Going Public On The Otcbb

Going Public on the OTCBB?2009-2010 A Field Guide from OTC Listings on the OTCBB

12/27/2009For OTCListings.comBy Knowledge Publishing

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Founded August 2008 by Amalgamated Enterprises Inc with the goal to develop a series of StockExchange educational websites. The website was first launched as a blog in February of 2009, with itsfirst recorded statistics in June 2009. The website has grown from June until December 2009 from 800unique 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 websitesin the world according to Alexa.com Traffic Ranking. With over 150 website posts and pages, the contentcontinues to grow. A newly added initiative launched December 2009 is the permission for third partywebsites 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 havethe addition of at least 20 more contributing authors and encourage companies wishing to reach ouraudience to contact us to contribute content.

OTC Listings ServicesOTCListings.com began as a website focused on educating private companies on listing with the OTCBBstock market and the going public process and post public management skills. The website hasdeveloped to include information from users and service providers within the marketplace. From thisvast network, we have developed contacts that enable companies to go public for less than $40,000.

Social Media and OTCListings.comOTCListings.com provides social media marketing services to service providers and companies within theOTCBB market place. Through-out this guide, you will be exposed to ideas regarding services we offer tohelp you build a community for your business.

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Being Mentally Prepared For Listing On The OTCBB

With the growing scepticism of the capital markets with the transparency, compliance, and overzealousfinancial 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 andcurrency Forex trading had an exciting appeal once again. For the most part, big board companies haveunderperformed 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 theinvestment 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 thegreatest 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 andtakeover bids or lack thereof, regulatory requirements and costs, are just a few considerations of thosechallenges. More than any time before in the history of public markets this is a true statement aboutwho 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 acomplicated 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 acompany is the more difficult it is due to the lack of resources, the fast pace of events that occur, andthe lack of basic skeletal level reporting mechanism’s built into the fibre of the company andmanagement. In general, as companies progress through stages of business development, thesemechanisms, such as committees and tracking, all become part of the corporatized listing. In somecases, 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 thesenew entrepreneurs and directors in order to facilitate small business development. A company shouldbe run successfully whether it is a listed or unlisted business, especially where capital needs require thesolicitation of individual investors.

Listing on any stock exchange in the world requires the preparedness mentally of directors and not justthe abilities or experience. One such requirement is to be mentally prepared for is the stage of thebusiness the directors are managing (as many directors are taken from mature companies who cannotmanage 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 thestaff and investors into the venture due to the state of mind, and the ability to accept a certain level ofhumility as the open book management requires all the mistakes to be disclosed which is embarrassingfor those running the company. However, one of the greatest signs of a leader is humility, the ability tofail and drudge on to success. There is no question that a good CEO requires a level of self developmentthat molds their emotional intelligence and leadership ability. The stock market has rarely nurturedthese characteristics, but they are required. The fact is that a great deal of stress comes with being aCEO 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.


The smaller exchange’s play an important role for businesses who are not prepared for the costs ofbeing on a big board listing or do not meet the requirements but still want to reap the benefits of goingpublic such as:

Access to capital

Ability to acquire companies by funding through the sale of shares or the issue of new sharesversus 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 andmodels 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 creationand birth of Small Cap and lower Board or quotation systems globally. This was complemented by theimprovement in the perception of venture businesses, the viable exit strategy for venture capitalistswho financed between $100,000 and $50,000,000, and subsequently the jump in IPO’s and listingsglobally. The positive outlook and small cap gains reaped during 2001 to the present time is directlyrelated 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 anexchange is to provide a platform for companies to raise capital needed for the positive attributesmentioned 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 measurevalue due to disclosure requirements.) Sometimes going public could be the worst option formanagement and family businesses with the almost manic experiences with the ups and downs ofcapital markets and investor sentiment, especially in the often thinly traded and volatile small boardlistings. Many companies have gone public on the whims and promises of capital raising, however, if thisis not something you are prepared to do yourself, going public with the wrong group of financers couldcost you your reputation and possibly even more daunting would be sanctions by regulators whichrestrict your god given talent of building businesses. Over the last decade and since the beginning oflower board listings and otherwise referred to penny stocks, a flood of rubbish was listed on the boardsglobally. The majority fall into regulatory or accounting problems, the inability to deliver due to lack ofcapital, management, or viability of the business. Many of us have struggled with the lack of capital andviability of the business in various management consultant roles.

The reality however for the young exchanges or the lower board exchanges is the ability to motivatecompanies 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 jobof a stock exchange selling the ideas of listing to early stage companies and or businesses in a turbulentbut growing phase is therefore easier. New companies or companies with immediate capitalrequirements to expand and grow are attractive to retail investors due to potentially immediate andlong term gains. Therefore, the nature of the small cap market attracts the retail investor who


understandably knows the volatility of the market but is willing to step into a penny stock situation withthe ambition of making a dollar off optimism.

It is rather graceful of companies and humbling to watch management such as Google to be comfortablewith their success and let a rising share price do all the talking. Leadership style such as that of Googleand Apple are carbon copies of the mature stage of a business, and what one can aspire to becomegoing public. A good exercise for companies wishing to go public, is to look at businesses that are publicin your area of business, and look at the best. The public filings and disclosures will help assist inidentifying the benefits related to going public, the approach which has been successful in going to themarket, and the capacity of production and cost of success. Many people read filings and identifymistakes made by management and verbally or silently say to themselves, well I would never do that if Iwere public. It may even be a method of raising financing which is mentioning what the competitor hasdone in error and how you will capitalize on this weakness. However, I also suggest you look at theerrors and try to visualize how you could have made the same mistake and what you would havelearned from it internally and via the public humility of having to disclose it to the world. If you canunderstand this, the lesson is learned.

