How To IPO To The NASDAQ Using Reg A+ And Post Offering Liquidity Briefing; Interactive Clickable Video

Use the Chapters list below to select the part of the video you want to watch.

Chapters:

1. Disclaimers
2. Rod's background
3. What is Reg A+? - Reg A+ investors
4. Why use Reg A+ to conduct an IPO
5. Reg A+ IPO Timeline Schedule
6. How to deal with underwriters
7. Costs and Marketing
8. Reg A+ IPOs to date
9. Post Reg A+ liquidity
10. Mistakes to avoid
11. Q&A - Advantages of Reg A+ over Reg D
12. Q&A - Which is the best exchange to list on?
13. Q&A - Reg A+ IPO vs Buying a public shell and raising money as a public company
14. Q&A - Can I raise money with Reg D and Reg A+ simultaneously?
15. Q&A - Direct listings
16. Q&A - List of companies that have utilized Reg A+
17. Q&A - Is it possible to do multiple Reg A+ offerings simultaneously?
18. Q&A - How many companies does the SEC qualify per year?
19. Q&A - What is an appropriate minimum investment amount for an offering?

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Rod Turner

Rod Turner is the founder and CEO of Manhattan Street Capital, the #1 Growth Capital service for mature startups and mid-sized companies to raise capital using Regulation A+. Turner has played a key role in building successful companies including Symantec/Norton (SYMC), Ashton Tate, MicroPort, Knowledge Adventure, and more. He is an experienced investor who has built a Venture Capital business (Irvine Ventures) and has made angel and mezzanine investments in companies such as Bloom, Amyris (AMRS), Ask Jeeves, and eASIC.

[email protected]

www.ManhattanStreetCapital.com

Manhattan Street Capital, 5694 Mission Center Rd, Suite 602-468, San Diego, CA 92108.

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First, before I get into my bio and what Manhattan Street Capital does briefly, I'll give you a legal disclaimer. I am not, and my company is not an underwriter or a broker-dealer, and I'm not a valuation professional or an attorney. So, I'm talking about a lot of things in the Reg A+ process, which is a very regulated space, but I'm talking about them in ways to help you guys, not pretending to be anything that I am not. In addition to this, I'd like you to read the disclaimer, which we posted in the chat. It's important that you read that because I don't want to mislead anyone in any way, shape, or form. Okay. Now I'll go on to who the heck am I? My name is Rod Turner.

I'm the founder and CEO of Manhattan Street Capital. In terms of background that's relevant, I come from a tech background. I started out as an engineer. I moved into startup companies at the age of 24. I've done six prior successful startup companies with liquid outcomes, two of which we took to the NASDAQ. One of them was Ashton Tate (for those of you who are my vintage and might remember it, dBase II). The second one was Symantec, the Norton antivirus company, which more of you may recognize. Inside Symantec, I drove the largest mergers and acquisitions. My team introduced the Norton antivirus and made it the market-leading antivirus of that ilk at that time. I've did numerous mergers and acquisitions, and I've also been on the receiving end of having my companies acquired.

I formed a venture capital firm called Irvine Ventures with a good friend of mine Safi Qureshey, from AST Computers, in the late nineties. I've done a lot of angel investing and have raised money from numerous blue-chip venture capital firms in one or other form of companies that I worked with; so, I have a lot of relevant experience. Then I got into Reg A+, courtesy of launching Manhattan Street Capital. I launched the company in April of 2015, just before Reg A+ went live. We were the first dedicated Reg A+ funding platform when we went live in May, just before Reg A+ went effective at the end of June 2015. So, we've been at this for a little bit more than five years. We were initially called FundAthena because I wanted to focus on the fact that women can't get capital, which was nice, but a bad idea because there weren't enough companies that were aware of Reg A+ at all. So, narrowing it down to a subset of a tiny, tiny market was not working. So, we pivoted and changed the name to Manhattan Street Capital in October of 2015, and since then, that's been our brand name. I'll shut up about the company in a minute. We do two things: we are a platform for fundraising of Reg D but mostly Reg A+ offerings, and we are a consulting project management company/advisory company and we're selective. We help the companies that we work with in a very proactive manner by bringing in all the right service providers and helping advise them as to what to do, how to do it, front-end loaded throughout the whole journey, through to the back-end and to completion.

Okay, enough about me. I will now restate the agenda real briefly, and then I'll get into presenting. I'm going to touch on what Reg A+ is - the advantages of it over a traditional IPO; talk about the schedule. We'll get into underwriter involvement, marketing and costs, and ongoing costs; the size of raising; the IPOs to date - how they've done and what we've learned from them; post-offering liquidity to companies that don't want to do an IPO; mistakes to avoid and questions and answers. That's the agenda for today. Hopefully, this is the correct webinar and you're in the right place. We are not going to be discussing the weather in the UK, even though I obviously come from the UK; or blue clothing might be interesting to a microscopic audience, but not what you'll hear about today, even though I'm wearing blue clothing. So, what is Reg A+? It is a public offering by the sec, determination, not an initial public offering, fewer units. Anyone could invest anywhere in the world, except those few problem countries. The investors are deemed liquid by the sec is long. That's a different thing than having a trading place, which we'll get into later, but they are considered liquid securities by the sec.

In any way, I could invest regardless of wealth level, if they are accredited, they're not limited in any way, how much they invest. If they are not accredited, they are limited to 10% of their net worth or their annual income and they self-state, we don't have to prove that they don't have to prove that tier two is the way to go. But if you do a tier two, then you have to start off with, an audit that covers the last two years. If your company is that long, or if your company existed four weeks, then you have us gap level audit for four weeks, which is obviously less expensive to produce.

Well, that vast in Regulation A+ online are generally optimists. It's quite different than a credited investor. We do. We do get some accredited investors, mostly in real estate transactions. Um, we have two sweet spots though at cited real estate. One is what I said, optimist. And I'll get into that more in a moment. And the other is people that are almost accredited. If we see someone investing 30 K in a Regulation A+ they're almost always someone who's wealthy, almost an accredited investor, but not quite there a sweet spot. That means a weak spot though, for Regulation A+ in general terms and not, not so much in real estate, the investor mix is more normal, more representative of a broad array, but in normally at a state, all four names, most of the investors are mainstream folks, regular people that aren't accredited, not close that have disposable income.

