further, we are responsible for ensuring
that the audit committee receives copies of certain written communications between us and
management, including management representation letters and written communications on accounting,
auditing, internal control, or other matters.
Management is responsible for the financial statements, for making all financial records and related
information available to us on a timely basis, and for the accuracy and completeness of that
information. Management is also responsible for the establishment and maintenance of adequate
records; the selection and application of accounting principles; the safeguarding of assets; adjusting the
financial statements to correct material misstatements; and confirming to us in the management
representation letter that the effects of any uncorrected misstatements aggregated by us during the
current engagement and pertaining to the latest period presented are immaterial, both individually and
in the aggregate, to the financial statements taken as a whole. In addition, management is responsible
for identifying and ensuring that the Company complies with applicable laws and regulations.
We are required to read any annual report that contains our audit report. We will read the annual
report for the purpose of determining whether other information in the annual report (including the
manner of its presentation) is materially inconsistent with information in the financial statements or
management’s assessment of the effectiveness of the Company’s internal control over financial
reporting. We assume no obligation to perform procedures to corroborate such other information as
part of our audit.
Regarding electronic filings such as the SEC’s Electronic Data Gathering, Analysis, and Retrieval
(“EDGAR”) system, management agrees that, before filing any document in electronic format with the
SEC with which we are associated, we will be advised of the proposed filing on a timely basis. We will
provide the Company a signed copy of our report and consent. These manually signed documents will
serve to authorize the use of our name prior to the Company’s electronic transmission. Management
will provide us with a complete copy of the document accepted by EDGAR.
We estimate that our fees for this service will be $___________. An initial deposit of $__________ is
due upon the signing of this engagement. The final portion of the invoice will be due upon delivery of
our audit report. The Company will also be billed for travel and other out-of-pocket costs such as report
OTCListings.com – An Information Website for the OTC BB Stock Market Page 16
production, word processing, postage, etc. The fee estimate and completion of our work is based on
anticipated cooperation from Company personnel; timely responses to our inquiries; timely
communication of all significant accounting and financial matters; and the assumption that unexpected
circumstances will not be encountered during the audit. If significant additional time is necessary, we
will keep Company management informed of any problems we encounter and our fees will be adjusted
accordingly. Our invoices for these fees will be rendered each month as work progresses and are
payable on presentation.
The Company may wish to include or incorporate by reference our audit report on these financial
statements in a registration statement proposed to be filed under the Securities Act of 1933 or in some
other securities offering. If so, you agree not to include our audit report or make reference to our Firm
without our prior permission or consent. Any agreement to perform work in connection with an
offering, including an agreement to provide permission or consent, will be a separate engagement.
Any additional services that may be requested and we agree to provide, will be the subject of separate
The audit documentation for this engagement is the property of our firm and constitutes confidential
information. However, we may be requested to make certain audit documentation available to the
PCAOB, SEC, or other regulators pursuant to the authority given to them by law or regulation. If
requested, access to such audit documentation will be provided under the supervision of firm
personnel. Further, upon request, we may provide copies of selected audit documentation to the
regulator. The regulator may intend, or decide, to distribute the copies or information contained therein
to others, including other government agencies.
We appreciate the opportunity to be of service and believe this letter accurately summarizes the
significant terms of our engagement. If you have any questions, please let us know. If you agree with the
terms of our engagement as described in this letter, please sign the enclosed copy and return it to us.
Very truly yours,
Your Auditor’s Name
This letter correctly sets forth the understanding of YOUR COMPANY NAME
Once this engagement is signed, and the auditor is paid their deposit, you are on your way to becoming
a reporting company.
OTCListings.com – An Information Website for the OTC BB Stock Market Page 17
Finding and Engaging a Transfer Agent
In short the transfer agent is the firm responsible for maintaining the corporate share registry and
transactions and communications related to the company’s shareholders. The Transfer Agent could be
the company, as the company can be its own transfer agent, however, when moving forward to go
public and file the Form 211, the company should hire a transfer agent to maintain the records. That’s
not to say that the company should not keep its own records, it is good practice for audited companies
to maintain their shareholder registry and transactions related to issuing shares with the resolutions and
issuance documents as part of their ongoing corporate records and daily upkeep of transactions.
Transfer agents also deliver proxies, dividends and annual reports, and they forward company
correspondence to shareholders. If you are not sure who to choose for your company transfer agent, I
can say that I have had good experiences with Island Stock Transfer, Holladay Stock Transfer, Signature
Stock Transfer, etc. Below we have compiled a list of transfer agents.
When selecting a transfer agent, it is important that you check to see if they have had any disciplinary
measures, that the people running the company seem to be organized, responsive, and professional.
They will be the forefront of communication with your investors and caretaker of your share registry. It
is vital you understand the company and its business practices.
