S-1 Process

The S-1 Registration (direct filing IPO) is the most cost effective and 'cleanest' way for a company to go public. Because of the low cost and high level of customization, the direct filing IPO process for a public listing on a US Exchange is the most common method of going public today. When a company goes public by direct filing IPO, the private company going public files an S-1 registration statement with the SEC and then, once approved, a Form 211 is filed by a market maker to obtain the stock symbol and a public price quotation.  

Direct Filing IPO S-1 Registration “Life Cycle”

 

Direct Filing IPO S-1 Registration Advantages

  • Timeframe is normally 4 to 6 months from completion of the financial audit.
  • The Cost is considerably less than going public by reverse merger or conventional IPO.
  • A much cleaner method than a reverse merger because there are no potential unforeseen legal issues which are usually prevalent in a public shell reverse merger.
  • Company has control over the issuance of stock and the share capital structure that is best for the company going public.
  • No underwriter is needed. There is no underwriter requirements for raising money for the Company during the process. The company can arrange to raise money themselves before, during, and after the process.
  • A recent article by a top US Securities Commissioner stated that "that the traditional system of Initial public offering in the U.S. remains the gold standard.” By taking your company through the Direct Filing process you are legitimately registering your company's shares with the SEC in compliance with Federal and State securities laws.
  • The company can pay for certain professional services with stock.
  • The company can register additional "shelve regsitration shares" for future use.

Direct IPO Process

For a company to be a 'public company', it must (a) have a minimum of 40 public shareholders and (b) have 'free trading' stock. This is accomplished during the direct IPO S-1 Registration process. The following is a brief outline of the direct IPO process:

1. Company must obtain a financial audit of their financial statements for the past two fiscal years. The audit must be conducted by a PCAOB registered accounting firm.

2. Utilizing a customized private placement memorandum (PPM) the Company sells shares in a private offering. These shares will be registered in the upcoming S1 registration statement, making the shares free trading. The amount of funds to be raised and the price per share can be determined by the Company and is generally nominal. Many companies use the opportunity to raise the funds to pay for the audit, the legal costs and get the required shareholders as quickly as possible.

3. Upon completion of the audit and the private offering to obtain the required number of shareholders, an S-1 Registration Statement is filed with the SEC to register the shares sold in the private placement so that they are “selling shareholders” and the stock becomes free trading upon the effective date of the Registration.

4. The SEC will review the S-1 registration statement and provide their comments within thirty (30) days of the filing date. Comments from the SEC typically relate to the terms of the offering, the Company’s business and its financial statements. The Company then answers those comments in a Form S-1/A. On average, it takes approximately 3 to 4 months for the SEC to declare the S-1 registration statement effective.

5. Shortly after filing the S-1 registration statement with the SEC, a market maker is engaged to file a form 15c2-11 ("Form 211") application with FINRA for the purposes of obtaining a stock symbol and a stock quotation of its shares. The timetable for approval of this process is approximately 3 to 7 weeks.  The Form 211 will not be approved until the S-1 is approved by the SEC.

The entire process typically takes approximately 3 to 6 months from the time the financial audit and private offering are completed.