Going Public Q & A

1. Going Public 101 Q&A Everything you wanted to know about going public but were afraid to ask

2. What does it mean to go public ? • Going public often refers to the process of a company filing a registration statement with the Securities & Exchange Commission to register its securities and become a reporting company. This process is referred to as “going public” even if the Company does not have a stock ticker symbol and its shares do not trade. • Going public may also refer to the filing a Form 211 with FINRA to obtain a ticker symbol for quotation on the OTC Marketswithout filing a registration statement with the Securities & Exchange Commission.

3. Why Do most Companies go public? • Most companies go public to raise capital. It is much easier for a public company to locate capital than it is for a private company. • Funds raised in going public transactions can be used for working capital, research and development, retiring existing indebtedness, acquiring other companies or businesses or paying suppliers.

4. Benefits of going public • Once a going public transaction is complete, a company can use its common stock as currency & collateral for loans. • Going public creates value for a company’s shares & creates liquidity for existing and future investors. •Going Public provides an exit strategy for shareholders and/or investors. • Public company stockholders may be able to sell their shares or use them as collateral. • Public companies have greater visibility than private companies and are often featured by the media. • Going public allows a private company to attract more qualified employees and key personnel. • A certain amount of prestige is associated with public company status or service to a public company.

5. What is a reverse merger? • A reverse merger is a transaction in which a private company merges into or is acquired by an existing public company. • After a reverse merger is complete, the business and management of the privately held company becomes that of the public entity. IS A REVERSE MERGER REQUIRED TO GO PUBLIC? No. Companies can go public using a direct public offering even when they do not have an underwriter for their offering. A reverse merger is not required.

6. what is a direct public offering? • Unlike an initial public offering or IPO, direct public offering is an offering conducted by a company on its own behalf without an underwriter. • Direct public offerings are often used in conjunction with going public transactions. • In a registered direct public offering, the company files a registration statement with the Securities & Exchange Commission to register shares on its own behalf or on behalf of its selling stockholders.

7. What is dtc eligibility? •DTC is the only custodian of securities for its participants, which include broker-dealers. • DTC is the only securities settlement provider in the U.S. If an issuer’s stock is DTC eligible, DTC will hold an inventory of free trading shares in street on deposit. These free-trading shares are also known as the “public float”. • Without DTC eligibility, shares can only be publicly traded if there is physical delivery of a stock certificate and payment between a buyer and a seller. • Without DTC eligibility, it is almost impossible for a public company to establish an active trading market in its securities.

8. What are the Distinctions between a securities act & exchange act registration statement? • Filing a registration statement under the Securities Act of 1933 , such as on Form S-1 registers an offering of securities. Shares registered under the Securities Act, generally are not restricted securities. • Filing a registration statement under the Securities Exchange Act registers a class of securities such as common stock. • Registration under the Exchange Act does not register a securities offering and it does not create unrestricted securities.