There are several professionals in the public markets who act as advisors, in some markets, such as thePlus Exchange in the UK and ALTX / JSE advisors submit the application to the exchange with therequirement of assessing how appropriate it is to list, method of listing, capital requirements,milestones, documents to support viability including detailed models and performance factors. Withinthe OTC markets, management prepares the documentation with an auditor and then this goes to amarket maker who acts the role of an advisor. Market Makers and advisors have to sometimes argue onbehalf of the company the merits of the company and value to the exchange to an advisorycommittee/regulatory body. For example, FINRA within the United States is the group who inevitablydecides whether the company is to get a symbol, and the process of getting one is often a series ofcomments and responses between the committee and the company lawyers and advisor/marketmakers. The value of an advisor or market maker is often decided by their success in the commentingstage of going public, but also, in identifying the appropriate time to submit the application on behalf ofa company.

The reality is that going public has a skeletal infrastructure of advisors, professionals, regulators, andmechanisms for investment, which are designed to realise companies goals but it is up to managementand 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 tobe worthy and ready, and are willing to have faith and optimism at the expense of humility to reachthese goals while remaining transparent, with the understanding that you have to do much of ityourself, such as capital raising and share structuring, then you are ready to consider the process ofgoing public. In this process of consideration, even if you have been a director of a public company inthe past and understandably have experience, it is advisable to attend some the of training courses andevents 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 exchangeglobally would be suitable for a business venture of your nature, I suggest contacting us [email protected] it is likely we know of advisors in your market or have dialogue with exchangerepresentatives or advisors. If you are reading, then continue reading...



Common Going Public Services and Process

OTC Bulletin Board Requirements

Financial Requirements: No minimum shareholder equity or income. Companies must bereporting companies, providing an annual report to shareholders, current in all its filings, andsubject 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 atrading market.

SEC status: Listed companies must have completed a registration of the company or itssecurities 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 theSEC, and at which point do I need to have a PPM or offering document in place. Of course, if you areasking yourself these questions, you probably need to discuss your business with a competent SecuritiesLawyer with no bias but to give you the advice you need instead of, like many unfortunately, trying tojam you into going public or reporting process. Until it is entirely necessary, most companies do notbecome reporting due to the costs. Once reporting, the company would likely file a registrationstatement that has permission to offer registered securities, stock, bonds, etc for sale to the generalpublic. 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 OTCBBwas a stock exchange, but the status was changed to just a quotation system. The NASDAQ for examplewould be a stock exchange globally recognized.

A Public Company has:

Companies with over 500 shareholders who are required to report under the SecuritiesExchange Act

For some it may be also an asset test, such as over $5,000,000 in assets and over 500shareholders (example)

Voluntarily become a reporting company, and have filed with a Market Maker to obtain asymbol 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 fairmarket value develops in a public company

Analysts and International exposure could be beneficial to the companies


A Public Company Disadvantages:

The requirement to disclose is expensive and exposes information to competitors and the worldthat you may want to be private that must be disclosed (such as Sarbanes Oxley doesn’t apply toprivate companies)

The rigid structure of reporting is time consuming and may take focus from smaller businessesfrom 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 financialinformation to the SEC. Issuers who file with the SEC via EDGAR are not required to submit hard copyfilings with the OTCBB or the NASDAQ. Unlike all other exchanges, stocks trading on the OTC BulletinBoard cannot be shorted. If you are even thinking of going public, you should subscribe to EDGAR Onlinejust 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 theirfilings

#2. The format of the S-1 filing and different offerings that have already been accepted by the SEC andFINRA are clear and available within the system

#3. It is the single best source of all public information in our opinion, for personal sources ofinformation on interests, research on potential clients who may also be public, potential partners andbuy-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 andmanaging 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 israising 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 withother venture capital firms, at least this would validate your business to potential investment firms. Inaddition, 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 youare interested in going public or are interested in using competitive information to your advantage, wecan 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


Statement. Agree on a corporate structure, and ensure the funds are deposited into the lawyers escrowaccount 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 additionaldrafting sessions. Ensure the Lawyer will give an opinion and approve the S1. Ensure the auditor has allthe 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 anddistribute preliminary prospectus; commence acquiring in escrow investment from 35 investors. SECdeclares offering effective; company acts as its own underwriter.

Stage 4: Close and deliver offering proceeds. Proceed with filing and reporting of Q if the timeframebetween filing the S1 and obtaining the investors went into the next quarter, organize filings forreporting purposes. Contract the transfer agent and the market maker. Complete Market Maker duediligence questionnaire and representations of the company. Prepare and file the 15 c 211 with themarket 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 theinitial documentation recorded by the Lawyer who manages the trust account for this purpose. FINRAapproves 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

CUSIP number

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 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 increasesthe cost of going public in general)


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 LawFirm you should go with. You might even have downloaded a few other companies PPMs and reviewedand compared or began researching your competitors. All good thoughts. At www.otclistings.com wehave reviewed several 1000 PPMs as professionals via the Edgar Filing system, and discussed PPMs withmany 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

The Broker

Generally speaking, the more simple the deal the faster and less expensive. The more complex, thelarger number of different players, the more expensive this will get for you. Simple terms to deal with isthe commission. Commission can vary, even in these markets I have seen 5-8% commission, but typicallybrokers want 10%+ for what they sell and may have expenses from 1 – 3% that are covered as part of anarrangement. Equity placements are also often parts of the offering process, but not the documentitself. It would be however disclosed what the broker has received in compensation for the offeringprocess, which includes legal, road shows, accounting, etc, if equity is involved. If there is no equityinvolved, than its likely the companies costs directly.

