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Glossary
A - B - C - D - E - F - G - H - I - J - K - L - M -
N - O - P - Q - R - S - T - U - V - W - X - Y - Z
-A-
Annual Report. A report filed annually to
the Secretary of State to remain in good standing.
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-B-
Blind Pool/Blank Check. A company which
has no specific target industry, business or venture when its securities are publicly
offered for sale and the proceeds of the offering are not specifically allocated.
Blue Sky Laws. A popular name for
the various states' securities laws which have been enacted to protect investors against
securities frauds.
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-C-
Capitalization. The total amount of the
various securities issued by the company. For registration statement purposes,
capitalization includes all short- and long-term debt.
Cusip Service Bureau. The
organization which issues a Cusip number upon receipt of your application. Three
market-makers need to be listed. There is a $70 charge for this service. The Cusip number
is used by the brokerage industry to distinguish the different securities.
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-D-
Deficiency Letter. A letter from the SEC
commenting on deficiencies noted in its review of registration statement.
Due Diligence. A reasonable
investigation conducted by the parties involved in preparing a disclosure document to form
a basis for believing that the statements contained therein are true and that no material
facts are omitted.
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-E-
Exempt Offering. Money raised without the
need of a formal registration with the Federal Securities and Exchange Commission.
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-F-
Form 8-K. A report required by reporting
companies to be filed with the SEC when specific reportable events occur.
Form S-1. The most commonly used
SEC form for registering securities in an initial public offering.
Form 10-K. Annual report required
to be filed with the SEC in compliance with the '34 Act.
Form 10-Q. Quarterly report,
containing primarily unaudited quarterly financial information, required to be filed with
the SEC in compliance with the '34 Act.
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-G- -H- -I-
Intrastate Offering. An offering of
securities exempt from registration, which will be sold only to residents of the state in
which the issuer is doing a significant portion of its business.
IPO. Initial Public Offering.
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-J- -K- -L-
Legend Stock. See restricted stock.
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-M-
Making a Market. Efforts by a dealer to
maintain trading activity in a particular stock by offering firm bid and asked prices in
that stock.
Managing Underwriter. The lead
underwriter whose functions include forming the underwriting syndicate.
Market-Maker. A dealer who makes
a market in a particular security in the over-the-counter market. He is a wholesaler,
trading with other brokers, and often a retailer dealing with investors.
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-N-
NASD. The National Association of
Securities Dealers, Inc., an association of brokers and dealers in the over-the-counter
market. NASD reviews underwriter's compensations to determine whether underwriting
arrangements are fair and reasonable.
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-O-
Offering Circular. A document, similar to
a prospectus, which is used in offerings not requiring registration with the SEC.
Over-the-Counter Market , (OTC).
A market made up of dealers who make a market for those securities not listed on an
exchange. The over-the-counter market is made between buyers and sellers over the
telephone, rather than the auction-type market found on exchanges.
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-P-
Partial Secondary Offering. An offering
in which securities are offered for sale by both the company and by existing stockholders.
Pink Sheets. Used in the
over-the-counter market printed daily listing the market-makers and the current quotes on
stocks.
Private Placement. An exempt
offering of securities which is limited in distribution, the recipients of which receive
restricted stock from the issuer.
Prospectus. The document or
brochure, used as the selling document in an offering, that discloses pertinent
information regarding the issuer.
Public Shell Corporation. A
publicly-held corporation currently inactive as to any operating business activities.
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-Q-
Quiet Period. The period between the time
you reach an understanding with the underwriters regarding your intent to go public and
ninety days after commencement of the offering, so-called because of the restrictions on
publicity.
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-R-
Red Herring. A preliminary prospectus,
circulated during the waiting period, which bears a legend in red ink stating that the
registration statement has not yet become effective.
Registrar. An agency which issues
certificates to new stockholders and checks the transfers of stock to insure that the
number of new shares issued is the same as the number of shares canceled.
Regulation Statement. A document
filed with the SEC to register securities under the 1933 Act.
Regulation A. Provisions of the
1933 Act which contain the rules governing public offerings of no more than $1,500,000
exempt from registration.
Regulation D. The regulation
issued pursuant to the Securities Act of 1933 which contains the rules governing
private-placement offerings and Rule 504 public offerings.
Reporting Company. A public
corporation which has 500 shareholders and over $3,000,000 in total assets as reflected on
its financial statements is required by the Securities Exchange Act of 1934 to make an
initial filing of a Form 10 with the S.E.C. and subsequent filings of Form 10-K, Form 10-Q
and Form 8-K.
Restricted Stock. Securities
acquired in a private transaction not involving any public offering which have limited
transferability. They are usually acquired in a private placement from the issuer. Also
called legend stock or lettered stock.
Rule 14~. An exemption provided
pursuant to the 1933 Act which allows, under certain conditions, a shareholder to sell his
restricted and control stock in the public market without registration of that stock.