Once again, the larger agents and banks are costly and geared towards larger companies, as a new
public company, a transfer agent with competitive rates and professional such as Island Stock Transfer is
the perfect size for your business. There are several others within the list below. Some of the other
transfer agents may be affordable but they do not have the funds to own the technology larger firms
possess. Ensure that the web based system of viewing and maintaining your records are available so the
company can keep their records in unison with those of the transfer agent and answer shareholder
queries if asked. If you would like to know what they charge, ask for the rate card, and be sure to pay
attention to costs of proxy communications. There are services that can help you choose the right
transfer agent. If you are interested in us recommending a transfer agent, feel free to contact us.
Here is a representative list of the commercial transfer agents in the United States:
Affiliated Stock Transfer
American Registrar & Transfer
American Stock Transfer & Trust
Atlas Stock Transfer
Bay City Transfer Agency & Registrar
Citibank Shareholder Services
Colonial Stock Transfer
Columbia Stock Transfer Company
Computershare Investor Services
Computershare Trust Company of Canada
Continental Stock Transfer & Trust
Corporate Stock Transfer
Cottonwood Stock Transfer
Empire Stock Transfer
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Equity Transfer Services
Executive Registrar & Transfer
Fifth Third Bank
First American Stock Transfer
First Bankers Trust Company
First-Citizens Bank & Trust
Florida Atlantic Stock Transfer
Genesis Stock Transfer, LLC
Gemisys Financial Services
General Securities Transfer Agency
GTI Corporate Transfer Agents, LLC
Hollady Stock Transfer
Illinois Stock Transfer
Interwest Transfer Company
Island Stock Transfer
Jersey Transfer & Trust Company
JP Morgan Chase Bank
Liberty National Bank & Trust
Madison Stock Transfer
Manhattan Transfer Registrar
My Transfer Agent
National City Bank
National Stock Transfer
North American Transfer
Olde Monmouth Stock Transfer
OTC Corporate Transfer Service Co.
OTC Stock Transfer
OTR/Oxford Trust & Registrar
Pacific Stock Transfer
Phoenix American Financial Services
Registrar & Transfer Company
Securities Registrar & Transfer
Shareholder Financial Services
Signature Stock Transfer
Standard Registrar & Transfer
Stock Transfer Company of America
Sun Trust Bank
The Bank of New York Mellon
The Nevada Agency & Trust
Transfer Online, Inc.
Trust Company of America
United Shareholder Services
OTCListings.com – An Information Website for the OTC BB Stock Market Page 19
Wells Fargo Bank
Western States Transfer
Zions First National Bank
Example Engagement Letter with Island Stock Transfer:
Transfer Agent Agreement: http://www.otclistings.com/ExampleTransferAgentAgreement.pdf
The Process of a Reverse Merger or Buying an Existing OTCBB
The Process for Companies to go public via Reverse Merger
Initially the process of going public via reverse merger is not as straight forward as it may have been two
or even one year ago. Firstly, if you are looking to go public the candidate company to reverse merger
into should not have:
Any offerings or sale of shares during any time of which it could have been deemed a shell that
are purported now to be free trading by the company owner
The Lawyer who represents the company should have a clean record, and you may want to
contact the Bar/Legal Society to ensure there are no current investigations or complaints
pertaining to the lawyer
The market maker needs to have a clean record, if they have been reprimanded in the past, the
details will be available through FINRA, and thus, you will ensure the company remains trading
in the future if you do your due diligence on the market maker. A condition of taking over the
company may be that it has more than one market maker
That there are no liabilities, and that the party presenting the candidate company for take-over
for equity also take the liabilities on personally that have not been disclosed or other than what
had been disclosed
Read carefully the articles and by-laws, understand the power of the directors, shareholders,
and ensure the minutes clearly state the voting in and resignation of all Directors (Even though
in some cases there have been forgeries which have caused several companies and individuals
shame, it is not as often, and thus, its just a precaution to ensure it is all there.) Ensure you have
a clause in the merger agreement that applies a penalty if the representing party to the
transaction cannot come up with documentation or answers from regulatory parties at a rate of
$1,000 per day.
Don’t go near companies whereby the company has been under investigation by ANY global
regulatory body, of which any Director or past Director has been under investigation by ANY
global regulatory body, or whereby there has been any cease trade, sanction, or otherwise.
Being in the same industry, and truly completing a merger is also an important success factor, as
for the days of turning a Gumball Factory into an Online Dating website faded with the last
OTCListings.com – An Information Website for the OTC BB Stock Market Page 20
batch of “shell” peddlers who face jail time for fraud and misrepresentation during the times
they issued shares.
Ensure there are board minutes on all discussions, and that thorough thought by both sides is
documented and contemplated. Make sure material submissions are protected by Non-
Disclosure and Privacy Agreements with black-out or no-trades on information.