Um, they they're doing and they're investing because perhaps they need a decent dividend return on that. So hard to find some of our offerings are doing that, or because they buy ownership in a company, they believe is going to make them a millionaire. Even though we get out and say that they are looking at a company and believing strongly that it's going to make them a fortune over time, or they're doing it because they want the company to do what it does. They're voting with their feet to support it, to make it succeed. A biotech company, doing an Alzheimer's treatment, the cancer treatment, if it's the right cancer, particularly things of that nature make biotech a really wonderful fit in many ways, in many cases for Regulation A+. So, if they care about it, that's enough. In many cases, if it's serious enough need pain treatments, we did a biotech offering where they raised money at the least expensive.

We've done so far where they were spending $3 and 30 cents per $100 raised by social media advertising, which is a thing of beauty because it's a non-addictive pain painkiller that non-addictive non-opioid painkillers, satisfying a really serious need that many people are fully aware of. And they want to support that. And it's a good investment in many people's eyes. I've got to be careful what I say, because I'm not allowed to, as a non-broker, I'm not allowed to promote the companies themselves by offering is behind us. It was a great success. Okay? So, these folks are optimists to give you an idea. 60% of the money coming in these days on our platform is from people investing by the smartphone and out of a hundred people who will invest in a Regulation A+ process over time. One or two of them will invest on that first visit, you know, and that's happening. They're optimistic group, right? You have to be very careful to make sure that they're fully informed and not assuming too much, too much good stuff. There you go. I touched on the reasons they invest as well. Okay. So why I'll get into costs and things later, I didn't cover those just now in the Regulation A+ prospect, but we'll get to them. Um, so then why use a Regulation A+ offering prior to doing an IPO? These, you know, what's the reason for it? So, these are the primary reasons.

If you are in the case where a company can make an S one IPO or Regulation A+ IPO because it's strong enough to make the choice, then these are the advantages through the Regulation A+ you'll get lots and lots of investors. So, you'll have genuine liquidity. When you list January, liquidity is very valuable to help maintain the share price. And it's what the markets want. It's very beneficial to you as a listed company. If you do a Regulation A+ method, then you're paying much less money for your audit and much less money for the legal filing fees. The position is not yet an IPO. This is a Regulation A+. So, your fees are far lower, especially for companies that have a long history of the two years of audit could be expensive. You'd rather not do that with a PCA or be audit right now.

It's going to cost a lot more money. You do a us gap level audit for the Regulation A+, and that's sufficient to go public with, right? And then you get subsequent tube listing. You add in the PCA OB audit for the next guy for the next quarter. And you don't need to go get an inexpensive attorney to list because you already did that via Regulation A+. So those are significant reasons. Another very significant reason is that sometimes people do and that's why an IPO and they can't raise quite enough money for this. Maybe they go to raise 12 million to list and they reach 10 or nine. And for one reason or another, the underwriter and the company shut it down. And guess what guess how much money they raised? Zero the big zero, spend an awful lot of money on those expenses, filing the [inaudible], et cetera, et cetera, broker-dealer, underwriter fees, et cetera, et cetera, and non-refundable, and have no positive money in the bank at all.

Not a fun place and the egg on the face. Right? So, a Regulation A+, however, if it had the same addict on with the same intensity, we would be raising money online and the Regulation A+ beforehand. So, and you would be able to close that money as you go. You would not have to give it all up and give it back. So, you actually do a capital raise and it's not a complete waste of money. It's a good deal. He didn't list, okay, you got options. We can come back later. We can list on a lower market, but at least raise the damn money, right? So that's a significant advantage. Part of me swearing, I'm British. And if I let myself go, I'll be swearing. And, uh, you know, you guys would either enjoy it or hate it. So, I got to be careful with that.

In terms, there are another set of reasons why companies use Regulation A+ to YPO. We are working with some companies right now in this situation where they're not quite strong enough to do an IPO right now. They aren't. But if we raise $14 million in a Regulation A+, then there'll be fraud enough. We'll get the undivided support that we need to list them. The fact of the matter is that the underwriting and the underwriters as a space underwriter, I've been going through a very nice period of time where they can very easily conduct offerings, and they're getting picky and they're getting demanding. And so, a good company, you can go to the right underwriters and be told. Yeah, good. Okay. So, I get the first 8 million in, and then we can go, you know, nobody can go with this and others might be approaching the wrong man.

The writer and gets all gay. Yeah. Paid 45 K commit to these commissions. And then nothing happens because it's not really a strong enough company. I'm not saying that many on that would do that. We have a service where we find the right underwriters for you. Uh, and obviously we know who they are. But my point is, there are companies that are really interesting, that are quite interesting enough to get the undivided support, to do an asphalt IPO. We build the momentum and awareness and especially then come out of money in the bank on the numerical investor can buy the Regulation A+ go back to those same underwriters further in the journey. Oh yeah. Now it's a lot easier story, right? That it's already a successful offering. It's already a successful raise. If it has the right characteristics. Now we can, they become public and be very pleased that we did it.

So that sequence of events is one where, you know, we have three companies working with us right now with that kind of plan in mind. I'm not signed up yet. I should say we'll find out yet. My phone still ringing in my ear, which is okay either. You won't hear. Okay. So, I'm, by the way, as we go along here, you're welcome to write questions in that. I'll do my best to answer at the end. Alright. I balance. Yeah. We'll get into the questions and answers at the end. Otherwise, I'll lose my flow and God knows what would happen. You know, I could be getting, going outside and jumping on a kayak or something, which would be of no use to anybody. Okay. So, for that, for the companies that aren't basically appealing enough to do any kind of IPO right next to the NASDAQ, then this is a very good way to go.

We can change the nature of the beast, where they can actually list, right. So that's a good way to go. And it's very appropriate when it is appropriate. Um, okay. Check my notes here. Yeah. I think the company gets more attractive as it goes, basically one more advantage to doing a Regulation A+ on route to an IPO that applies to both companies that don't have to do it via Regulation A+ POS. And those that do is that we're building brand ambassadors, slide. Everyone that becomes a part of the company is going, is going to be because they like it and they wouldn't be vested. Otherwise, they got to be out there talking the talk and telling their buddies about it is, which is a good thing for sales. And if it's something that's obviously potentially very good, depending on the nature of the product from the company, okay.

