New Regulation FD

In recent days (April 2 to be exact), the U.S. Securities and Exchange Commission (“S.E.C.“) issued a report that said that Regulation FD could be satisfied by issuers by posting disclosure to social media sites.  To us, this is a logical extension of the J.O.B.S. Act since its intention was to allow small companies to capitalize themselves through the larger reach of the Internet. The S.E.C. release, available at http://www.sec.gov/news/press/2013/2013-51.htm, provides more insight.

Regulation FD is very important for publicly traded companies – it basically states that all investors should receive good and proper information disclosure from publicly traded companies at the same time.  Only certain venues were considered proper outlets to post “Press Releases” and even information on the company’s website was limited and specified.  Nothing worse than getting a comment from the S.E.C. on a registration statement relating to improper disclosure on the company’s own website – news sections posting information news before the official press release or 8K, company newsletters that disclose something improperly, etc.  Here is the S.E.C.’s definition of Regulation FD (http://www.sec.gov/answers/regfd.htm).

Here are some simple rules that we train our client organizations to follow:

1. Create an “Investors” section of their website.  Link to other public venues for quotes, etc. such as Yahoo! Finance, Google Finance, Market Watch, OTC Markets.
   1. List board members, including committees.
   2. List transfer agent.
   3. List company’s SEC counsel.
   4. List company’s Ethics Statement.
2. Create a “News” section of website wherein only items that have been released officially through a Regulation FD authorized distributor, such as Market Wire, Mac Report, Business Wire, etc..
3. Create a “BLOG” section of website for opinions.
4. Always release information as follows:
   1. Issue 8K, if required.
   2. Issue press release through FD authorized distributor.
   3. Put exact copy of press release on company’s website.
   4. Put exact copy or link to press release on LinkedIn and Facebook company pages.
      

      Image via CrunchBase

Disclosure is a “by the numbers” issue, meaning every company should come

Image via CrunchBase

up with a standard operating procedure (“SOP”) and follow it religiously – more to ensure that news gets the largest reach but also to ensure that a company doesn’t go afoul of the authorities.

Related Articles

• The Green Light to Social Media Use for Regulation FD Purposes Looks More Like Yellow (securitiesnewswatch.com)
• The Board, Social Media and Regulation FD (blogs.law.harvard.edu)
• Social media to be allowed for SEC fair disclosure (bizjournals.com)
• Twitter, Facebook OK to use for news – SEC (buzz.money.cnn.com)
• Regulation FD in the Age of Facebook and Twitter (blogs.law.harvard.edu)
• Did The SEC Just Issue Double Secret Guidance For Using Social Media? (somelaw.wordpress.com)
• Corporate disclosure via social media (professorbainbridge.com)

 

What were they thinking…

First, I must apologize for the dearth of information on the public markets and financing techniques therein over the last four months coming from our BLOG.  Our associated group of organizations (Rhodes Holdings LLC, ReCap Marketing & Consulting LP, and American Equity Fund LLC) have been involved in a number of actions to protect shareholder value as well as having been asked to put together a number of “go public” projects for clients.  With that said, expect a new focus on providing a look into what is going in the public markets…

OTC Markets

Since the Jumpstart Our Business Startups Act (“J.O.B.S.“) Act was signed into law on April 5, 2012, there has been a “promise” in the air that it would help get capital formation for the micro-cap market started again.  This really hasn’t happened since the Congress and President can’t seem to get their acts together (pun intended), and the Securities & Exchange Commission (“SEC“) hasn’t released the details on how it will enforce the J.O.B.S. Act provisions, like changes to internet marketing of stocks (general solicitation).

OTC Markets Group Inc. had hoped that this Act would help drive their business, but alas FINRA is all about limiting the markets that OTC Markets Group Inc. serves by making it impossible to deposit shares in Pink Sheet companies as well as OTC:BB companies.  The crux of the problem that those of us working in the

Seal of the U.S. Securities and Exchange Commission. (Photo credit: Wikipedia)

micro-cap arena are facing is that even if you follow all the rules (register your shares, pay cash for stock, etc.), the broker dealers and their compliance departments are running scared of the SEC and FINRA’s rules, so stock just doesn’t get sold.  If no stock gets sold, that capital doesn’t get re-invested into other micro-cap stocks – thus, the velocity of money associated with micro-caps has ground to a halt.  Read what OTC Markets Group Inc. has to say:

• “Slow PO to the Public Markets“

In a few cases, it has eased regulation and shown that at least some of those in Congress listened.  The J.O.B.S. Act did make it so that issuers did not have start filing SEC mandated disclosure statements (10Q, 10K, 8K, etc.) until they reach 2,000 shareholders – previously it was 500 shareholders triggered filing requirements.  Read CFO magazine‘s article on banks de-registering:

• “JOBS Act Opens Path to Deregistration“

All in all, the J.O.B.S. Act has not helped us reach its stated goal – helping jump start capital formation.  It may still help, but those of you who thought that crowd funding was going to take over capital formation, it hasn’t delivered the goods.