Ensure the agreement includes black-out periods at the discretion of the incoming asset to all
affiliates and or related parties to the transaction for the period of up to 2 years and for any
length of time during that length of time. Otherwise, companies may find themselves open to
third party reselling and IPO definitions. IPO/Resell definitions combined with possible shell
designation could be dreadful. Most mergers happen where by the owner of the public
company tries to sell shares during the merger, do your best to avoid this by using black-out
Ensure all corporate documents are provided and that the wording of the document is “a
complete set of all documents in the history of the company” and not just in the possession of
the current Directors or presenting candidate. Sometimes the fact that people don’t designate
that its the companies complete files historically, individuals have been able to simply say “it
was the complete copy of documents … in my possession.” Wording is important, and so are the
documents. Apply penalties for missing documents.
Compare transactions with the documents, transfer records, auditor comments and filings,
combined with multiple questions aimed at the Directors themselves. Ensure that further
certification of the documents is completed by the parties involved. The certification at least
ensures that if any document was forged or altered in any way, it was their certification on that
date, and could not be pawned off into a goose chase of who’s who.
If you enter into a letter of intent, ensure it is non-binding, and any exchange of funds in
advance of closing needs to be documents by both parties. I highly recommend not transferring
any funds prior to closing, many unsavory characters have possed as Lawyer trusts over the
years and have stolen the funds.
Consider the acceptable amount of dilution for yourself and then times that number by two.
That is likely what you are facing due to the “lack of market” that the candidate company has,
even a little bit of trading feels like a ton of bricks.
Public company candidate companies may or may not just do an equity transaction, a cash
component is often asked for to also purchase on controlling and hold out shareholders for
cash. Be aware, that the market price for near complete ownership is around $300,000 USD with
very little equity given up, to almost no cash and just equity. The going price of control per se
are between $500,000 and $300,000 in assets or cash. However, one should never consider a
“shell”, but rather look for candidate companies for a reverse merger with existing businesses. If
you believe a company to be a shell, you need to report this appropriately. The stronger the
merging company, the better.
OTCListings.com – An Information Website for the OTC BB Stock Market Page 21
Access top-notch securities attorneys to complete the entire process from due diligence,
executing the agreements, the merger, and super 8k. To do so, contact email@example.com
In order to close a merger transaction, your company must have two years of audited financial
statements prepared in accordance with GAAP, and quarterlies. There statements are filed
within the 8k.
The best way to receive shares is in a share per share value issued for control. Getting them any
other way requires careful advice of an attorney to ensure no laws are being circumvented.
What documents should one expect when purchasing an OTCBB Company?
Here is the list:
a) Share Certificates
b) Proof of all Restricted shares and then those that are being purchased or issued
c) Proof of all Free trading shares(including shareholders list) and those that are being purchased
d) PA where applicable
e) PA for transfer agent access
f) Letters of resignation of director(s);
g) Executed subscription agreements( including copy of drafts/ wires)
h) Minute Book(including all executed resolutions and forms)
i) Corporate registration in …….. State & Federal
j) Original Registration on …..
k) Original Corp Charter;
l) Article of Incorporation;
m) Bylaw of ….;
n) IRS registration;
o) Certificate of good standing in ……
p) SEC filing of S-1 ……
q) FINRA approval pursuant to Rule 15c2-11 (symbol)
r) EDGAR registration form
s) CUSIP confirmation number for …….
i. With Transfer agent
iii. List of investors( restricted & free trading)
i. bank statements from ,,,
ii. Chq. Book
iii. Canceled chq.
iv. Unpaid invoices
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It is possible that you may want indemnifications on expenses or unknown costs, including possibly
access to the transfer agent prior to the transaction to ensure the transfer agent ledger is the same of
that which the company had in place.
How high is too high for buying an OTCBB Company
How high is too high for buying an OTCBB Company?
When you say too high … you obviously have a good reason for saying that. Could you share with me
how you have calculated that … I may learn something here.
Are you saying the price is too high for what we are suggesting the price is, or is it just more than you
have in your budget or you can’t justify it.
It is an interesting question to ask as we have all at some point said to ourselves the price of the OTCBB
for sale is too high! The questions is how high is too high.
Roughly 3 years ago an OTCBB would sell for between $700,000 and $1,000,000. The value of course is
that a company with a trading symbol and current reporting is worth its weight in gold, as there is no
unknown factors. When building an OTCBB the unknown remains whether you will find a market maker
willing to submit your form 211 and that FINRA will actually reward your company a trading symbol.
With the market crash of 2008 and 2009 we have seen a drastic change in pricing for OTCBB Shells,
where the bottom of the market saw fully delivered companies selling for as low as $250,000. However,
this was definitely the low point in the market, because if you call anyone who has a company to sell,
they will tell you the market is now $350,000 to $400,000 for control of an OTCBB. One such vendor
even said,” If you have a company for sale for $300,000… I will buy it from you, because it’s worth it, we
will see the market hit $500,000 to $600,000 again soon.”