Now we move on to the next segment I get plus IPO schedule. So essentially there are two schedules, right? For companies that could do it anyway and have a large, particularly if they have a large fan base or a large customer list back then in that particular case, we can do what we did with Okamoto, right? Akimoto had a WR Hambrecht as their underwriter and us as their plant, a funding platform, and a large audience of enthusiasm in social media that they had built over time for their three-Wheeler electric car. So, they were able to do pretty nifty stuff very quickly, unusually quickly. They raised $4 billion online from retail investors, uh, you know, an average investment amount of about $2,000 in their Regulation A+ with us. And they raised 15 and a half million with the handbrake on the rider, doing the normal thing for an IPO.

And then they listed and they've actually their stock price. Hasn't done great, but it's, it's naturally starting to recover because they were a long way away from having a car to produce them. It's tough being out there, flapping in the breeze without too many major news announcements about how many calls you just sold, et cetera, et cetera. But the point is with a large fan base, you could raise $4 million online in a Regulation A+, which is exactly what we did with them. But in a more general case where there isn't a fan base that even in that case, if the company chooses to take if the company is strong enough to do their own IPO, but they choose to raise money on if they're strong enough to do an [inaudible] IPO. Uh, but they choose to do a Regulation A+ IPO for the reasons I act lined, but they don't have a large fan base that we're not really going to raise $4 million in four weeks online because you just can't get the marketing that the advertising working efficiently cost-efficiently that fast.

It just doesn't happen. You could spend megabucks any efficiently and raise a lot of money, but not 4 million in four weeks. Okay. So, in that, in that more realistic scenario, then let's say that the company needs to raise $8 million online, um, to fit with the expectations that they've already negotiated with, or we've helped them negotiate with the underwriter. In that case, then we get the 8 million as fast as we can, was retaining efficiency in the process, right? So that 8 million might take three months to raise. It might take four months to write something of that ilk is, is, is, is reasonable. And then they go the underwater. We, you know, we're in constant communication anyway, and they do their bit, which takes two and half weeks, an hour list, right? The way it works in a Regulation A+ IPO is post listing. There was a series of filings that upgrade the company, the four West one level, but they're easy filings.

And the Regulation A+ attorney that got you into the deal in the first place that we brought you to can do that all of that work, right? And it isn't heinously expensive. And then you do have to get a PCA or the audit for the first quarter, subsequent to listing as you would expect. But, but nothing now you're public. Now you're listed. Now the issue, of course, is having a series of good news announcements to protect your sheriff price from naked shorting, which stockbrokers are allowed to do with gay abandon. So, it's not just the doctor do an offering and be a successful company. You have to have conservative financial management in place. So, you manage your expense level and serious reserve making which a great CFO will do. And I could train your people on this cause I've have done this stuff. If needed, it's a cultural thing, right?

To be ready, to do two lists and to be ready to perform where your company stock price does. Well afterward, there's a heck of a lot of conservatism. Predictability managed predictability by the CFO, manage communication to the audiences and, um, news announcements, good news and announcements because when the broker-dealers slash stockbrokers, there are looking for companies to put a naked short arm because they can to make a bloody fault, excuse me, to make a fortune at your expense. If you make this, if you make a series of regular announcements that are newsworthy and genuinely strong enough to bolster interest in the store and in the company, they're going to go somewhere else, right? Not every company has that ability because of the facts. So, bear that in mind when you're thinking about it, if you want to list, because if you are naked and flapping in the breeze and no news announcements coming for two years, the likelihood is your stock will go down and down and down until it's a penny stock or some horrific thing about it.

And then you'll be wondering, was it a good idea to do this? Okay, that's a whole, whole story onto itself, which I'm happy to train you guys on. If you're doing that path, we did it right. That we did it wrong on my first IPO, I was VP of sales for that one. And the CEO is a great guy, a real entrepreneur, but he shot from the hip. He gave it, he gave the analyst community numbers that were higher than are in journal plans. Things of that really made it made life very difficult. I was running sales. So, I had to live up to the standards that weren't part of a fine, but a Symantec. We did write the first, the first 16 quarters post listing, we delivered better than our public expectations. We beat the market expectations, 16 quarters. So, our stock did wonderfully lots of institutional investment.

We were a darling of wall street, right? That's not casual. That's not random. It has to be worked on it's a serious effort. Okay. So then evidently it should be evident that, uh, if we're doing a raise for a company that isn't quite attractive enough to get underwrite support, to do a NASDAQ listing, then we raised the money and we raised the money over time, or we bought it. We do it right. You could raise typically 12 million, 14 million is enough to list on the NASDAQ can be last depending on the shareholder mix, nine market value and so forth and so on. But we didn't, we can do that and expect it to take some time. And frankly, the smart way then is that when we're attractive, then I go to bat on your behalf, assuming you're working with me to solicit interest from the right broken underwriters.

And we pulled together with, obviously I pulled together a pitch with you guys. We pulled together a pitch. That's a good put pitch on the company. I approach the underwriters, we get their response. And if it's positive, which will be because we do it at the right time, in the right way. At that point, then you and we negotiate a deal and that's going to cost 40 K 45 K upfront, typically to the underwriter, to the lead underwriter and 8% commissions, eight and a half percent commissions plus warrants have the same face value to get them on board. But you only do that at the end. You don't do that prior to you do it when we are ready, right? They'll want some payment on the money that's raised on the platform after they're involved. You don't want to be paying them that money prior to and now is when we're attractive. So that's the sequence of events that makes sense onshore might take nine months to get to the point where we're compellingly, obviously ready out of the 12 months that you're allowed to raise money in the Regulation A+ and then go do it right beyond the rightly underwritten part isn't as straight forward. And it takes two and a half weeks to raise the money that's there, but it's very fast. It's straightforward.

Okay. Just checking to see I've covered the things I wanted to cover here.

Yeah. There are other things we'll get into, but what they're going to be coming up automatically here, underwriters, how do we deal with underwriters? I just gave you a preview right there. So I can't look at the questions I got to do that later and I'm happy to then I will. Um, I kind of answer every question if there's too many all answer the most, the ones that I can add the most value to if there's too many. So how are we doing on time? Are we doing okay? So, um, there are, we know who the underwriters are that like Regulation A+, and that is good to work with so that part's not a problem. And we can go with that. Let's say that it's, it's the right time for you to find out if we can put together an IPO with those underwires or not.

