Withrow Financial, INC.

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MINI IPO'S On April 5, 2012, President Obama signed a landmark piece of bi-partisan legislation called The JOBS Act into law. The JOBS Act greatly expanded entrepreneurs’ access to capital, allowing them to go to the crowd and publicly advertise their capital raises. Initially, private companies could only crowdfund from accredited investors, the wealthiest 2% of Americans. On June 19, 2015, three years after the JOBS Act was initially signed into law, Title IV (Regulation A+...) of the JOBS Act went into effect. For the first time, Title IV allows private growth-stage companies to raise money from any and all Americans. Reg A+ allows companies to raise a large sum of capital from a large pool of investors. By raising small amounts from many investors, a company can spread out ownership more broadly. Oftentimes, institutional investors require a certain level of control alongside their investments which can even result in a CEO getting kicked out of their own company. In a typical Reg A+ offering, a company will not need to cede board seats or agree to other potentially adverse mechanisms that are typical when raising venture capital or private equity. Reg A+ , like an IPO, allows companies to offer shares to the general public and not just accredited investors. Companies looking to raise capital via Reg A+ first need to file with the SEC and get approval before launching a mini-IPO, however, the fees associated with a Reg A+ offering are much lower than a traditional IPO and the ongoing disclosure requirements are much less burdensome, effectively making a Reg A+ offering a mini-IPO. Mini-IPOs are about more than just raising capital. In addition to fund raising, Reg A+ offerings are managed and promoted like a significant product launch. When executed correctly, a Regulation A mini-IPO can also be a robust investment opportunity, just as with a typical product launch.

There are literally thousands of penny stocks that are publicly traded. It isn’t uncommon for some of those stocks to become abandoned by their control people for a variety of different reasons. When a publicly traded company gets abandoned it doesn’t just stop publicly trading. The abandoned shell will continue to trade until the day that the SEC files an administrative order to revoke the Issuers registration (for SEC filers) or until FINRA deletes the symbol (for non-SEC f...Continue reading

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