The Timing

Once again, this depends on the complexity of the PPM. Often there are many examples that create aframework, but every deal is different, and its often quicker for a Lawyer to draft an entirely new PPMfor a complex project than it is to work from a template of any kind. Most securities lawyers will giveyou a flat fee versus charging $500 an hour, but flat fee projects generally take 1 month to 2 monthswhere hourly billing which is often more expensive often gets quicker results as the lawyers prioritizetheir time on a billing by billing basis. A way to motivate the Legal to move faster is a success fee uponcompleting the offering based on getting the document out in a timely fashion. This however is alsooften 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.

Information

Timing has a lot to do with the information on the company being prepared and accurate. If thecompany and its management is not prepared, that it could take even longer. from a little as a couple ofweeks to a couple of months to get the PPM done and ready to start selling. Such as;

Contracts in Order



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 badconditions. Your expectations need to be realistic. I have seen an offering within Canada take 18 monthsfrom start to finish given the current crisis to now.

Legal Perspective

You will want to have a lawyer conduct an analysis that all of the key requirements are present in thedocument, which includes all the disclosures required by law so investors can make an informeddecision, so that the broker or placement company is covered in representing the company anddocument, and so that the Directors and Company removes liability to the best of their ability. The PPMmakes clear the transaction and risks associated with it. A mining company for example would havemany different risks, such as environmental law, changing regulations, speculative nature, currencychanges, etc, that may be different to risks listed for a Software start-up company PPM. A good lawyerbuilds this document to your specific needs and relevant and up to the current moment details you needwithin your PPM. The PPM and Subscription Agreement show the due diligence of the company and ofthe 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 lawyeron a retainer makes this possible, I would be happy to recommend him for you. If an issuing companyfails to qualify for the Private Placement exemptions relied upon, it can face severe penalties andpossible criminal repercussions. In other words, securing competent counsel is the single mostimportant step in conducting a Private Placement offering.

Documents related to this topic would be Form SB2, Form S1, and Offering Documents, all of whichserve 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 wewould recommend if you contact us, but for your own good I will discuss what we have found is a goodway to discern and find a lawyer.

Size is not everything, bigger law firms often bill more than a good sole proprietor, and more attentionis spent on your matter with a smaller firm than a larger firm. This is mainly true with processes such asPPMs, 15c211, having review of your reporting requirements, such as 10Q’s, Ks, 8Ks, Proxy, etc. Draftingand filing of registration statements, coordinating EDGAR, corporate compliance, mergers andacquisitions, employee compensation, change in control, PIPEs, contract work, and debt transactions. Inactual 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 tofeel that the person you are dealing with simply understands business. It doesn’t matter how technically


good they are at formatting a document and piling in the disclosures, if the essence of the agreementand intent is not completely understood the document could be a hindrance to the actual business. Agood inclination of such as firm, especially in the smaller ones is one closer to a securities law firm thathas a wide focus, for example, mergers, acquisitions, filings, PPMs, Contracts, Incorporations andOperating documents, and regulatory advice, with experience in commercial litigation whereby theirclient 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 toavoid and or mitigate damage. These are lawyers who have dealt at a personal level with regulatorsbefore, who have had large clients and small clients, and can most likely quote off the top of their headsections of securities law that most others would have to look up. They would be the type of lawyer whoreceives updates, go to educational meetings and updates on a regular basis, not only because they arerequired to but because it is their interest. This is the time and place for an adapter, someone who is upto 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 thisis 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 statesuccesses 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. Individuallaw firms allow for individuality in opinions and they tend to have more emotion for your cause if its anissue they tackled before. Whatever you do, don’t have a lawyer who is going to learn from your case, orhas a bone to pick with a case they lost before but “think” they could win this time. They either know itor they don’t, you can simply ask “have you seen a case like this before that you have personally workedon, and what was the general outcome?”

Someone who draws the line where you should not cross as many lawyers will draw up theagreements, but do not explain why they did it or why they are there. Inadvertently, clients often crossthe lines of their own agreement because the lawyer never explained to them the true meaning of thedocument, historically, regulatory wise, and in practice. It is like giving the answer of the math problemwithout explaining the theorem, how then could one practically apply the solution. If you are aresponsible operator of a public company, have the entire document explained until your governingknowledge of Securities Laws is high enough that when you see a theorem you understand its purposein 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 thisdocument in particular. Those of you who have run public companies know exactly what I mean. Be thestudent and the client.

If you are looking for a lawyer who takes this type of attention with their clients, then we can likely refer3-4 that you could choose for your needs. Go through them, check to see what their time schedule is likeand 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 thebroker-dealer submitting a Form 211 to gather, analyze and maintain current financial and operationalinformation relating to the issuing company. The process is an interactive one with FINRA, and requires


a significant time commitment on part of both the broker-dealing submitting the 211 and the issuerwishing to become quoted.

One of the more reliable firms has been Spartan Securities and Island Stock Transfer who worksdiligently with its client companies to obtain a symbol and quote in the most timely and efficientmanner.

15c211 is often needed when a company has been delisted and is attempting to relist from the greysheets, 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 forany security unless certain information concerning the issuer is available and the broker or dealer has areasonable 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

annual report,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 certainother data must also be on record.

List of Market Makers

BMA Securities Rolling Hills Estate, CA 310 544-3545First London Securities Corporation Dallas, TX 214-220-0699Glendale Securities, Inc. Sherman Oaks, CA (818) 907-1505 http://www.glendalesecurities.comHudson Securities, Inc. Jersey City, NJ 800-624-0050Network 1 Financial Securities, Inc. Red Bank, NJ (732) 758-6533Pennaluna & Company Coeur D’Alene, ID 800-535-5329Spartan Securites St. Petersburg, FL (727)823-2058Spencer Edwards, Inc. Englewood, CO 303-740-8448Sunstate Equity Trading Tampa, FL 813-961-4649Westminster Securities Spokane Valley, WA 509-892-5590Wilson-Davis & Co. Salt Lake City, UT 801-532-1313

http://www.pinksheets.com/pink/otcguide/issuers_service_providers.jsp

If you are a Market Maker and want to be put on this list or taken off this list, please contact us. Inaddition, if you know of any of these market makers having been removed as FINRA membercompanies, 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 havea transfer agent, and have been looking for one that is decently priced. You have done your research

http://www.pinksheets.com/pink/otcguide/issuers_service_providers.jsp


and found Spartan Securities and Island Stock Transfer, most likely through a Google Adwordsadvertisement.