So, then I help you. As I said earlier, put together a presentation, that's going to fly. And then I go to bat and engaging with those folks. We get phone calls set up and moved the ball forward. And then I helped me negotiate a fair deal with those underwriters. And you know, it's typically going to be a two or three lead to a lead underwriter until two more to make three as the leading group that will pull, pull together to syndicate, that will raise the money. And of course, it has to be money left to raise otherwise, why the hell would we do this? I mean, for them, for them, they're not interested in a, a, an art that I'm interested in, unless they can make money. You do have the option to do a direct listing, which nobody's done yet borrowing a Regulation A+ process. I'm looking forward to doing the first of those. And then more, you can take that approach. So that's an option too, where you do 't use an underwriter because we meet all of the necessary requirements for listing without one, that's a very doable thing, but it hasn't been done yet.

I already touched on the costs, how it works. They build a syndicate. The syndicate is essentially the commission that is paid to the lead underwriters. The group of three typically is a central. So, and they will assemble a syndicate that get paid five or 6% out of that. And the remainder goes to them, right? So, they'll do their own work with their own clientele. And there'll be bringing together a syndicate of broker dealers under them who will be, who will be my son wants my attention, which is not cool and who will be, um, so the sub some theaters, if you will, the syndicate members, are we making enough money to make it worth their while? And that's why the 8% has to be that scale. Otherwise, it isn't, there wasn't enough money to go. Right. Okay. Okay.

We will be sending out a recording of this webinar because we're recording it sometimes are screwed up and not recorded it, but we have recorded this one according to this one. So, there'll be a recording. You'll be able to access with a clickable index. So, you can skip the boring bits and go to the bits you care about. It will be posted on our blog post when it's done. It'll be done within a week, less than a week from today. Okay. Now marketing and costs, marketing and marketing costs and cost in general. So primarily marketing, there's an exception. The exception is you got a large fan base, or you got a large customer base that love you. Ben marketing is inexpensive and it's all focused on making a compelling offering page, designing marvelous email messages to go to that list and raising money from them.

Or if it's social media designing the right communication to bring them in, you can raise all the money that way for virtually free, except for the preparation costs in that lovely scenario. One company that I'm aware of did just that this company, vid angel raised $10 million. Their maximum in 12 days, lie to investors. They did have a break of about 10 days because they were, they had a problem with, they had to deal with the problems they said to solve that problem. And then they re then they went live again, but they raised that money by simply emailing their 30,000 happiest customers. That's all they did no advertising it, get expensive, any significance, few social media, organic posts, beautiful offering page and a well-pitched message. $10 million in 12 days live is a record to my knowledge and more power to them. The more companies we see like that they'll be there super, super easy to do.

Of course, in the normal mode where we don't have enough of a customer base or a fan base, the issue or the company does not that we need to build it from scratch, right? So of course, if you're working with us, then we will be emailing our member base and telling them how marvelous it is, et cetera. And the ways that we're allowed to do that and sharing in all social media, we've got about 150,000-person social media fan base, but you're really going to raise the majority of the money from reach out advertising and social media drawing in investors. And it's all about targeting tuning, testing, and adjusting. And of course, upfront making sure that what is being sold to these investors is a, excuse me, is appealing. So, one of the, our primary role at the beginning of discussions with companies is to figure out what the company does.

You know, obviously it has to be a great company and all those obvious things, but how are we going to make this appealing to the investors? What is it, you know, what should it be? What should the offering be? So, we can't tell our clients what they should be. We can tell them what will work. We can tell them what, what, what will have appeal to the audiences that we market to. So, we do that. So, by helping in that manner, then you're doing an offering you should do. Cause I don't want you to do it at all. If it's going to fail and your, uh, the messaging and targeting and so forth starts off because we've thought about this, a great deal, right? With, with, uh, appropriate, appropriate test messages, test advertising, past test targeting. And in month one, literally you'll be spending $10,000 on advertising, just the advertising part.

And so far, in every case, we've raised three to five times that much money in the first month, which is heinously inefficient, but not bad for the first month when we know we don't know what we're doing, right? So that's the way it works logistically. And cost-wise for the marketing, by the way, since COVID hit. And, you know, since this, when it went on, when it was the stock market falling apart, period then cost went up 25%. But after that, they recovered and now our company's cost of advertising to bring in investors is 10% lower than before. Just so you're aware of what I go. So, I don't forget to tell you that. So, month two is better than month one, right? And if we're lucky, it's really a lot better. If we're not, then it's better. You know, and I'm, I'm recommending you. The agency is recommending.

We bring in the agency, we manage the enjoyment with you. They're recommending that we're recommending that you double, maybe you double spend, will treble the spend in month two, depending on the efficiency we reached at the exit point from month one, right? This stuff's adjustable at the drop of a hat day by day, the spend level on social media. So that's the nature of the beast. And we're constantly, uh, looking for higher and higher efficiency. And then as we get to the point that the acceptable efficiencies reached, then we encourage you to spend a lot more money and raise more money fast. But you know, that won't happen in the first two months. It takes a lot of testing and duty and adjusting as the offering is continuing. We're assembling a list of people that gave us their email to see the investment page. You like it.

I forgot something. I was going to mention earlier, 60% of these investors invest via smartphone. Did I say that anyway? Now I've said it twice, or I've said it once. Either one is enough. So, um, it's a bill, right? We're building a list of email people, email recipients. We build a relationship to them. We constantly, we regularly email them probably three times a week with interesting messaging updates about the company. If there's a share price change, we're emailing them about that. You name it. Um, we are building an ever-bigger list, which makes the cost of marketing gradually lower people who put in a test investment early, come back and put it in a bigger one later. Then they come back in from their managed IRA and put it in a much bigger one that sort of sequence of events occurs. Okay. So marketing, advertising expense.

