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We have developed the following process model:

Going into 2014, there is a need for an aggressive plan to meet the capital needs of the small investment community today and into the future. Many cannot compete in the financial marketplace as it currently exists. An approach that will offer the best of the crowd-funding process is a full registration. If launched today, a first test Company could be ready for later 3rd quarter of 2014 for the first streamlined public offering and placement of the securities directly to the investment community.

A Principal Partner and Two (2) sponsoring partners with $250,000 would be required, each to initiate the filing of an S-1 registration (IPO) of a Special Purpose Vehicle (SPV) and the marketing required to sell the securities. The sponsor would receive a fully-secured position in the transaction in the form of Convertible Preferred Stock to secure the initial investment. Projected conversion value upon a successful offering is $1,000,000! If the placement of securities is unsuccessful, the Principal Partner would sell the public company to recover the initial investment of the sponsoring partners. Qualified sponsoring partners will also participate in the management of the SPV.

The Public Company

This model assumes that there are 2 or more like-minded participants (Companies or individuals) with aligned financial goals. As a qualifier, this is not a reverse-acquisition model or short cut to becoming publicly traded; but rather, it represents the planning and execution of a transaction that will result in a public company through the registration process. The resulting company will be a business with business operations and a strategy to build fundamentals, which is the general background within which an economy operates including earnings, sales, wage rates, taxes, and inflation. Improving business fundamentals are generally viewed as bullish for stocks, although stock prices at any given point already include some of the expected improvement of the business fundamentals.

A likely Model

The Company would be organized as a holding company having two or more participating private companies that will file a new registration statement. The document filed with the SEC explaining a new offering of securities for public trade. The registration statement must contain a complete description of the security and the terms of the sales. It must also include applicable information about the issuer's financial situation and applicable risk factors. This is done to protect investors from fraud the aligned goals of the participants will be some personal liquidity possible staged exit plan as well as fresh capital to grow the companies organically as well as an external acquisition strategy.

Why a Registration?

With today’s mercurial economic conditions, the goals have changed as to how the aging baby boomers can transition their private companies at a justifiable value. This model allows for the completion of a publicly traded company with transparency in which many little investors can participate. When based on business and financial fundamentals, a public company is valued differently from a private firm and in most cases will command a value greater than a private firm. It should be noted that it costs considerably more to be public than to be private, and without certain economies of scale, the cost would not be justifiable.

Many believe that being a legitimate public company is reserved for big companies that are raising huge sums of money, but that is just not so! Smaller companies can be very successful as public companies and raise smaller sums of money as long as management understands why they are public, and also understands that there is no substitute for transparency and profitability.

If you assume, for discussion purposes, that the business resulting from the participants is a well-run profitable business and can bear the added cost of being public, you can develop a very successful public company with years of growth potential.

We can further discuss the capital needs to complete a successful transaction with a Company in becoming part of the SPV post registration. Several key points to discuss would be as follows;

  • Pre-money valuation
  • Post-money valuation
  • Initial capital to selling stakeholders
  • Balance and term payout to selling stakeholders
  • Capital required for working capital
  • Capital for a key acquisition of equal size or larger
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