Rule 15c2-11. This is a rule
promulgated by the U.S. Securities and Exchange Commission and required that
broker-dealers maintain relevant information about the companies of which they make a
market. The rule requires that brokers keep current information about the company's
facilities, management, capitalization, operations, and of course, financial statements.
Rule 504 Exemption. An issuer
exemption under Section D of the 1933 Securities Act which allows a company to raise up to
$500,000 by registering with the state securities divisions instead of the
S.E.C.
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-S-
S.E.C. The Securities and Exchange
Commission, established by Congress, to administer federal securities laws.
Secondary Offering. An offering
in which securities of previously unregistered stock are offered for sale by existing
stockholders.
Securities Act of 1933 (1933 Act).
Regulates the disclosure requirements for securities offered and sold in interstate
commerce and through the mail.
Securities Exchange Act of 1934 (1934 Act).
Regulates and controls the securities markets and related practices and matters.
Standard and Poors Manual. See
Standard Manual Exemption.
Standard Manual Exemption. The
State Securities Commissions regulate state laws and must be complied with in every state
in which your stock trades. Most states securities laws have a secondary trading
exemption, often referred to as the "manual exemption". The most common manuals
include Moody's Investor Services (OTC Industrial Manual), and Standard and Poors Manual.
In order to qualify for Moody's, applicant must have a minimum net worth of $100,000 and
100 shareholders and pay a $750 fee. Standard and Poors has no net worth requirement but
charges $1600. Although they both accomplish the manual exemption requirements, Standard
and Poors coverage is superior in providing visibility to the financial community.
Syndicate. A group of investment
bankers who together underwrite and distribute an offering of securities.
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-T-
Tender Offer. A formal offer to purchase
shares of stock from existing stockholders, usually in connection with an attempt to gain
control of the company.
Transfer Agent. An agency which
keeps the official records name and address of a company's stockholders and handles the
transfer of shares from one person to another. Usually the transfer agent and registrar
are the same.
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-U-
Underwriting Agreement. An agreement
between a company and its underwriters, setting forth the terms of the offering, including
method of underwriting, the offering price, and commissions.
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-V- -W-
Window. The period of time when the
public market is anticipated to be receptive to the purchase of new securities.
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-X- -Y- -Z-
Seminars
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LEARNING CENTER
Does your
private company need additional working capital?
If your answer is yes than you may
want to consider the greatest source of funding in the world, Wall Street.
If you own a small but growing company and
you need capital to expand. Your Private Company's ability to raise funds has certain
limitations.
When a private business seeks additional
financing its choices are generally limited to either internal or external financing.
Existing working capital, cash flow and profits limit internally financed growth and
external financing. If any is accessible, it is restricted to bank loans and is considered
debt.
Since raising adequate capital through
either debt or equity financing is a problem faced by so many owners and managers of
privately owned companies what is the alternative?
"Going public is a significant
step in a company's development and easier than most executives think" says James
Everett Franklin, founder of "Goipo.com, Inc.", a San Diego based Company
specializing in Venture Capital, Mergers and Acquisitions and all facets of Pre and Post
IPO financing.
Hundreds if not thousands of good, solid
companies prepare to go public in one form or another every year. NASDAQ has recently
changed its requirements for listing on its exchanges in an effort to make companies
report financial information on a more regular basis and give better disclosure to its
past, present and future.
With all these necessary changes, it is
only natural to assume many up and coming companies will be overlooked as in the past.
Experienced venture
capitalists have made fortunes over history by being able to identify a "diamond in
the rough" before the rest of the market. They have been able to do so
because they had the experience and resources to gather timely, accurate information on
numerous companies which fit their own "investment criteria".
Corporations have most to gain by
going public!
Among the benefits are greater visibility
in the marketplace, heightened legitimacy with customers, partners and vendors, and easier
access to the capital marketplace.
By controlling a company who's shares are
trading publicly on the open market, you establish a generally recognized value on the
shares; which the company can use to acquire other businesses, assets or raise funds
utilizing private placements through the issuance of shares from its authorized but yet
unissued capitalization.
"While "going
public" offers many advantages, it also brings with it new responsibilities and
obligations" says Jim Franklin CEO and President of
Goipo.com, Inc. It
can be a complex, time consuming and expensive process. The SEC, stock exchange and the
NASD all require public companies meet specific disclosure and reporting requirements.
Why go public?
How does
Goipo.com participate in
a funding?
Goipo.com prefers to work with privately held companies in
the final stages of preparing a public offering. Goipo.com feels the risk versus reward ratios
are heavily weighted towards success utilizing its criteria. Goipo.com will participate in the
private placement funding as an investor. Once Goipo.com owns its position in the company it has
selected, it will assist in identifying other accredited/qualified investors who might
share Goipo.com's views towards success. The sooner the private placement is completed, the
sooner the selected company can go forward with its public offering. At this stage there
is no free trading stock available to any entity, therefore eliminating the fear of
"market manipulation.