We want to drive it as low as we possibly can, but you should assume there's another factor, which is once it starts to really work well and the efficiency is good. And then when you step up the spend, the cost per investor goes up because the channels we use primarily Facebook, Instagram, they know they're doing well. We stepped up the spend to mega bucks. So, they Jack up the price, right? The efficiency drops off song for that. So being impatient is expensive, managing that and doing some things to try and gain their system, to give us the better rates again, which we do helps. But the cost of raise, you should expect marketing. When it's all said and done to be the lowest, we've done is $3 and 30 cents 3.3% right on, on one. That's our lowest, but I wouldn't have you expecting that. I think you should expect 6%, 7%, maybe, maybe little we'll do our best to keep bringing back that.

But that's the likely process. It's the single biggest expense in your Regulation A+ offering with us because we're not a broker dealer. We don't charge a commission and all fees are very modest. Okay. So, I'm inadvertently or deliberately selling you on my company, which isn't the whole reason we're here. Is it guys, but, um, let's see cost, okay. Not going over to cost costs the rest of them to be the least expensive, assuming that you don't have a large captive audience to go to, let's assume that the least expensive way to reach the point that the offering is qualified by the sec. And it's ready to go live. And we're raising money is about $150,000. And that assumes as simple as, okay, we can get it a little lower if we go looking for a less expensive attorney, but that includes everything 150 K that's the least it could be.

There are lots of things we can do to raise it that I don't recommend, but you know, you should assume that's the least expensive and have more money on hand just in case. And that assumes some prudent moves on your part, which I'll get into later, you know, mistakes to avoid. Then after that's happening, we're raising money. We'll be cashflow positive from the res relatively soon, relatively quickly as we move forward. When the offering is structured properly, such that you have a minimum raise and you don't have a hat, have an escrow with any amount of money that you need to close first. And when you, because we're coaching you and the attorney is approaching you. When you write the offering document in such a way that you can use the proceeds to spend on the offering expenses. So, in that context, then cashflow wise, it was the upfront money unless we get really unlucky and a terrible investment returns for the first few months, in which cases there are other expenses, but it's not going to be terribly expensive, but they do exist.

So, I gave you the upfront cost. That's it? I reckon if you're doing a $12 million raise that my guidance to you is that the cash cost is going to be about 12% plus warms, not very many warrants or more warrants, depending on the degree of broker dealer involvement. There are seven problems States that that require either you and the securities attorney with our coaching to go to those States, to get permission, to raise money in them really, it's just Florida and Texas that matter. And you can do that with a securities attorney, but frankly, Florida is really, really slow and there's risk. You know, you could enter on that. You could, by doing it in this manner, you don't need a broker dealer charging any fees on the offering. Um, so that will get you tax to us. It might or might not get you Florida in a timely manner.

The alternative is to sign up, uh, the broker DDA, we recommend the charges 1% and upfront fee of the list is the list upfront fees, 25 K, but that can sometimes be negotiated lower. And there's an AK FINRA fee. That's an example of something you don't need instantly when we just went live, because we're only spending tiny amounts of money. You can add it a bit later when there's been some positive cash flow on the raise. So, you avoid adding the cost, the upfront cost of the broker, and you want to avoid paying 1% when you don't need it yet. Right? We have a way within our websites, capture those people from the problem States and register who they are. And you can go back to them to raise the money. Then when, when the solution is in place or whichever means it's made. Okay.

So that covered that covered the cost in a reasonable manner. Minimum raise should be zero and that's, you're buying an asset. And that's the reason for the raise. That's horrible because you've got to fund all of the offering expenses out of your pocket or somebody else's pocket until you hit the minimum. It's horrible. So, try and avoid that maximum raise is 50 mil today. It's possible. The sec would raise it to 75. I think they may do that, but we won't know until we know, um, could do bills enough to do a lot of good. I've got to, I'll get back to that topic in a bit. I'm looking at the Regulation A+ IPOs to date. Um, I haven't got details on all of them and I didn't dwell on the failed ones. You know, there are some that have failed, but then that's true.

That's one IPO. The company's too, right. I haven't got a study of the IPO companies that went out at the same time. And how many of those have want to say fail? You know, had this stock price go down a lot. Um, so I'm going to talk about the better ones. Cause I don't want to spend too long and subject chicken soup for the soul. Went out at, uh, at $12 a share. They're now up to $14 a share. I have some ownership. I was in chairs and chicken soup for the soul. And shouldn't disclose that, um, Akimoto went out. I think they listed, I don't remember the list price now, frankly, they went down, they went down quite a lot of they've been recovering. So maybe they went out at $10 a share. That's kind of what my memory tells me. When I looked on my app on my phone, I couldn't get quickly get up the, the listing price.

And I didn't remember it. It didn't make the time to get it from my own documentation anyway. So, I think they went out at 10. They'd been down a lot and they'd come back up because they're getting real, they're shipping. Cause it's not your stuff to announce, right? It's a lot easier life when you bought material revenues coming in and so forth. It's a neat, neat company that I need. Um, so those are the two ones that are like most fat brands that I'm sorry, fat was good. They had very tough offering. They ended up, uh, yeah, they only listed on the OTC because they're offering fail, which that they didn't work with us. I could have predicted it because the nature of the offering and the marketing was very weak. Even though they spent a lot of money on it, right. We were not involved.

And I had no way. I interviewed the CEO for my fourth column on his company, but he was, you know, he wasn't, it wasn't able to do anything. He wasn't a decision maker on that. All for me, he was the, you know, it was being handled by others. So, I couldn't help them and they weren't listening anyway. So, it, it, it, they didn't make, make enough money. And they raised the list on an Einstein, the listed on the OTC, they're doing better now. They raised more money than market cap, 54 million, you know, that's not a big, so that was a challenging one. Okay. So, I want to move on. That has been 11 altogether. There's been a while since we had a Regulation A+, because one company poisoned the well by misleading the sec and the sec, shut them down. Uh, the motive them to the OTC accused the insiders of inside the trading and that put reg red faces on everyone, uh, especially on Regulation A+.

I wish they'd done what they did is an [inaudible]. In which case it wouldn't have put a black Mark on Regulation A+ YPO is as it did, but we just might company have enough companies that want to do Regulation A+ processes. I know there'll be some neat, neat new Regulation A+ process coming soon. So that's good. I want it to be getting them going again, the momentum where we build. Okay. But I got it when not to list. I just want to touch on that because I know there's a lot of companies I recommend do not list on the OTC, do not list on the NASDAQ because of the vulnerability to naked shorting. And because the company doesn't have enough news events or the internal culture established or strong enough CFO to set the expectations conservatively and then beat them, right. It's seriously difficult to do that.