I believe him too, because he sent proof of funds and said “Go find one!”
Within the last 6 months however, I have seen several companies within the $350,000 mark and all of
the buyers who are looking at last year market prices keep saying that’s too high for an OTCBB. My
answer to them… prove you have the funds… and someone will go find one. I tend to agree however
with the professionals, the price of these companies will continue to climb as less and less companies
are awarded their trading symbols. Some say its the new administration, some say its stricter
regulations, some say that the reality is that nothing is simple, and you have to be intelligent and
prepared to build a public company and there are monthly costs and responsibilities that make it next to
impossible to just build on a whim… so its worth it to buy a company is it not? And if it is worth it, how
much should it be, and how much is too much?
Of course playing the Devil’s advocate, can you raise money once you have bought the company and or
merged? The answer inevitably is that you can probably raise more money in a public company than a
private company, yes, but you will lose a chunk of control just to get that first $350,000 back from
efforts to raise capital. If the market is strong, paying $500,000 shouldn’t be hard to do, because the
dilution will be less, but in this market it’s just not going to happen. The cost benefit analysis for a good
independent company is not there.
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So who is the market? Most likely the small 3rd tier Investment Bankers and Venture Capital firms that
are willing to bring financing with a public company but not a private one. They will purchase out of
convenience and time constraints, and therefore, will pay the asking price promptly. In this case, the
supply and demand remains at the new highs of $350,000.
The second question then one has to ask is, why not just perform a traditional IPO and not a reverse
merger? A traditional IPO or S-1 filing and trading on the OTCBB tends to run between $50,000 and
$100,000 in service fees. Then I have to ask again, how high is too high for making an OTCBB Company?
Our contacts have priced out the process at $40,000 based on a clear and concise breakdown of pricing,
however, its $50,000 and or $100,000 to only get to the point of dealing with FINRA who can say no, and
may say no indefinitely if there are undisclosed details on Directors, errors in statements made, and or a
share structure that does not reflect a market or a real offering was attempted.
Therefore, the purchaser and or company looking to go public finds themselves in a dilemma, how much
is too much? Do we file ourselves and take the costs on that someone with a company has already done,
spend 6 months of our time preparing the company documentations, the offering, filings, and then
FINRA process of obtaining a symbol to possibly go public (which in all likelihood there is a good chance
you could list for just the $40,000 and 3-6 months) or do you plan on going public immediately for
$350,000 with certainty and immediacy.
Therefore, the professional opinion of those interviewed concludes that $350,000 is really not too much,
and $40,000 is just right if you have the time to work the process yourself.
If you are looking at either option and need someone to talk to or guidance on the matter, contact us at
In addition, we can offer third party due diligence research reporting of which we will create a report on
the availability of the documentation, advantages and disadvantages, timeframe and total cost
estimates for your company to go public or on a company you are looking to acquire which is a shell
company or trading public entity. Our due diligence will be done simultaneously with your legal counsel
and we will review and develop a report to help you better make a decision. These services can range
from $1000 and up depending on the complexity of the transaction. If you are spending $350,000 it may
be worth the time and effort to have a report built on best practices. Maybe the price is too high if it is
not the right vehicle for your company or process.
I understand your concern about the investment although … what helped one of our clients justify the
investment was when he figured out what the real cost in money would be if he did not go public and
his company failed privately, 2 weeks later he put together the funds for his vital delivery date to get
If it means enough to you, you will do it. Info@otclistings.com
Last but not least, would you believe that we don’t set the prices? Who does…
Real Life Examples On How Negotiating On The Price Of An OTCBB Can Lose You Money
OTCListings.com – An Information Website for the OTC BB Stock Market Page 24
Don D. From Canada is looking to buy a public company for his Industrial Services business. A few
companies where presented at $775,000 and $800,000. The $775k was represented by a broker dealer
in Florida, the $850,000 company was represented by a local contact known to have a few public
Don had $800,000 to purchase control of a company. Instead of purchasing the company for $775,000,
he thought he would negotiate the price. He decided that he wouldn’t pay more than $735,000. The
vendor lowered the price to $750,000 but Don wanted to set the price at $735,000. With no room to
move, the vendor took in other contacts, and within one day, the company had signed off with another
person for $800,000. The buyer was motivated, and offered more money since they knew there was
another interested party.
Don D. ended up going back to the person for $850,000, but there was now another buyer there as well.
The research into these companies had taken two months, and now Don D. had no public company.
Three months later Don D. paid $895,000 for his public company in a bidding war with another
purchaser. The reality is, if you are going to play games be prepared to realize that the clients may set
the price within these markets... but also be prepared to know there are other clients. You will lose out
if you play silly games.