Goipo.com Motto
Always do your "homework" yourself, it is
your money. Make financial decisions based upon the merits of the company you are
considering versus the "story" you are hearing. Remember, all investments
involve certain elements of risk no matter who the company is and how successful they are.
"Risk versus reward" is the key. Educate yourself and develop your own
"secret formula" for success.
What are my options?
What is private placement
funding?
Private placement funding can and will take various
forms depending on the companies financial needs. Various SEC rules and regulations are
utilized to assure proper disclosures to all participants in the funding. By offering a
certain percentage of their company to investment bankers, angels, private investors, etc.
private companies can raise millions of dollars to help finance their growth.
Goipo.com, Inc. assist emerging growth companies
raising any amount required in accordance with federal securities laws and regulations
applicable to private offerings. In order to facilitate capital formation consistent with
the protection of investors, SEC released the "Revision of Certain Exemptions from
Registration under the Securities Act of 1933 for Transactions involving Limited Offers
and Sales", also referred and known as the Regulation D.
The Regulation is designed to simplify and clarify existing
exemptions, to expand their availability and to achieve uniformity between federal and
state exemptions. Reg D is the product of the Commission's evaluation of the impact of its
rules and regulations on the ability of small businesses to raise capital. Regulation D is
a series of six rules. As Rule 501 through 503 explains general procedure, conditions and
uniforms sales practices, Rule 504, Rule 505 and Rule 506 limit the dollar amount that can
be raised through a private offering under Reg D.
How do you become a publicly traded Company?
There are generally two well-accepted ways for a Company to
accomplish this:
A) A traditional Initial Public Offering
(IPO) - Company
has to meet or exceed extremely stringent financial and reporting guidelines set out by
the SEC and selected exchanges. Once meeting these guidelines, selected company will then
have to spend approximately $200,000 in registration and filing fees, hire investment
bankers, develop relationships with "market makers" and "underwriters"
and possibly restructure their entire business plan and management team to satisfy their
"new " partners concerns. All of this taking anywhere from six to nine months
with no absolute guarantee of success. While many companies have become public through
this process, it is often an inappropriate method for small business because of the
significant amount of time and expense required to complete the offering.
B) Reverse Merger - a Public Company (Shell) acquires
a privately held business. When this happens, the once-private company becomes a public
entity with access to the acquiring company's cash, if any, and the public equity markets.
A Shell is a dormant but still publicly held company with few or no assets except its bona
fide corporate existence and its stockholders. By buying the shares of a shell and then
merging into it, a private company can go public quickly and cheaply, compared with the
time and money it takes to go through the Securities & Exchange Commission
registration and an underwriting. Total cost and time spent during this procedure would be
from $60,000 to $100,000 and sixty to ninety days.
Why
reverse merger?
"In an investment
banking world dominated by names like Merrill Lynch, Goldman Sachs and First Boston,
people sometimes forget there is a whole other tier of regional firms that finance
established as well as exciting growth companies,"
says Franklin. And he's right. The $100 million he and
his team have raised through reverse merger offerings show that clearly.
"On the larger issue, Franklin continues, it's a
question of character, not technique. "Reverse mergers are simply a tool, just like
IPO's, private placements and junk bonds. Whether or not a reverse merger is a good
decision depends largely on the character and acumen of the people putting it
together."
Consider this scenario, describes Franklin. "Your
company has spent months courting Wall Street, then several more months hammering out the
details of a public offering. When it's time for the deal to go through, you suddenly find
that your underwriting agreement was not really binding at all, and due to prevailing
market conditions, there won't be any offering--or any proceeds. What there will be, are
legal, auditing and printing bills of $200,000."
Getting an underwriter to say it will take you public can
be a hollow promise unless there's broad-based support within the financial community.
What it comes down to: getting commitments is easy, getting the necessary support to turn
the commitments into capital is another story. This very pit fall, he asserts, is what
makes reverse mergers such an attractive way to raise capital.
Jim Franklin and his team of experienced,
successful entrepreneurs are assisting Companies through the pre and post IPO periods.
"Our staff has helped over 600 businesses and entrepreneurs get venture financing,
and provides on-going technical assistance to them."
Our
Commitment
Searching for that
"diamond in the rough"
Goipo.com, Inc. Mission
Goipo.com, Inc. will review numerous
business plans and executive summaries, interview CEO's and Presidents of emerging growth
companies and do its own "due diligence" prior to making any verbal or financial
commitment to a corporate candidate. Companies must exhibit all the traits necessary for
success as well as be in an industry, which is considered "hot" by Wall Street
standards.
Goipo.com was founded eleven years ago by Jim
Franklin. He estimates that there are 30,000 public companies and 25,000 worthy candidates
for going public in the United States. "We have made it our mission to gain in depth
knowledge of the industry the client company is in, to help navigate a steady course"
says Franklin.
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