You contact the transfer agent and the market maker and they have asked you to go into anengagement 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:http://www.otclistings.com/211_Due_Diligence_Gathering_Questionnaire.doc

Directors and Officers Questionnaire: http://www.otclistings.com/D & OQuestionaire_ver_2.doc

Market Maker Agreement Form 211 Part 1: http://www.otclistings.com/Form 211 FilingAgreement.doc

Market Maker Agreement Form 211 Part 2: http://www.otclistings.com/Form 211 FilingAgreement_part_2.doc

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 yourmarket maker.

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 registeredpublic 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

Quarterly reports

Must comply with Sarbanes-Oxley

OTCBB issuers may choose to have an audit committee, and certain OTCBB issuers may be required tohave an audit committee by virtue of an applicable law or rule. However, the OTCBB rules do notseparately 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 toissue an audit opinion if they are not registered with PCAOB. Filings with audit opinions of anunregistered 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 onPinksheets as well as the OTC Bulletin Board (OTC-BB). Ideally, specialists in serving small and mid-market public companies.

http://www.otclistings.com/ExampleTransferAgentAgreement.pdf

http://www.otclistings.com/211_Due_Diligence_Gathering_Questionnaire.doc

http://www.otclistings.com/D & O Questionaire_ver_2.doc

http://www.otclistings.com/D & O Questionaire_ver_2.doc

http://www.otclistings.com/Form 211 Filing Agreement.doc

http://www.otclistings.com/Form 211 Filing Agreement.doc

http://www.otclistings.com/Form 211 Filing Agreement_part_2.doc

http://www.otclistings.com/Form 211 Filing Agreement_part_2.doc

http://www.otclistings.com/Form 211.doc


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-auditedinterim 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 costcompetitive audit with quality and experience.

There are over 2300 PCAOB Registered Firms, the list is available here:http://www.otclistings.com/PCAOBRegistered_Firms.pdf

Once again, like looking for a good Securities Lawyer, bigger is not always better. I prefer working withthe smaller practitioners who give your file their full attention, you generally are not dealing with arookie working under a major partner, but an auditor who has experience and is doing the work for youpersonally. In addition, the smaller firms can be a third of the cost of larger firms, not because they doless quality work, but because for a long time there has been a shortage of companies that would workwith 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 likelygoing to an auditor who specializes in large companies, and unless your audit is complicated and yourfirm 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 publiccompany. You have contacted three different firms, possibly Chang Park, DeJoya, and Mackay. Afterreview you find the rates range from $2,000 to $8,000. After requesting recommendations, you find thatChang 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 theengagement letter is below:

http://www.otclistings.com/PCAOBRegistered_Firms.pdf


Audit Engagement Letter

November 1, 2010

To the Board of Directors of

Your Company

Company Mailing Address

We are pleased to confirm our understanding of the services we are to provide for Your Company (“theCompany”) 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 ofoperation, 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 statementsin accordance with generally accepted accounting principles accepted in the United States (GAAP). Ouraudit of the financial statements will be conducted in accordance with the standards established by thePublic Company Accounting Oversight Board (PCAOB) and will include tests of the Company’s accountingrecords and other procedures we consider necessary to enable us to express our opinion. If our opinionis other than unqualified, we will discuss the reasons with Company management in advance. If, for anyreason, we are unable to complete our audit or are unable to form or have not formed our opinion, wemay 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 aboutwhether 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 thatare attributable to the entity or to acts by management or employees acting on behalf of the entity. Theaudit will include examining, on a test basis, evidence supporting the amounts and disclosures in thefinancial statements; therefore, our audit will involve judgment about the number of transactions to beexamined and the areas to be tested. Our procedures will include tests of documentary evidencesupporting the transactions recorded in the accounts, tests of physical existence of inventories, anddirect 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 willobtain 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 toprovide certain representations from management about the Company’s financial statements andrelated matters.

Because our audit is designed to provide reasonable, but not absolute, assurance and because we willnot perform a detailed examination of all transactions, there is a risk that material misstatements ormaterial weaknesses in internal control may exist and not be detected by us. In addition, our financialstatement audit is not designed to detect immaterial misstatements or violations of laws orgovernmental regulations that do not have a direct and material effect on the financial statements. Wewill, 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 clearlyinconsequential.


Our audit will include obtaining an understanding of internal control sufficient to plan the audit and todetermine the nature, timing, and extent of audit procedures to be performed. An audit is not designedto provide assurance on internal control or to identify significant deficiencies or material weaknesses inthe design or operation of internal control. However, we will communicate in writing to the auditcommittee and management any significant deficiencies and material weaknesses relating to internalcontrol over financial reporting identified while performing our audit. Any significant deficiency ormaterial weakness identified because the audit committee’s oversight of the Company’s externalfinancial reporting and internal control over financial reporting is ineffective will be communicated inwriting to the Company board of directors.