In today’s markets we are a long way from the $895,000 mark, but as the professionals say, $350,000 to
$450,000 or $500,000 is not a far jump. If you are sitting on your hands in an opportunity market, you
will miss out and pay more if not double.
Charles Wang has eagerly been looking for a public company for his alternative energy company. He
finds a company in this market for $300,000 when everything else is $350,000 to $400,000. Charlie
manages to put together the funds in three weeks. However, the original quote may have been
$300,000 but now there is a second buyer and the price is now $350,000. Angry, Charlie negotiates and
offers $315,000. Within the same 24 hours, the lawyer who was the escrow notifies Charlie he is holding
$340,000 and the company is sold. After two more months of due diligence, Charlie ended up paying
$405,000 down from $420,000 to another vendor. Why did he pay so much, well you would have to ask
Charlie, but its definitely not peanuts he lost. In both instances in both markets, it is a time of doing or
Its real estate, if you negotiate too aggressively or without reason, than you will be Shanghaied, the deal
will go to someone else. Be prepared to negotiate with knowledge that you can`t buy companies for
$300,000 they are $350,000 or higher. Why, because a deal offered at $300k in this market will not
happen why... because it will get bid up. Be the buyer if you are going to be... then you need to consider
where the market is at!
Where is the market at, well it is where you buy it at, that`s all I have to say. The market is natural.
Price aside … what else is it that is preventing you from moving forward with going public?
Flexible Pricing Model For Purchasing A Company
OTCListings.com – An Information Website for the OTC BB Stock Market Page 25
Flexible Payment Program
Recognizing the current economic environment, Belmont Partners is pleased to announce its new
Flexible Payment Program. Under this exciting new program Belmont is able to deliver control of a
public vehicle with as little as 25-30% down. The program covers select public vehicles with ticker
symbols on all OTC listings. Including companies listed on the Bulletin Board, Pink Sheet and Grey
Initial deposit as low as 25% of purchase price*
Flexible payment terms individually designed to meet the requirements of your transaction.
Available on select vehicles listed on the Bulletin Board, Pink Sheets, or Grey Market
As a long time leading provider of public vehicles, OTC Listing’s contacts has already closed 9
transactions in 2009 and completed over 60 transactions in 2007 and 2008 and has completed over 170
transactions since 2003. Their success comes from flexibility and focus on meeting client’s needs.
From what we have experienced, they stand behind every transaction they facilitate, integrity being
their main priority. The documentation provided to complete transactions have been some of the most
complete we have come across in the industry. We are proud to have the ability to offer such an exciting
and innovative program to help our clients in today’s market. Please contact OTC Listings and ask about
our partners for purchasing a public vehicle at firstname.lastname@example.org
Why Foreign Companies Should List On The OTCBB
The US Dollar and Economy will and is recovering. Given the current price of your international
currency, owning and running your company or a division of your company as a US public
OTCListings.com – An Information Website for the OTC BB Stock Market Page 26
company allows for you to earn US dollars for your stock. The currency of which you will be
trading will be US dollars for the shares that you own.
The OTCBB marketplace and the Pinksheets are more liquid than your local markets, therefore,
not only can you earn in US dollars, but there are more individuals willing to buy into your
Your company still earns however in its home currency, so if it is a profitable company, the fact
that the stock is in US dollars but the actual capital earned is in your home currency from the
business, the concern of the US dollar stability shouldn’t affect you terribly.
If the currency in your country lowers in value, the financing of your company via the US
markets would be substantial and material to your business.
There are several exemptions of which capital can be raised within a US public company such as
an OTC BB that may not exist within your Country. Having a portion of your business located
outside of your country may be advantageous to accessing capital.
If you build an OTC BB company for $45,000 and find that your company is not able to raise
capital or succeed in the US markets, the value of such a company is from $250,000 to $500,000.
By going public, you may make an unexpected profit even if it is not a success.
Website, Web Presence, Social Media Marketing, Blogs, and E-Proxy
The Complete Investor Relations Website (IR Website) and Social Media Discussions
Having a website is a key part of becoming a public company. The website should have all of the
functions that enable communication to the public with ease and in a timely manner.
It was 9 years ago that Chartered Financial Analyst Institute found that 56% of their member companies
use the internet and now in 2009 it is the single most important tool for Investor Relations. A Company
in the public markets, looking to raise capital, or looking to communicate to existing investors requires a
web presence, and not just any presence but an effective one. Roughly 90% of all portfolio managers
and retail investors utilize the internet to confirm their investment decisions solidifying the reality that
an IR website is a decision resource for investors.
If you are looking at building a new company or have an existing company, you require a transformation
to ensure that your web presence is Investor Relations friendly. An IR Website is no longer just confined
to a single web page domain name, but integration into social media such as Twitter, Facebook,
LinkedIn, and also integration and reference to blogs, research reports, and aggregates such as
Bloomberg and Yahoo Finance.
