While there are several potential routes when taking a company public and becoming quoted on the OTC, at V Financial Group we focus on key methods through which you can achieve your goal
-
A Minimum of 35+ shareholders will be needed.
-
Audited financials of the operating Company will be necessary.
-
The general process to achieve OTC status (unless through reverse merger with a trading shell company) is a process that takes a minimum of 4-6 months to achieve.
The most traditional way to go public, without reverse merging into an existing trading blank check shell company, is to file an S-1 Registration Statement or conduct a Regulation A+ Offering. These are Registration Statements filed with the SEC which register the restricted securities (stock) of your operating company that your current investors have, or that the Company will offer for sale, and subsequently grants your company status as an SEC Reporting Company.
Upon effectiveness of the S-1 or qualification of the Regulation A+ Offering, which generally takes between 4-6 months because the SEC responds to each submission with comments that must then be addressed, a market maker will then be able to file what is called Form 211, and also apply for DTC eligibility. It should be noted that in order to proceed with the Form 211 process, the Company first has to maintain at least 35+ shareholders holding free trading stock.
If timeline is of greater concern than keeping costs as low as possible, then a private operating company may consider purchasing, and/or reverse merging with, an existing trading OTC blank check shell company. When taking a company public, this dramatically reduces the timeline to become trading, however, the expense is greater than the traditional route. The cost to gain control of such a company would likely require a large capital expenditure, and/or may result in the need to compensate existing owners of the Company in the form of equity.
The operating company seeking to merge with the blank check company would be required to obtain PCAOB Audited financials for the merger to be consummated. However, control of the Company could be shifted to a new control group in a greatly reduced time frame depending upon due diligence and the alleviation of similar logistical considerations.