We are also responsible for communicating with the audit committee about certain other mattersrelated to our audit, including (1) our audit responsibility under PCAOB standards; (2) informationrelating to our independence with respect to the Company; (3) the Company’s critical accountingpolicies; (4) the quality of the Company’s accounting principles; (5) management’s judgments andsensitive accounting estimates; (6) significant audit adjustments; (7) any disagreements withmanagement about matters that could be significant to the Company’s financial statements or ourreport; (8) any consultations management made with other accountants; (9) any issues discussed withmanagement 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’sannual report; and (12) other matters as considered necessary. Further, we are responsible for ensuringthat the audit committee receives copies of certain written communications between us andmanagement, 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 relatedinformation available to us on a timely basis, and for the accuracy and completeness of thatinformation. Management is also responsible for the establishment and maintenance of adequaterecords; the selection and application of accounting principles; the safeguarding of assets; adjusting thefinancial statements to correct material misstatements; and confirming to us in the managementrepresentation letter that the effects of any uncorrected misstatements aggregated by us during thecurrent engagement and pertaining to the latest period presented are immaterial, both individually andin the aggregate, to the financial statements taken as a whole. In addition, management is responsiblefor 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 annualreport for the purpose of determining whether other information in the annual report (including themanner of its presentation) is materially inconsistent with information in the financial statements ormanagement’s assessment of the effectiveness of the Company’s internal control over financialreporting. We assume no obligation to perform procedures to corroborate such other information aspart 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 theSEC with which we are associated, we will be advised of the proposed filing on a timely basis. We willprovide the Company a signed copy of our report and consent. These manually signed documents willserve to authorize the use of our name prior to the Company’s electronic transmission. Managementwill 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 $__________ isdue upon the signing of this engagement. The final portion of the invoice will be due upon delivery ofour audit report. The Company will also be billed for travel and other out-of-pocket costs such as report


production, word processing, postage, etc. The fee estimate and completion of our work is based onanticipated cooperation from Company personnel; timely responses to our inquiries; timelycommunication of all significant accounting and financial matters; and the assumption that unexpectedcircumstances will not be encountered during the audit. If significant additional time is necessary, wewill keep Company management informed of any problems we encounter and our fees will be adjustedaccordingly. Our invoices for these fees will be rendered each month as work progresses and arepayable on presentation.

The Company may wish to include or incorporate by reference our audit report on these financialstatements in a registration statement proposed to be filed under the Securities Act of 1933 or in someother securities offering. If so, you agree not to include our audit report or make reference to our Firmwithout our prior permission or consent. Any agreement to perform work in connection with anoffering, 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 separatearrangements.

The audit documentation for this engagement is the property of our firm and constitutes confidentialinformation. However, we may be requested to make certain audit documentation available to thePCAOB, SEC, or other regulators pursuant to the authority given to them by law or regulation. Ifrequested, access to such audit documentation will be provided under the supervision of firmpersonnel. Further, upon request, we may provide copies of selected audit documentation to theregulator. The regulator may intend, or decide, to distribute the copies or information contained thereinto others, including other government agencies.

We appreciate the opportunity to be of service and believe this letter accurately summarizes thesignificant terms of our engagement. If you have any questions, please let us know. If you agree with theterms 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

RESPONSE:

This letter correctly sets forth the understanding of YOUR COMPANY NAME

Signature ________________________________

Title ________________________________

-------------------------------------------------------------------------------------------------

Once this engagement is signed, and the auditor is paid their deposit, you are on your way to becoming

a reporting company.


Finding and Engaging a Transfer Agent

In short the transfer agent is the firm responsible for maintaining the corporate share registry andtransactions and communications related to the company’s shareholders. The Transfer Agent could bethe company, as the company can be its own transfer agent, however, when moving forward to gopublic and file the Form 211, the company should hire a transfer agent to maintain the records. That’snot to say that the company should not keep its own records, it is good practice for audited companiesto maintain their shareholder registry and transactions related to issuing shares with the resolutions andissuance 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 companycorrespondence to shareholders. If you are not sure who to choose for your company transfer agent, Ican say that I have had good experiences with Island Stock Transfer, Holladay Stock Transfer, SignatureStock 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 disciplinarymeasures, 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. Itis 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 newpublic company, a transfer agent with competitive rates and professional such as Island Stock Transfer isthe perfect size for your business. There are several others within the list below. Some of the othertransfer agents may be affordable but they do not have the funds to own the technology larger firmspossess. Ensure that the web based system of viewing and maintaining your records are available so thecompany can keep their records in unison with those of the transfer agent and answer shareholderqueries if asked. If you would like to know what they charge, ask for the rate card, and be sure to payattention to costs of proxy communications. There are services that can help you choose the righttransfer 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 TransferAmerican Registrar & TransferAmerican Stock Transfer & TrustAtlas Stock TransferBay City Transfer Agency & RegistrarCitibank Shareholder ServicesColonial Stock TransferColumbia Stock Transfer CompanyComputershare Investor ServicesComputershare Trust Company of CanadaContinental Stock Transfer & TrustCorporate Stock TransferCottonwood Stock TransferDB ServicesEmpire Stock Transfer


Equity Transfer ServicesExecutive Registrar & TransferFidelity TransferFifth Third BankFirst American Stock TransferFirst Bankers Trust CompanyFirst-Citizens Bank & TrustFlorida Atlantic Stock TransferGenesis Stock Transfer, LLCGemisys Financial ServicesGeneral Securities Transfer AgencyGTI Corporate Transfer Agents, LLCHollady Stock TransferIllinois Stock TransferInterwest Transfer CompanyIsland Stock TransferJersey Transfer & Trust CompanyJP Morgan Chase BankLasalle BankLiberty National Bank & TrustLiberty TransferMadison Stock TransferManhattan Transfer RegistrarMy Transfer AgentNational City BankNational Stock TransferNorth American TransferOlde Monmouth Stock TransferOTC Corporate Transfer Service Co.OTC Stock TransferOTR/Oxford Trust & RegistrarPacific Stock TransferPhoenix American Financial ServicesProvident BankRegistrar & Transfer CompanySecurities Registrar & TransferSecurities TransferShareholder Financial ServicesSignature Stock TransferStandard Registrar & TransferStock Transfer Company of AmericaStock TransSun Trust BankThe Bank of New York MellonThe Nevada Agency & TrustTransfer Online, Inc.Trust Company of AmericaUnited Shareholder Services