It's a lot of work and it does take revenues and profits as well as, you know, intelligently done reserves and a lot of very careful communication to the investment community, which is seriously difficult to do for a lot of companies that are early stage. They don't have enough going on yet. Right? So, it's asking, asking for trouble to go out, unless on any exchange when you don't have enough substance or a culture and readiness and resources, enough resources internally dedicated to supporting the, the engine. That is the public markets that requires a lot of attention. Okay. That's so don't take it lightly. This business. I can't believe the sec allows brokers to put naked shorts on stops in private investors. Can't right. You have to have borrow, but brokers can do that all day long. They do crucify companies. That's why there are so many Brooks, not the only reason, but it's one of the main reasons. There are so many broken public companies there with penny stocks and worse. Right. Okay. Excuse me a lot. I go to the next page.

Good or bad on schedule post brigade plus liquidity. Um, obviously you can list on the OTC markets, even all the pink sheets and you can list on the NASDAQ. Um, but you heard what I just said. Right? So, you know, don't but yeah, I'll, I'll stick to my sequence because I know I've got that coming up later. The good thing here is that it's been nutrient for a long time, that there will be aftermarket places to list your, uh, securities for regular pass offerings. They are actually coming out real life. Later this year, September, October, there will be actual Regulation A+. Second, every market where no naked shorting, it's just buying and sellers, buyers, and sellers. That's all it is. And uh, the one I liked the best, they require these things, at least 2000 investors and you know, any sizable, medium and up Regulation A+ offering when I've moved in two times and investors very easily and monthly management financials, not audit, but management financials reported monthly. And initially they're not going to charge a listing fee, but they'll get they'll, they'll charge one once they've done it for a while and book momentum. So that's it.

Because what have you got? You brought actual liquidity for your investors on a limited scale. And depending on how good the marketing you're doing on an ongoing basis is, but not depending on, uh, not worried about naked shorting, you can support the enthusiasm in the market. So, there'll be enough buyers for your sellers. And that's a lovely thing, right? So, keep marketing, keep promoting the company. If you're going to do more Regulation A+, that's automatically going to support the bio market in the aftermarket, right. Something which you may not be aware of is that once you've completed the Regulation A+ even if you don't list, this is where it's more surprising. If you don't list every security owner in the company becomes liquid, uh, as a result of the Regulation A+. So after the first six weeks, monthly management financials, this is a non-listed Regulation A+, right? So once a year gap, hold it. After you've finished your race and jewelry and six-monthly management financials. This is not a big old verse. So, let's say you just, you, you just completed the, the, the offering and eight weeks later, it's time for you to produce your annual audit us gap level. You produce it all the insiders have approximately a month in which they can sell their shares or their preferred shares or whatever securities you have in the company, unless you lock them up. Right? So clearly in some cases you would want to lock them up, but where do they go? They can go to the Regulation A+ aftermarket to trade them. Now, what that says is the volume, the liquidity will be modest if not very, very little liquidity and the damn side for 10% and bigger owners of shares investors in the company and the founders, you know, you know who they are, you guys are familiar with.

These concepts is that you're limited to 1% of the float. So, if the float is microscopic, you can sell a microscopic of mine in that window of time. Right? So, it's in your interest to build aftermarket liquidity on that market would be my recommendation because it's a very good way to go with that, with that vulnerability, to the naked short side that we see, you know, I've described it, great detail here, some detail. Okay. So that's but the fact that everybody gets liquid, that's pretty cool. And investors who are known that have less than 10%, they're not restrained by, Oh, we just did an audit. They're able to all day long, all year long. So, with that a 1% restraint. So, your longstanding investors that own less than 10% positions in the company, they get liquid. Right. Really good automatically. Cause you completed your Regulation A+ no listing on some major exchange. Although, you know, all the caveat stated there, okay.

Mistakes to avoid setting a minimum Aspro but when you didn't have to please don't do that because it's so hard to reach the number and you have to spend all the money. I mean, really, it's so expensive. Two weeks to reach that minimum maximum raise. Um, if one of the lovely things about Regulation A+ is that you can adjust, share price while you go. So let's say you need 12 million and you set a maximum of 12 million while we might get lucky for some reason, or it may be a really compelling offering and we'd hit 4 million unusually quickly. And it's like, Oh, we could have raised more at a higher valuation. We locked ourselves out of that by having a max of 12 million, don't do that, send it to 50 mil, give yourself the flexibility to up the valuation, you know, do a share split and what it takes.

And then go to the sec with that. They don't judge the merits of the valuation or the merit of the company. They're looking at the legality on it. And that filing just if you're all you do is the Sheriff's splits will go through the sec on toll relatively quickly, like three weeks. Join that time you pause. But then you go live to raise a lot more money, uh, because you can and you want it to manage darling. That's a good thing. Very nice thing about Regulation A+. So, having set the maximum to 50 minutes your business, you know, do what you want, but that's, uh, one of the things I would say is a mistake to avoid limiting yourself with a low maximum don't do to your Bon. It's a waste of time. It's too difficult to get the States involved with. Many of them require an audit anyway, and that's the primary reason that people don't want to do.

A two, two is to avoid having to do an audit. Many of the States are merit review where you go to bureaucrat deciding if your company is good enough for their States investors, right? That's a non-fun place to be in. They're really slow, et cetera, et cetera, nobody, right? I mean, 4% of the money raised in 2019 in Regulation A+ was tier one. It will be less into in 2020, go do a reverse merger because there may be some rare exceptions because your company is absolutely compelling. In which case, then do a reverse merger as a convenient may way to get liquid, get public. That's fine. But the companies that are approaching us that need to raise money, don't do a reverse merger because you got to satisfy the shareholders in it and whatever buying by some means or another, usually you didn't pay much. So, they're still shareholders. You got to make sure that, you know, suddenly it's a world of hurt and a lot of reasons why it's a bad thing. We are working with a company right now that did a reverse merger thinking that would make it easy to raise money, which it does not. And he is in he's now adjusting his Regulation A+, uh, and he wishes he hadn't done it. If he could undo it, he would. So, bear that in mind. I can't go into excess or detail right here, time.