IR departments that do not master, monitor and manage their online communication channels are
compromising their companies’ valuation potential. They must make sure their IR websites emphasize
the right types of information, are designed from the perspective of investors, and that the combined
experience that investors have on the site supports or strengthens the company’s credibility.
The Complete Investor Relations website:
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Custom Graphic Design: An industry appropriate high quality look and feel
Homepage, IR Pages and Blog with Search Engine Optimization
Content Management System: Managing any content point or function of the website without
having to pay technical people to help you.
Social Media Functions, such as Twitter, Facebook, LinkedIn, the company Newsletter, and Blog
One-Click Rule, therefore, no matter where anyone is on the website, the Investor Information
Section is only one click
Company Section which includes About Us, CEO section with links to company blog and
documentation, Investor FAQ, and other Corporate pages
Stock Quote, Filings, Highlights, News Feeds, Press Releases, Reports, and Blog Feeds
Events and Resources Page for matters such as eProxy, Webcasts, Calendar for tradeshows and
historical information, etc.
Contact section which includes the typical contact information in addition, newsletter alert sign-
up, twitter, facebook, linkedin, comments section, and any other contact information, such as
that of the transfer agent, company law firm, etc.
Utilize these tools to reach the following audiences:
a. Individual Investors
b. Financial Analysts
c. Professional Investors
d. Financial Journalists
Would you like to integrate an online social media strategy with this website
Social Media Marketing for Public Companies
In order to successfully launch a social media marketing campaign, there needs to be a plan in place. It
starts with the goal and the website, and the rest is a matter of plugging in the tools and maintaining
The first question therefore is, what would the goals be of a publicly traded company for a social media
1. To communicate with its existing investors on news, disclosures, advancements, and answer
questions with regards to past information.
2. To discuss with the media and general public the goals of the company, its news, and
3. To gain more investors in the company, or investor interest
4. To build an internationally recognized brand
5. To be top of mind in the news, on the search engines, and in online discussions
6. To increase the links back to your website and news to measure the results of your
achievements in the public eye and your public relations efforts
In order to successfully achieve these goals we first look at the main website, which would need to have
OTCListings.com – An Information Website for the OTC BB Stock Market Page 28
1. An appealing graphic design
2. Title, Meta Tags, and keywords programmed into the website
3. A Blog or News Release page for accessing the news releases on the website
4. A newsletter subscription service (to capture the interest of users, and communicate press via
5. Possibly a section for podcasting and company videos or a part of the front page
6. Links to social media accounts, such as Twitter, Facebook, etc., possibly with live updates from
Twitter, Facebook, the company blog being posted along the sidebar of the website.
The Social Media Scope
One the website is designed, the social media set-up is the main focus. Here are the following key steps
1. Set-up an account with twitter, facebook, linkedin, youtube, and the other 30 main social media
websites. Document their user names and passwords.
2. Build a company blog, OTC Listings can set this up for you on one of its hosted domains for the
stock market, such as www.otclistings.com or www.stockexchangelistings.com or
www.asxlistings.com of which you can also send press releases onto for free.
3. Integrate the Blog and the Website with all of the social media accounts so immediate
publishing occurs of the news or information across all mediums
4. Use a Newswire service, and be sure to list at the bottom of every press release the facebook
account, the twitter account, the youtube account, the blog address, the website address, and
the company email to join the newsletter.
5. Integrate all of the websites, press, and articles with all of the social book marketing websites.
6. Publish a research report, submit the report to the many document repositories on the internet,
publish links to the report across all social media platforms, and within press releases and the
7. Create video’s of staff reading the press release, publish the video’s within the company
Youtube account. Staff can also read newsletters, articles from third parties, or updates from
time to time on non-material issues such as going to a conference.
8. If the company has history, you may consider writing a small guide on the history of the
company to where it is today, growth, changes, about management, etc.
9. Having manuals and guides for example such as “Investing In Gold” or Investing in
Semiconductors” depending on your topic are good sources of information that are often linked
and referred to. Be sure to brand it with company information or references to.
10. Integrate your blog with other blogs, creating a network of reciprocal links. Especially with those
blogs that are other public companies, awareness and or newswire websites, etc.
www.otclistings.com has over 50 websites for public companies to immediately link into.
11. Optimize keywords and tags on all blogs, press, and tweets
12. Utilize profile management software such as www.hootsuite.com to manage and time tweets
for press releases, comments, etc. Within these systems, you can schedule for free the tweets.
Blogs can also be prescheduled, therefore, many of the social media tools can be preset for the
release of information.
13. Utilize general meetings, seminars, and conferences to promote the social media tools of which
your communications are coming from. Video as many of these outings as possible and publish
them via podcasts and video sites.
OTCListings.com – An Information Website for the OTC BB Stock Market Page 29
14. Integrate the communications of all the mediums into community websites on your industry,
groups such as yahoo, google, and msn, as well as websites that have discussion forums on your
company. These forums combined with all of the above tools will drive an integrated online
communication and social media marketing campaign.