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 twoor even one year ago. Firstly, if you are looking to go public the candidate company to reverse mergerinto should not have:

Any offerings or sale of shares during any time of which it could have been deemed a shell thatare 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 tocontact the Bar/Legal Society to ensure there are no current investigations or complaintspertaining to the lawyer

The market maker needs to have a clean record, if they have been reprimanded in the past, thedetails will be available through FINRA, and thus, you will ensure the company remains tradingin the future if you do your due diligence on the market maker. A condition of taking over thecompany 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-overfor equity also take the liabilities on personally that have not been disclosed or other than whathad 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 thoughin some cases there have been forgeries which have caused several companies and individualsshame, it is not as often, and thus, its just a precaution to ensure it is all there.) Ensure you havea clause in the merger agreement that applies a penalty if the representing party to thetransaction 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 globalregulatory body, of which any Director or past Director has been under investigation by ANYglobal 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, asfor the days of turning a Gumball Factory into an Online Dating website faded with the last

UMB BankWells Fargo BankWestern States TransferZions First National Bank

http://www.otclistings.com/ExampleTransferAgentAgreement.pdf


batch of “shell” peddlers who face jail time for fraud and misrepresentation during the timesthey issued shares.

Ensure there are board minutes on all discussions, and that thorough thought by both sides isdocumented 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 allaffiliates and or related parties to the transaction for the period of up to 2 years and for anylength of time during that length of time. Otherwise, companies may find themselves open tothird party reselling and IPO definitions. IPO/Resell definitions combined with possible shelldesignation could be dreadful. Most mergers happen where by the owner of the publiccompany tries to sell shares during the merger, do your best to avoid this by using black-outclauses.

Ensure all corporate documents are provided and that the wording of the document is “acomplete set of all documents in the history of the company” and not just in the possession ofthe current Directors or presenting candidate. Sometimes the fact that people don’t designatethat its the companies complete files historically, individuals have been able to simply say “itwas the complete copy of documents … in my possession.” Wording is important, and so are thedocuments. 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 furthercertification of the documents is completed by the parties involved. The certification at leastensures that if any document was forged or altered in any way, it was their certification on thatdate, 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 inadvance of closing needs to be documents by both parties. I highly recommend not transferringany funds prior to closing, many unsavory characters have possed as Lawyer trusts over theyears 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 cashcomponent is often asked for to also purchase on controlling and hold out shareholders forcash. Be aware, that the market price for near complete ownership is around $300,000 USD withvery little equity given up, to almost no cash and just equity. The going price of control per seare 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. Ifyou believe a company to be a shell, you need to report this appropriately. The stronger themerging company, the better.


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 protected]

In order to close a merger transaction, your company must have two years of audited financialstatements prepared in accordance with GAAP, and quarterlies. There statements are filedwithin the 8k.

The best way to receive shares is in a share per share value issued for control. Getting them anyother 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 Certificatesb) Proof of all Restricted shares and then those that are being purchased or issuedc) Proof of all Free trading shares(including shareholders list) and those that are being purchased

or issuedd) PA where applicablee) PA for transfer agent accessf) 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 & Federalj) 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 forms) CUSIP confirmation number for …….

Executed agreements:

i. With Transfer agentii. Auditor

iii. List of investors( restricted & free trading)

Accounting:

i. bank statements from ,,,ii. Chq. Book

iii. Canceled chq.iv. Unpaid invoices



It is possible that you may want indemnifications on expenses or unknown costs, including possiblyaccess to the transfer agent prior to the transaction to ensure the transfer agent ledger is the same ofthat 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 mehow 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 youhave 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 OTCBBfor 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 isthat a company with a trading symbol and current reporting is worth its weight in gold, as there is nounknown factors. When building an OTCBB the unknown remains whether you will find a market makerwilling 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 vendoreven said,” If you have a company for sale for $300,000… I will buy it from you, because it’s worth it, wewill 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 ofthe buyers who are looking at last year market prices keep saying that’s too high for an OTCBB. Myanswer to them… prove you have the funds… and someone will go find one. I tend to agree howeverwith the professionals, the price of these companies will continue to climb as less and less companiesare awarded their trading symbols. Some say its the new administration, some say its stricterregulations, some say that the reality is that nothing is simple, and you have to be intelligent andprepared to build a public company and there are monthly costs and responsibilities that make it next toimpossible to just build on a whim… so its worth it to buy a company is it not? And if it is worth it, howmuch 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 ormerged? The answer inevitably is that you can probably raise more money in a public company than aprivate company, yes, but you will lose a chunk of control just to get that first $350,000 back fromefforts to raise capital. If the market is strong, paying $500,000 shouldn’t be hard to do, because thedilution will be less, but in this market it’s just not going to happen. The cost benefit analysis for a goodindependent company is not there.


So who is the market? Most likely the small 3rd tier Investment Bankers and Venture Capital firms thatare willing to bring financing with a public company but not a private one. They will purchase out ofconvenience and time constraints, and therefore, will pay the asking price promptly. In this case, thesupply 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 reversemerger? 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, andmay say no indefinitely if there are undisclosed details on Directors, errors in statements made, and or ashare 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 muchis 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 thenFINRA process of obtaining a symbol to possibly go public (which in all likelihood there is a good chanceyou 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 [email protected].

