Exemptions from Registration and Direct Public Offerings

Start-up companies seeking to raise capital with an initial public offering (IPO) often run into trouble. First of all, there is no market for the company's stock unless it is first listed on a stock exchange or quoted on a quotation medium, such as the over-the-counter bulletin board (OTCBB). Secondly, brokers will usually not underwrite the stock on a firm underwriting, and brokers may even be reluctant to do a best efforts underwriting. Companies can usually be more successful raising capital in the public arena if they first obtain a trading symbol for their stock. To do this, the company must first raise capital with an initial public offering IPO, which is typically a full registration with the Securities and Exchange Commission (SEC) on Form S-1, then apply through a market maker for a quotation on a quotation medium such as the OTCBB or, if qualified, a listing on a recognized exchange.  A direct public offering DPO, which usually falls under exemptions from registration of securities contained in either Regulation D, Rule 504, which typically involves a small corporate offering filing (SCOR) in a state which allows a SCOR , or a Regulation A filing with the SEC, with coordination in the blue sky states the company wishes to sell in are other less desirable avenues.. For more information, call our office at 323-782-8802