Accredited Investors

The J.O.B.S. Act did make some changes to the accredited investor definition, which would be very helpful.  The original 1933 Act definition is as follows for Rule 501 definitions.  Here is what the General Counsel of Second Markets had to say about the proposed implementation in his letter to the SEC.  In general, we at Rhodes Holdings LLC are keeping track of what is happening in the marketplace that will make it easier for our clients to access the capital they need.  Here are some websites associated:

• Certified Accredited Investor
• Accredited Investor Solutions

Related Articles

• Waiting on the JOBS Act (axialmarket.com)
• Crowdfunding awaits key rules from SEC (sfgate.com)
• JOBS Act Expected to Increase Diversity in Funding (entrepreneur.com)

 

2012 in review

The WordPress.com stats helper monkeys prepared a 2012 annual report for this blog.

Here’s an excerpt:

600 people reached the top of Mt. Everest in 2012. This blog got about 4,900 views in 2012. If every person who reached the top of Mt. Everest viewed this blog, it would have taken 8 years to get that many views.

Click here to see the complete report.

 

Raising money – entrepenuers log book…

For the entrepreneur, everything starts with a business plan that lays out what they will be doing.  Once the plan is in place, now you have to finance your new start-up, or ongoing business that has a new “use of proceeds” for a new line of business.  This is where most entrepreneurs fail – finding money and putting it to work is an art form.  Find the wrong money, and it kills you (like factoring when your clients take too long to pay).  Find the right money at the wrong time, and you never get to use it again (commercial lines of credit when your bank uses cash flow and you are building assets).

Therefore, entrepreneurs need to be adept at securing equity, but there are so many laws surrounding this area that most entrepreneurs as well as seasoned professionals run afoul of the laws, both federal and state securities laws.  For instance, as a merchant banking organization, Rhodes Holdings LLC does not raise money – we restructure organizations, working with them to re-write their business plans with strategies that allow them to secure financing.  I, Robert Rhodes, accepted the position of Managing Member of American Equity Fund LLC (“AEF”), so that public companies that were reorganized could be offered a financing facility that was legal, and did not run afoul of these laws – specifically because AEF works with clients to file registration statements with the US Securities and Exchange Commission (S.E.C.) for the equity investment.  We would like to help entrepreneurs understand the process though; here are few articles that you should read:

• “When Raising Investment Capital, Can You Pay Someone to Do it for You?“
• “Using others to raise capital“

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© 2012 by Rhodes Holdings LLC, all rights reserved.

Finance (Photo credit: Tax Credits)

 

Related Articles

• Ways to Finance a New Business (techpluto.com)
• Small business tips series: Is it worth writing a business plan? (hiscoxusa.com)
• 5 Biggest Money Mistakes of Rookie Entrepreneurs (inc.com)

 

M &A Activity Gone Wild – 4th Quarter 2012

Merger Frenzy to Close 2012

After a 7 year stretch of reduced M&A activity, experts are predicting an increase for the fourth quarter of 2012 in the US and worldwide.  The combination of low interest rates that make it easier to finance debt, reductions in capital expenditures resulting in the accumulation of idle cash, and slowdowns in revenue makes acquiring other businesses a preferred method of expansion.  Goldman Sachs (with the most M&A imputed fees for 2011 according to Reuters) is among the firms predicting this resurgence and recommends businesses move now before interest rates begin climbing.  In addition, the imminent, total capital gains tax jump of at least 8.8% has privately held businesses scrambling to close deals before 2013.  The President’s reelection is also expected to be a catalyst for activity in this quarter due either to uncertainty about future tax policy or changing confidence in the state of the economy.  The end result is an expected significant frenzy of activity in these next two months. Key Performance Indicators: How is my business doing?

You run a successful business.  Your customers are satisfied, and you’re making money.  That’s how a successful business works.  Isn’t it?

Yes and no. Examining a business’s Key Performance Indicators may reveal a few surprises about how it could do even better than it is already. The most basic Key Performance Indicators (KPIs) are data such as revenue and profit and loss reports. However, there are more extensive figures and ratios that can serve to highlight trends and hidden problems. With the right expertise, KPIs can be used to identify sources of waste and help a business owner outline strategies to get the most of the resources at hand. A shrewd business owner will be able to look at these vital statistics and find ways to increase profit, but trained professionals utilizing KPIs to work with innovative management can extend the life of a business and allow a company to grow to the next level. You know where you want to go. Clear Financial Solutions can show you how to get there.

As they say, a picture is worth a thousand words.  Using KPI, a business can track data and statistics that lend themselves to graphic presentation and trend analysis.  Charts and graphs are much easier to understand that rows and columns of data and allow for quicker and more relevant decision making.  Our team can help you develop the data analysis and calculations necessary to present you with clear information about how to maximize the potential of your business.