What's the time come on. Oh, there it is. Okay. So a reverse merger. It isn't a two-year-old. And if your company only existed for six months, but you're not going to get you can't list on the NASDAQ without two years of history, actual history, you can't take a company that you parked and has nothing ever happened in it six years ago. And then use that as a NASDAQ listing company, because they'll look for the actual numbers. They'll look for actual history and there isn't any, then you can't list. You have to have a two-year history to list on a nice, but to do a regular Regulation A+ then you just need an audit that goes back two years or less, the company is new her mistakes to avoid, make sure your company and the deal you're offering is going to fly for Christ's sake.

You know, we can do a test with you. We've figured out new, a fact better, faster ways to do that. Um, in some cases we've gone live with an all frame because we thought we were confident with the pitch, discovered it wasn't applying. And then we'll create multiple offering page while the agency creates them on our platform, multiple offering pages, all of which are taking money, all of which are flowing the money into escrow seven Gates to the cans, but different ads for those different offering pages to figure out better messaging. Right? Um, so we'll do that if we need to after the start, but if it was always going to be a Duffer because it's a lovely company, but we will never be able to communicate it. That's not do this at all. Or if the substances that is supported do have a debt offering where people are investing in the eye interest, rate your pain, but you know, make sure we're doing the right thing. Don't just do it for the sake of it.

Don't set a high investor per investor minimum because when these folks that we bring in via social media advertising or raw guys, they were doing something else. Right. But the ad brings them in to look and they're checking an app because it is interesting to them. For some reason, we've got about seven or eight seconds to get them to stay. So, if the minimum is too high, they'll leave at this point is old for casual. They were doing something else, right? And if it's too high, a minimum to play, it's not playing money. They go and then never come back. You have a minimum low enough to say, ah, I can play with this. I could put a token amount of money into this and see how it goes. Now they're sticking around for 30 seconds and we got to make that compelling enough that they start to invest or they stayed for three minutes. Right?

Those are the obvious mistakes are now open to answer questions. Uh, I don't know how many off and I'll be pleased to look at them. Um, geez. Where are the questions? Scroll down, scroll down. Sorry guys. Yeah, we are recording this advantage of reg A+ over reg D it's easier to attract the attention. The marketing costs are lower. It's easier to reach Regulation A+ investors for the right kind of offering. Reg D is easier to start costs less money to start quicker to start because you don't have to fall on us permission from the sec. Um, that's the law. Those are a series of, you know, that's a big deal, cost less money to ready and it's quicker. So, in four weeks we can be live with a reg D and good marketing going. But you know, it's difficult to get the attention of accredited investors and they're cynical for good reason.

So, you know, only some cases I'll recommend you for it or against it, depending on the nature of your offering, you know? Um, but it's hard to get reg D investors, unless it's a compelling message. They want to make money. They're not doing it for the optimism reasons that we see in Regulation A+ yes, once qualified by the sec, you have a year in which to raise the money. You can pause it early. You can pause it. You can, we open it and you can count. You can finish it early, but, uh, uh, it's a year and you can renew it, but it's a new app. It's a new filing. They'll pay your pay the attorney a bit less. If it's the same offerings, style, same security, et cetera. But you start ahead of time. If you want to have it without really any long breaks, you start the next one for the second one before the end of the first one.

So it's ready in time, which is the best platform from an economic standpoint to list on which exchange, you know, NASDAQ's the real market, right? If you've got a company that has enough substance to support itself, that's the place to be. I wouldn't go to the OTC markets cause it's so hard to gain liquidity there to support the share price, but they are there. They're easier to get into. They cost less, right? I think it's 12 or 15 Kate and list on the OTC QB. So, it's less cash expensive, but that's only a small piece of the whole mix of variables here. Right? Comparing two options doing a right.

Yeah. So, you know, comparing two options, doing a Regulation A+ the raise money first and then posts the listing on the last day as compared to a reverse merger with an NASDAQ shell and raise the money as a public company. Well, most of the shells you can buy have stopped. That's, you know, a penny stock, right? That's a problem. It has a bankrupt history. That's a problem you need to ruin your way out. Or typically you've got a lot of shareholders that want their pound of flesh. So you've got to do something different. You don't really, in many cases, it isn't a good idea to offer common stock. You know, if it's, if it's a shell that has some, the trouble is, there are so many caveats, but generally speaking, penny stock. So do a new security, not the security that you got this company public for.

So, your public with something you can't really do much with, in many cases in my, in my view. But you know, when he brought up, when you have mega companies, you know, like some of these electric companies we've seen where, you know, they're able to do this, use a SPAC or shell to go public. You know, there, there are different stories, cause there's so much interest. Is it possible to have some docks in Italian language while the filings or have to be in English? And we have automatic translation in my website. So, look at my website, Manhattan, sweet capital, see the logo behind me. And if you click Italian, the whole site in Italian, yes. You can raise money in a reg D and a Regulation A+ simultaneously with a different term. Yes. Different price, different preferences, 14 million sales or cap. Not sure what you mean, but typically 14 million raises are the sort of zone you need to list on the NASDAQ or is better. But you know, that's sort of a minimum. Typically, there'll be some exceptions.

Well, at the moment, because of the, you know, the market being so hyped up or so hot because of the offense support, um, there are some spec companies which are essentially a brand-new blank check. There, there are shell company that's new and fresh that hasn't been used yet. What's the company, the name of that electric company? I can't remember it, but there's a truck, electric truck, Nicola, Nicola. They did that. They did a transaction know, but we're talking very, very high valuations, very nice market. You know, you should just go and do it straight away. That's fine. It works for them in those situations. You're raising megabucks Regulation A+ isn't the appropriate instrument. Yeah. It's a statement from Lloyd and I agree. Can you still offer it manifested?