The SEC embraces online Communications- But its your responsibility to work with a firm who knows
how to set-up the checks and balances to protect your firm.
According to the SEC, “As we have developed EDGAR to facilitate and promote electronic availability of
information, we also have encouraged companies to make their Commission filings and other company
information available on their web sites. We believe that company disclosure should be more readily
available to investors in a variety of locations and formats to facilitate investor access to that
The SEC published a 47-page report that outlines the boundaries for sharing information as well as
holding companies and their employees liable for the information that they post on blogs, networks,
communities, and discussion forums.
If public companies are not proactively analyzing these guidelines and establishing internal policies,
frameworks, and penalties, then they are exposed to the dangers that loom where self-restraint and a
concrete plan of action need to be. It is a bit more than applying common sense, this is why you need to
work with social media marketing experts who have owned and run public companies such as our
Most Social Media Marketing professionals have never actually owned or run a public company,
therefore, their understanding of regulations, timely publishing, and potential conflicts with staff
comments is a liability. The reality is, social media marketing is a tool that needs to have more controls
placed on it than just free range twittering. As appealing as that may be, it has its place, but not in public
Contact us to develop a social media marketing strategy for your public company. email@example.com
Do You Need A Blog?
Your website is meant to be the storefront or for those with registrations filed it could be considered
your offering, however, the blog is the social network where you are not selling until they walk in the
front door to your website. How you effectively do this defines you as either a thought leader, and
ineffectively can define you as a spammer. It is best that you build this with the socially minded and
talent available within your firm who think daily about your business and your shareholders.
Social media is very effective for communication of new products, news about your company, news
about the industry, and dealing with objections head on. If you had a chance to write how you handle
your 100 most common objections, whether it is about your stock, your company, your product, or your
industry, than you would have 100 great blogs. Not only would they prove and communicate your point
about your company, but give you industry wide credibility and exposure.
OTCListings.com – An Information Website for the OTC BB Stock Market Page 30
With this in mind its a start, the blog idea that is. But why not look at social media as a whole which will
encompass custom projects that entail setting-up blogs, twitter, facebook, linkedin and other related
social media devices into centralized platforms, installing the links and tools for web users of your
website to promote and access, and focus on building a following for your site and company in addition
to building search engine optimization and links from these efforts.
As a company you should set-up a blog for:
- CEO’s and Founders
- The company itself
- Your Industry
- Blogs for specific causes you support
- For education on you products or investor communication
You should set it up really to just give your opinion, because if you are reading this blog I just proved
that counts for something, right.
By utilizing twitter, facebook, linkedin, social bookmarking, the blog; the company, and website would
be exposed and increase monthly traffic and search engine placement. The new era of Social Media has
gone from “do you have a cell phone number” to “do you have an email” to “do you have a twitter
account” or “are you on facebook.” An extension of this world is simply put the Blog, which allows for a
non-commercial approach for discussing what is important to your market, your industry, and about
yourself and company and view and ethics of how you forsee what you are doing. By handling client
objections before they come through the front door of your store, you already increase conversion into
sales of your web traffic and audience.
Packages for setting-up social media marketing range from $500 with a low monthly fee of $5 up to
$500 a month depending on how much of a managed service you would like to have. If you are
interested in getting some quotes on social media marketing and setting up an effective blog for your
company, feel free to drop us and email at info@OTCLISTINGS.com. Also, if you have a blog let us know
and we will link to you, we do get over 7000 unique visitors a month. Would you like 7000 eyeballs
looking at your business or company, or idea. In this market, you need all the help you can get… just ask
and the blog will be opened.
Blogging and the E-Proxy
Researching is one of my passions, and the adopted view of using online internet presence for publicly
disclosing proxy materials is a no brainer. I was reading a very informative blog of which I have snipped
the following below, but you should read the whole post: http://tinyurl.com/ljh32s “In 2007, the SEC
adopted amendments to its proxy rules that would require reporting companies and other persons
soliciting proxies to post their proxy materials on a publicly accessible Internet website and provide
shareholders with a written notice of the Internet availability of the proxy materials, except in
connection with a business combination. Large accelerated filers (other than registered investment
OTCListings.com – An Information Website for the OTC BB Stock Market Page 31
companies) were required to comply with the e-proxy rules starting January 1, 2008. All other reporting
companies (including registered investment companies) and other soliciting persons must comply
starting January 1, 2009. The e-proxy rules provide two alternatives for the delivery of proxy
materials: (1) the notice only option; and (2) the full set delivery option. An issuer or other soliciting
person may use the notice only option for some shareholders and the full set delivery option for
others.” Under the notice only option, an issuer must send a Notice of Internet Availability of Proxy
Materials to all shareholders and must post its proxy materials on a publicly accessible Internet website
(other than the SEC’s EDGAR website), in both cases at least 40 calendar days before the meeting date.