If you’d like to see how Clear Financial Solutions can help you do more of what you do well, give us a call at 713-780-0806 or email us at info@clearfinancials.com.

Good Business Role Models

The Boy Scouts has been a standard for honesty, integrity, commitment, and quality for more than 100 years.  The founders of Scouting dreamed of channeling the raw energy of youth into something constructive and beneficial for everyone with the potential for self-sustenance and growth.  These are the qualities everyone should hope to exhibit in themselves and in their businesses.  Scouting establishes a system of hard work, tangible goals, and worthwhile achievements to give kids a sense of success and an understanding of the value of hard work.  These boys go out into the world as young men and strive to make it a better place.  We at Clear Financial Solutions are proud to volunteer with our local unit and bring the values of Scouting with us in everything we do.

About Us

Clear Financial Solutions, Inc. specializes providing Contract CFO and SEC Reporting Services.  We are experienced entrepeneurs with extensive public company and start up experience.  Hire the expertise and vision of seasoned financial and accounting professionals and let us help you succeed by doing more of what you do well and improving what you don’t.

Call on us today at (713) 780-0806 to schedule a free one hour confidential consultation or visit our website www.clearfinancials.com

Related Articles

• Key Performance Indicators (kpi) (competencydevelopment.wordpress.com)
• Five Numbers Small Business Owners Should Know (hiscoxusa.com)
• Getting your KPIs and Other Metrics Mixed Up? Does It Matter? (karentopp.wordpress.com)

 

Arrayit Diagnostics Files S-1 Registration Statement

SUNNYVALE, Calif., (November 15, 2012- BUSINESS WIRE)  –  Arrayit Corporation (OTCQB:ARYC) (“ARYC”) is pleased to announce that  Arrayit Diagnostics, Inc. (“AD”) has filed an S-1 registration statement with the Securities and Exchange Commission today. Upon the effective date of the registration statement, AD will be an independently traded public company and will distribute one share of AD for approximately every 3.34 shares of Arrayit Corporation held shortly thereafter.

John Howell, President and CEO of AD, stated, “Upon approval of this registration statement by the SEC, AD will be spun off from ARYC, allowing us to proceed with the previously announced financing agreement. We are confident that our efforts to commercialize our proprietary Diagnostic tests will be achieved.”

Rene Schena, ARYC CEO, adds, “The accretive benefits to our shareholder base, by granting them ownership in an additional public company, enables them to benefit from two distinct revenue streams.”

About Arrayit Corporation

Arrayit Corporation, (publicly traded under symbol “OTCBB:AYRC”) headquartered in Sunnyvale, California, leads and empowers the genetic, research, pharmaceutical and diagnostic communities through the discovery, development and manufacture of proprietary life science technologies and consumables for disease  prevention, treatment and cure. Please visit www.arrayit.com for more information.

About Arrayit Diagnostics

Arrayit Diagnostics (website http://arrayit.com/Microarray_Diagnostics/microarray_diagnostics.html), headquartered in Redmond, Oregon, is leading the research and approval process of diagnostic tests for cancer based on molecular diagnostic technology.

About American Equity Fund LLC

The American Equity Fund LLC (“AEF”) provides an alternative funding mechanism, an Equity Line Facility (“ELF”), for SEC reporting publicly traded micro- and small-cap companies that want to take control of their financial futures. An ELF is a flexible financing structure in which AEF commits to purchase shares of Common Stock directly from an Issuer, at prevailing market prices, over a multi-year period. When an Issuer elects to drawdown on the ELF, AEF is obligated to purchase an amount of shares equal to the dollar amount requested with a discount to market and warrant coverage to underwriting expenses. Issuers request drawdowns at their discretion in accordance with the terms of their funding agreement.

About Rhodes Holdings LLC

Rhodes Holdings LLC (“RHL“, http://rhodesholdings.wordpress.com) was founded on the principle that public companies‘ top officers need help with the complexities and demands of the public markets.  Funding their companies and managing public S.E.C. reporting shouldn’t take all of these officers’ time and that is when RHL comes in.  RHL provides a turnkey solution for companies that would like the benefits of being public but have not experienced it before.  RHL was founded by Mr. Robert C. Rhodes in 2005.  Mr. Rhodes is surrounded by professionals dedicated to your success, including SEC lawyers, general counsels, auditors, IR professionals, and investment sources that he has historical knowledge.

Safe Harbor Statement

We have identified forward-looking statements by using words such as “expect,” “believe,” and “should.” Although we believe our expectations are reasonable, our operations involve a number of risks and uncertainties that are beyond our control, and these statements may turn out not to be true. Risk factors associated with our business, including some of the facts set forth herein, are detailed in the Company’s Form 10-KA for the fiscal year ended December 31, 2011 and Form 10-Q for the quarter ended June 30, 2012.

Contact:

Arrayit Corporation

Steven Scott, 617-448-1300