I don't understand the question from a dr. Wild one, if you could resend that. I don't understand what you're asking. Just reading them some good statements are useful statements. Thank you. Yeah. I hope you all enjoyed it because it was a number of questions. Some of it's relevant, at least I enjoy doing this stuff. I do. But particularly if you're enjoying it, if I'm doing it and its Duff, then why would we do this? I've got to think. I know more than that. I enjoy. So direct listing is not brand new. That's been available for some time and I'm looking forward to doing Regulation A+ direct listings is just super around animal. You know, I'm looking forward to doing that. I really am just a matter of time. Right? And then when we do the first one, they'll be many others, many other funds. There'll be others that fall. One of that's. One of the reasons we're not a broker dealer is that we can do a lot more things we can partner with underwriters to do an IPO. If we were a broker Dita, FINRA would ban us from the transaction because they would say the, uh, the commissions that we would charge. Plus, the commissions abruptly underwater charges are excessive compensation. Any it, Whoa, can I provide a list of companies that have utilized Regulation A+ go to echo the sec, we don't have a list of all of them. There are loads of them at this point. Um, we produce reports on the new numbers and things on a regular basis. But, um, if you'll send me an email, I'll send you some info on that.

What if trying to raise over the, the limit? Is it possible to do more than one Regulation A+ two, two offering? Yeah. The, where that's been done successfully multiple times is by fund rise, um, where they have a new entity doing each new each entity doing its raise is separate. It's an LLC and it's separate from the other ones and they all share one manager. So, it's one manager, we're orchestrating it and making lots of money. And they've raised over a $900 million at this point. And Regulation A+ just in Regulation A+, multiple parallel offerings. So, um, it's possible in theory to do that for a non-real estate company, although no one's done that yet. Right? So, you set up a management structure and then you set up an entity that does a Regulation A+ for this and another one of the gears that doesn't resonate for us for that, that should work, but nobody's done it. It's been done in real estate. Now I would say that, uh, at any given time, Oh boy, there's approximately eight companies get qualified per month by the sec. So that gives you an idea, not to say that all of them should, but that's the number that do get qualified per month. So, what is that flat? A hundred a year get qualified. So that gives you a sense of it. In 2019, where we have this whole rapport on my website, you can go look it up on the blog. And in news in 2019 Regulation A+ raised slightly more than a billion. The total number of total offerings raised were a bit more than a billion dollars of that 650 million was real estate. The average was 20 million. And if you can only tier two offerings, the average room's higher, 24 million or something, most of the big, big raises were real estate. That's 41% up on 2018.

So not bad. And this year will be up on 2019, but I don't think it will be up 41%. I think more like 20%, there are no particular minimum revenue requirements for an eye, a Regulation A+ IPO. It's not about revenue. It's about the overall attractiveness of the company, right? You can have a company with no revenue right now, but they're going to kick ass in an amazing space, like a biotech. And you can have a company with substantial revenue. That's so boring. No one in their right mind would touch it. Right? We had a company last year or two years ago that wanted to go IPO, but they were experiencing, you know, half a percent, a year growth, 1% a year, profit, dead, boring business, not a really good candidate for an IPO.

No, no. The list on our site, we're not, we're only, you know, we're one player in the universe of Regulation A+, and we can quote all ways. We've done that on show. If you send me an email, I'll send you the metrics and I'll also show you, send you a document that describes more significant deals that we've done. But if you want a cannibal, my God, it's going to be a long time and a long effort. I can send you a spreadsheet that lists them. Probably. That's what I'll send you. I suppose, send me an email that now how many hotel companies are using Regulation A+ I don't know that number. Um, I don't know that number. I'm sorry. I know it's being done, but I don't have an answer for you. Big market for soda and battery projects because Regulation A+ kept investors care about new environment, right? Individuals care about it. So, they'll put the money with MIF is an invest very much so. And I want to do companies that will reverse climate change. And I want to do companies that will have virus solutions for us. Cause my God, we need them. Right. Vaccines and other medicines.

Yeah. Well, Nicola Fisker as special cases. I'm not saying don't ever do reverse merger. If I said that earlier, I was wrong. I'm thinking in our zone and in companies, in our zone of interest, if you're going to do it, make sure you know what you're doing. That's all, I'm not trying to dis reverse mergers altogether. Yeah. I don't think we can have a minimum of 500 per investment so far. We've had companies doing 300 up through 600. That's the range we've had. Yeah. There'll be a recording within a week. Less problem. It's something that Chuck asks looking for a plain public shell as I'm a startup, but we used to do a Regulation A+ tier one for 40 mil, but you can't do 40 mil in tier one has to be tier two. And I wouldn't use a shell. This wouldn't do it to my mind for that. You should do a Regulation A+ itself and don't do the shell part. If you want to email me about it and have a discussion about it. I'm happy to Nicola is neat. Huh? I get my 15-year-old son told me that, that one I invested in it. Who knows how it's going to actually before there's a lot of buzz. Uh, look at the price umbrella that Tesla has created. It's absolutely astounding. I was in a venture fund that invested in Tesla. So, I had Tesla stock from the get go stupidly sold it though.

Could you raise money by creating a REIT? And could it cost less than Regulation A+, or I don't know how you would raise the money. I mean, Regulation A+ would be the best way to get the raw reach funding. I don't know about a way to raise the money. I larger network. This Manhattan circulates. We have a, uh, 60,000 members are less isn't as big as it could be for two big reasons. One is that we don't take for all the offerings that are alive on our platform. They don't get into all of this. They don't get into all this to promote a new offering because they're offloading. It's fine. If you do a deal with us while your offering is live and until it's finished, we will never do anything to promote another offering or allow other companies to promote themselves to your list.

Right? So, we don't touch them either. So, our numbers are much bigger than I'm saying at all times, because there's a whole large number that aren't ready yet, right? When those offerings finished and there'll be all members that will market to them, we are respectful of our lists and we don't abuse them. So that way that please to hear from us and we get more value out of that, then otherwise we would. Um, and we're selective, right? Because then a hell of a lot more deals that we've done, but I don't want to do it for one reason or another. We didn't want to do them. So that kept out that's kept all lists and smaller, but a happier list, I think, can we be the sponsor for the direct listing on an exchange? Or we still need DTC, DTC, eligibility, needy, anywhere in a transfer agent anyway, uh, like Computershare will be store. Yes, all of those are needed. We don't need a broker data sponsor per se, to do a direct listing. You do need to get three market makers lined up, but if the company is hot, that's trivially easy. And that's part of the process of dealing with NASDAQ. That's where they come in handy. Thank you. Okay. Have a great day. I hope to hear from you at some point in time with some compelling, exciting company that we can do great things with. Have a great day guys. Bye bye.

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