It is official, you can’t be a public company without a website or at least a blog! If you are interested in
posting your e-proxy, REG FD, and corporate press or newsletters, contact us at firstname.lastname@example.org.
We will get you set-up in an instant. In addition, you don’t have to log-in to post your information, as
long as its in the text of an email, we will give you a personalized address where you can send
information and it will instantly be posted. Our system is set to give you a personalized blog and post the
information of your company on our website at the same time.
Buying Advertising and Social Media Marketing With OTCListings.com
Buy Advertising and Social Media With OTC Listings and Stock Exchange Listings Services
Our combined website traffic on www.otclistings.com and www.stockexchangelistings.com is over
10,000 unique visitors per month searching for terms around OTC listings, otc bb listings, otc shells for
sale, buying penny stocks, best penny stocks, and other such common terms.
As a company, we have held back from any kind of advertising to our viewers, however we believe the
audience would be eager to have advertisements from:
- Companies who list public companies on the OTCBB and Pinksheets
- Companies who sell OTCBB and Pinksheet Shells for sale
- Companies who build public companies
- Go Public consultants
- Securities Lawyers who build public companies
- Transfer Agents who list public companies
- Market Makers who file 15c 211 or form 211
- Reverse Merger Companies
- Public Companies who want exposure
- Stock Promoters who would like exposure on their services, or as a contributor
OTCListings.com – An Information Website for the OTC BB Stock Market Page 32
- Online stock trading platforms, such as eTrade, quest, etc.
- Penny Stock Newsletters, Penny Stock Alerts, Hot Stock Alerts
- OTC BB and Pinksheet Research Reports and reporters
- Short Sell Alert Companies
- Auditing or Auditor Firms for the OTC BB
- Other online OTC BB marketing companies, like RagingBull, Stockhouse, etc.
- Reporters, Bloggers, Writers, on the OTC BB
With such a vast market potential for selling advertising, we would like to discuss with you what we
believe we can do for your brand and company. Here are some ideas, and it’s not limited to just this:
- 3 Blogs per week promoting your company or services over a 3 month period
- Access to over 1,000 twitter followers and growing for new releases, blog releases, tips,
information, comments about your services
- 3 months of posting into forums and information websites the blogs posted on the website to
promote your brand
- 3 months of advertising installed within the side bars of the website and within the actual text of
all the different blogs of the website.
Advertisements and blogs would be posted on both OTC Listings and Stock Exchange Listings websites.
Optional: We could build a second blog on a domain in which you would own and begin building
domains and search terms on websites you would have ownership of. We would still require a 3 month
contract to do so, this could be in addition to the marketing done on www.otclistings.com and
www.stockexchangelistings.com and would be complimentary and long term vision for your company.
OTCListings.com – An Information Website for the OTC BB Stock Market Page 33
Become a Reporting and Listed Company With OTCListings.com
Our team is prepared to deliver in a timely fashion. Even if you have started working with another firm,
we will take over their file and deduct what has been completed from the cost? Why would we do this,
because we are confident that we can supply a great service at the right price, and so are all of the
professionals who work for you when you get started. The funds deposited cover the following costs:
Preparation of a Professional, compliant PPM by a Business Plan and Copy Writer who has
access to over 1,000 such PPMs drafted
Incorporation Fees and Filings
All Form D filings
Other Edgar filings
Preparation, legal review and filing of the S-1 registration statement
Answering all S-1 registration SEC comments including legal review
Initial S-1 Audit fees for new companies
Transfer agent set-up fees
DTC set-up fees
Having the 211 filed by a market maker to obtain stock quote
All legal costs and legal opinions included!
(Financial Audits of Companies with over 1 year in business or the quarterly filings after the S1 is not
included in the fees)
Why use OTC Listings?
1. Our associates can be found by name within the registry as one of the top filers registrations, ahead
of the others who make these claims!
2. Professional PPM written by an expert in the field
3. We Don’t Take Any Equity!
4. We offer the best value at the best price
Contact Us At email@example.com for a free assessment of your company prior to making any choice.
What is the Payment Schedule, either $40,000 upfront in escrow of a lawyer controlled by expenses
submitted by our team to your firm, or
1. $15,000 down payment; ppm, and submission to SEC
2. $15,000 upon approval of SEC registration
3. $15,000 when Form 211 is prepared and ready to file to obtain your stock quote!
NO EQUITY, thank you for being our client is all that is necessary.
No other firm includes initial audit fees, this is the best deal for price and services! Don’t be
mislead by the little things, this is real value for going public.
No other firm escrows funds deposited under YOUR control!
No other firm offers a payment plan with no equity requirements!
OTCListings.com – An Information Website for the OTC BB Stock Market Page 34