Micro Cap IPO - Merger & Acquisition and Public Market Exit Services for Investor Backed Ventures

Small Public Offerings, Regulation A and other Direct Registration IPOs

Our core specialty is helping select small companies raise capital, make strategic acquisitions or division launches, and go public. 

If you need investor capital, Jobs Act Private Offerings or Regulation A offerings are the most effective way to do small offerings today.  

You can conduct a public offering without a broker-dealer underwriter today. As crowdfund sites mature these may become more frequent.

These are known as Direct Public Offerings, or DPOs.

The Internet today makes the DPO process very viable and greatly under-utilized.

See FAQs for more detailed information on DPOs.

We help you:
  • get government approval to conduct a public offering,
  • assemble a syndicate of small retail brokerage firms and institutional investors,
  • help promote the offering,
  • engage market makers and a stock registrar/transfer agent,
  • identify qualified and affordable auditors and lawyers, and
  • assist with all other requirements to successfully conduct an offering. 
We offer contract CFO services if needed by client companies lacking internal expertise to be successful fully reporting public companies.

More on Regulation A:
The four principal revisions to Regulation A are: 1) an increase in the dollar ceiling; 2) the disclosure requirements; 3) the 'test the waters' provision; and 4) the substantial compliance provisions.

• Dollar Ceiling. The maximum aggregate offering amount in any 12-month period has been increased from $1.5 million to $5 million, including up to $1.5 million in a secondary offering by selling shareholders, provided that no resales by affiliates are permitted if the issuer has not had net income from continuing operations in at least one of its last two fiscal years. This soon will increase to $50 million, and should bring credibility to Reg A use as established national footprint investment banks start to take advantage of its simplified offering registrations and faster approval time lines.

Rule 251(c) provides that a Regulation A offering will not be integrated with any previously completed registered or exempt offering or with any subsequent offering registered under an employee benefit plan, in reliance on Rule 701, or Regulation S under the securities Act, or made more than six months after completion of the Regulation A offering. Issuers of fractional undivided interests in oil, gas or mineral rights, investment companies or blank check companies are not permitted to use Regulation A. As under the previous regulation A, the issuer's securities could not be sold under Regulation A if the company or a controlling person or underwriter is subject to the so-called 'bad boy provisions' enumerated in Rule 262. Under the new rules, Canadian issuers can now use Regulation A. Regulation A is not available to a company that is already subject to the periodic reporting requirements under Sections 13 or 15(d) of the Exchange Act.

• Disclosure Requirements. The disclosure requirements are embodied in the offering statement, on Form 1-A. The offering statement consists of three parts: Part I, notification, which includes nine items; Part II, the offering circular (which may be prepared in three alternative disclosure models) and financial statements prescribed by Part F/S; and Part III, exhibits. The offering circular may be prepared in three alternative formats, all of which are available to corporate issuers, but only the second and third formats are available to non-corporate issuers:

1) Corporate issuers may now use the same simplified disclosure statement, Form U-7, that is prescribed for a SCOR offering.

2) A simplified offering statement form, Form SB-2, is available to all issuers, corporate and non-corporate, and will replace the present Form S-18, a registration statement for initial public offerings up to $7.5 million, which will be phased out at the end of 1992.

3) The offering circular on Form I-A under the previous Regulation A remains unchanged and is available for all issuers, corporate and non-corporate. Form I-A is in outline form, consisting of 12 items, and the offering circular is to be prepared from the instructions therein. The items are self-contained (i.e., they are not cross referenced to Regulation S-K).

Unless issuers already have audited financial statements, unaudited financial statements are permitted to be filed with the offering circular. All financial statements must be prepared in accordance with generally accepted accounting principles (GAAP). Financial statements shall include a balance sheet and statements of income and expense for each of the two fiscal years preceding the date of the most recent balance sheet.

As under the previous Regulation A, a preliminary offering circular may be used as soon as the offering statement has been filed with the SEC. Rule 255 provides that the preliminary offering circular must contain a 'red herring' legend on the cover page and substantially the information required by Form I-A except that price, discounts and commission information may be left blank.

The final offering circular may be used when it has been 'qualified' by the SEC (equivalent to 'effectiveness' of a registration statement), and subject to similar acceleration provisions. A final offering circular must be delivered to the purchaser not later than the date of confirmation of sale. As in registered offerings, sales within 90 days after the qualification of the offering statement must be accompanied by a copy of the final offering circular.

As under the previous Regulation A, copies of any advertisements or radio or television broadcast scripts must be filed with the SEC when first published or delivered. Also, reports of sales and use of proceeds on Form 2-A are continued under the new rules.

• "Test The Waters"Provision. One of the most innovative changes effected by the Small Business Initiatives is the 'test the waters' provision under Rule 254, which allows issuers to solicit indications of interest from prospective investors before the issuer incurs the expense of preparing the offering circular and financial statements. The issuer may deliver a written document or make scripted radio or television broadcasts. There are no specific content requirements for the written documents, broadcasts or oral communications, but each are subject to the anti-fraud provisions of the federal securities laws. No binding commitment or solicitation or acceptance of money is permitted, and no sale may be made until the offering circular has been qualified by the SEC. The issuer is required to submit a copy of any written document or script of any broadcast with the SEC's regional office on the date of first use. However, failure to file such a written document or script shall not disqualify the exemption.

• Substantial Compliance. Rule 260 under the revised Regulation A provides that insignificant deviations from the Regulation A requirements will not disqualify the offering from the exemption if 1) the failure to comply did not pertain to a requirement intended to protect the particular individual; 2) the failure was insignificant in relation to the offering as a whole (except that any failures to comply with subparagraphs (a), (b), (d)(1) and (3) of Rule 251 shall be deemed to be significant to the offering as a whole, and 3) a good faith and reasonable attempt was made to comply with the requirements.

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