In addition, we can offer third party due diligence research reporting of which we will create a report onthe availability of the documentation, advantages and disadvantages, timeframe and total costestimates for your company to go public or on a company you are looking to acquire which is a shellcompany or trading public entity. Our due diligence will be done simultaneously with your legal counseland we will review and develop a report to help you better make a decision. These services can rangefrom $1000 and up depending on the complexity of the transaction. If you are spending $350,000 it maybe worth the time and effort to have a report built on best practices. Maybe the price is too high if it isnot the right vehicle for your company or process.

I understand your concern about the investment although … what helped one of our clients justify theinvestment was when he figured out what the real cost in money would be if he did not go public andhis company failed privately, 2 weeks later he put together the funds for his vital delivery date to getfinanced.

If it means enough to you, you will do it. [email protected]

Last but not least, would you believe that we don’t set the prices? Who does…

Our clients.

Real Life Examples On How Negotiating On The Price Of An OTCBB Can Lose You Money




Example 1:

Don D. From Canada is looking to buy a public company for his Industrial Services business. A fewcompanies where presented at $775,000 and $800,000. The $775k was represented by a broker dealerin Florida, the $850,000 company was represented by a local contact known to have a few publiccompanies available.

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. Thevendor lowered the price to $750,000 but Don wanted to set the price at $735,000. With no room tomove, the vendor took in other contacts, and within one day, the company had signed off with anotherperson for $800,000. The buyer was motivated, and offered more money since they knew there wasanother 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 anotherpurchaser. The reality is, if you are going to play games be prepared to realize that the clients may setthe price within these markets... but also be prepared to know there are other clients. You will lose outif 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, youwill miss out and pay more if not double.

Example 2:

Charles Wang has eagerly been looking for a public company for his alternative energy company. Hefinds a company in this market for $300,000 when everything else is $350,000 to $400,000. Charliemanages 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 andoffers $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 askCharlie, but its definitely not peanuts he lost. In both instances in both markets, it is a time of doing orbeing done.

Its real estate, if you negotiate too aggressively or without reason, than you will be Shanghaied, the dealwill 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 nothappen why... because it will get bid up. Be the buyer if you are going to be... then you need to considerwhere 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


Flexible Payment Program

Recognizing the current economic environment, Belmont Partners is pleased to announce its newFlexible Payment Program. Under this exciting new program Belmont is able to deliver control of apublic vehicle with as little as 25-30% down. The program covers select public vehicles with tickersymbols on all OTC listings. Including companies listed on the Bulletin Board, Pink Sheet and GreyMarkets.

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 9transactions in 2009 and completed over 60 transactions in 2007 and 2008 and has completed over 170transactions 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 beingtheir main priority. The documentation provided to complete transactions have been some of the mostcomplete we have come across in the industry. We are proud to have the ability to offer such an excitingand innovative program to help our clients in today’s market. Please contact OTC Listings and ask aboutour partners for purchasing a public vehicle at [email protected]

Why Foreign Companies Should List On The OTCBB

The US Dollar and Economy will and is recovering. Given the current price of your internationalcurrency, owning and running your company or a division of your company as a US public



company allows for you to earn US dollars for your stock. The currency of which you will betrading 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 yourcompany’s stock.

Your company still earns however in its home currency, so if it is a profitable company, the factthat the stock is in US dollars but the actual capital earned is in your home currency from thebusiness, 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 USmarkets would be substantial and material to your business.

There are several exemptions of which capital can be raised within a US public company such asan OTC BB that may not exist within your Country. Having a portion of your business locatedoutside 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 raisecapital 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 thefunctions 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 companiesuse the internet and now in 2009 it is the single most important tool for Investor Relations. A Companyin the public markets, looking to raise capital, or looking to communicate to existing investors requires aweb presence, and not just any presence but an effective one. Roughly 90% of all portfolio managersand retail investors utilize the internet to confirm their investment decisions solidifying the reality thatan 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 transformationto ensure that your web presence is Investor Relations friendly. An IR Website is no longer just confinedto 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 asBloomberg and Yahoo Finance.

IR departments that do not master, monitor and manage their online communication channels arecompromising their companies’ valuation potential. They must make sure their IR websites emphasizethe right types of information, are designed from the perspective of investors, and that the combinedexperience that investors have on the site supports or strengthens the company’s credibility.

The Complete Investor Relations website:


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 withouthaving 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 InformationSection is only one click

Company Section which includes About Us, CEO section with links to company blog anddocumentation, 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 andhistorical 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 asthat of the transfer agent, company law firm, etc.

Utilize these tools to reach the following audiences:

a. Individual Investorsb. Financial Analystsc. Professional Investorsd. 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. Itstarts with the goal and the website, and the rest is a matter of plugging in the tools and maintainingyour image.

The first question therefore is, what would the goals be of a publicly traded company for a social mediaplatform?

1. To communicate with its existing investors on news, disclosures, advancements, and answerquestions with regards to past information.

2. To discuss with the media and general public the goals of the company, its news, andadvancements

3. To gain more investors in the company, or investor interest4. To build an internationally recognized brand5. To be top of mind in the news, on the search engines, and in online discussions6. 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 havethe following:


1. An appealing graphic design2. Title, Meta Tags, and keywords programmed into the website3. A Blog or News Release page for accessing the news releases on the website4. A newsletter subscription service (to capture the interest of users, and communicate press via

email.5. Possibly a section for podcasting and company videos or a part of the front page6. 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 stepsto take:

1. Set-up an account with twitter, facebook, linkedin, youtube, and the other 30 main social mediawebsites. 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 thestock market, such as www.otclistings.com or www.stockexchangelistings.com orwww.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 immediatepublishing 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 facebookaccount, the twitter account, the youtube account, the blog address, the website address, andthe 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 thecompany newsletter.

7. Create video’s of staff reading the press release, publish the video’s within the companyYoutube account. Staff can also read newsletters, articles from third parties, or updates fromtime 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 thecompany to where it is today, growth, changes, about management, etc.

9. Having manuals and guides for example such as “Investing In Gold” or Investing inSemiconductors” depending on your topic are good sources of information that are often linkedand 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 thoseblogs 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 tweets12. 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 therelease of information.

13. Utilize general meetings, seminars, and conferences to promote the social media tools of whichyour communications are coming from. Video as many of these outings as possible and publishthem via podcasts and video sites.


http://www.stockexchangelistings.com/

http://www.asxlistings.com/


http://www.hootsuite.com/


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 yourcompany. These forums combined with all of the above tools will drive an integrated onlinecommunication and social media marketing campaign.

The SEC embraces online Communications- But its your responsibility to work with a firm who knowshow 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 ofinformation, we also have encouraged companies to make their Commission filings and other companyinformation available on their web sites. We believe that company disclosure should be more readilyavailable to investors in a variety of locations and formats to facilitate investor access to thatinformation.”

The SEC published a 47-page report that outlines the boundaries for sharing information as well asholding 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 aconcrete plan of action need to be. It is a bit more than applying common sense, this is why you need towork with social media marketing experts who have owned and run public companies such as ourconsultants.

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 staffcomments is a liability. The reality is, social media marketing is a tool that needs to have more controlsplaced on it than just free range twittering. As appealing as that may be, it has its place, but not in publicmarkets.

Contact us to develop a social media marketing strategy for your public company. [email protected]

Do You Need A Blog?

Your website is meant to be the storefront or for those with registrations filed it could be consideredyour offering, however, the blog is the social network where you are not selling until they walk in thefront door to your website. How you effectively do this defines you as either a thought leader, andineffectively can define you as a spammer. It is best that you build this with the socially minded andtalent 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, newsabout the industry, and dealing with objections head on. If you had a chance to write how you handleyour 100 most common objections, whether it is about your stock, your company, your product, or yourindustry, than you would have 100 great blogs. Not only would they prove and communicate your pointabout your company, but give you industry wide credibility and exposure.

http://www.sec.gov/rules/interp/2008/34-58288.pdf



With this in mind its a start, the blog idea that is. But why not look at social media as a whole which willencompass custom projects that entail setting-up blogs, twitter, facebook, linkedin and other relatedsocial media devices into centralized platforms, installing the links and tools for web users of yourwebsite to promote and access, and focus on building a following for your site and company in additionto 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 provedthat counts for something, right.

By utilizing twitter, facebook, linkedin, social bookmarking, the blog; the company, and website wouldbe exposed and increase monthly traffic and search engine placement. The new era of Social Media hasgone from “do you have a cell phone number” to “do you have an email” to “do you have a twitteraccount” or “are you on facebook.” An extension of this world is simply put the Blog, which allows for anon-commercial approach for discussing what is important to your market, your industry, and aboutyourself and company and view and ethics of how you forsee what you are doing. By handling clientobjections before they come through the front door of your store, you already increase conversion intosales 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 areinterested in getting some quotes on social media marketing and setting up an effective blog for yourcompany, feel free to drop us and email at [email protected]. Also, if you have a blog let us knowand we will link to you, we do get over 7000 unique visitors a month. Would you like 7000 eyeballslooking at your business or company, or idea. In this market, you need all the help you can get… just askand 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 publiclydisclosing proxy materials is a no brainer. I was reading a very informative blog of which I have snippedthe following below, but you should read the whole post: http://tinyurl.com/ljh32s “In 2007, the SECadopted amendments to its proxy rules that would require reporting companies and other personssoliciting proxies to post their proxy materials on a publicly accessible Internet website and provideshareholders with a written notice of the Internet availability of the proxy materials, except inconnection with a business combination. Large accelerated filers (other than registered investment



companies) were required to comply with the e-proxy rules starting January 1, 2008. All other reportingcompanies (including registered investment companies) and other soliciting persons must complystarting January 1, 2009. The e-proxy rules provide two alternatives for the delivery of proxymaterials:[1] (1) the notice only option; and (2) the full set delivery option. An issuer or other solicitingperson may use the notice only option for some shareholders and the full set delivery option forothers.” Under the notice only option, an issuer must send a Notice of Internet Availability of ProxyMaterials 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 inposting your e-proxy, REG FD, and corporate press or newsletters, contact us at [email protected] will get you set-up in an instant. In addition, you don’t have to log-in to post your information, aslong as its in the text of an email, we will give you a personalized address where you can sendinformation and it will instantly be posted. Our system is set to give you a personalized blog and post theinformation 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 over10,000 unique visitors per month searching for terms around OTC listings, otc bb listings, otc shells forsale, 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 theaudience would be eager to have advertisements from:

- Companies who list public companies on the OTCBB and Pinksheets

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- Go Public consultants

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- 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




- 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 webelieve 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 topromote your brand

- 3 months of advertising installed within the side bars of the website and within the actual text ofall 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 buildingdomains and search terms on websites you would have ownership of. We would still require a 3 monthcontract to do so, this could be in addition to the marketing done on www.otclistings.com andwww.stockexchangelistings.com and would be complimentary and long term vision for your company.




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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 theprofessionals 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 hasaccess to over 1,000 such PPMs drafted

Incorporation Fees and Filings All Form D filings CUSIP number 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 notincluded 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, aheadof the others who make these claims!2. Professional PPM written by an expert in the field3. We Don’t Take Any Equity!4. We offer the best value at the best price

Contact Us At [email protected] 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 expensessubmitted by our team to your firm, or

1. $15,000 down payment; ppm, and submission to SEC2. $15,000 upon approval of SEC registration3. $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 bemislead by the little things, this is real value for going public.

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