RSS

Category Archives: Public markets

OTC Markets & promotional data

OTC Markets & promotional data

Today OTC Markets put out its monthly newsletter today (here is a link to my copy of the newsletter, but you should go here and sign up to receive them yourself) and reiterated that it had purchased theOTC.today, which tracks promotional information and has since 2011.  Now, what do you think that they are planning to do with that data?…

Keep up to date with OTC Markets.


© 2017 by Rhodes Holdings LLC and Robert C. Rhodes, all rights reserved.

 
 

Tags: ,

What is the PCAOB auditor process for public companies?

What is the PCAOB auditor process for public companies?

I’ve worked with public companies since 1998 in some form or fashion – either being the investor who provides the equity to “go public”, being the private company who goes through the process of going public, or being the consultant who helps the private companies through the process. One of the most frustrating parts of either “going public” or being public is interacting with the PCAOB auditors. Most of the frustration comes from the process, a good process at that, but a process of completing the audit itself – it’s a process that provides the auditors with the background documents and confirmation that the financial information that they have received is correct.

The Process

For the uninitiated, the process is one that can be daunting the first time you go through it, and can make you hate even your best friend who is a PCAOB auditor, but it is a process that you must be familiar with in order to complete.  Here is the process step by step:

  1. Engagement letter
  2. Requested information list issued from auditor
  3. Information requested sent to auditor
  4. Process information, roll forwards, etc.
  5. First partner review
  6. Client responses to (5)
  7. First audit partner review
  8. Client responses to (7)
  9. Second audit partner review
  10. Client responses to (9)
  11. If 10K, auditor must receive all third party confirmations prior to filing
  12. Partners sign off
  13. EDGAR-ization / XBRL
  14. EDGAR-ized sent to auditor / client for sign off
  15. EDGAR-ized & XBRL filed

Usually after you’ve gone through all of this, it’s time for a vacation because it is a gut wrenching process by which the auditors determine if they have all the detail in order to provide their opinion that the financials are a fair representation of reality.  Remember, this is not an opinion that you have not committed fraud or some other malfeasance, but that you have provided them all of the documentation that they require.

 


© 2017 by Rhodes Holdings LLC and Robert C. Rhodes, all rights reserved.

 
 

Tags: , , ,

SEC issues abound, getting caught up…

SEC issues abound, getting caught up…

There are just a lot of things happening in the merchant banking world.  First, of course, President Trump’s first 100 days in office have been a slow walk towards the lofty goals he set forth when he was running for office – don’t get me wrong, I believe that he has made strides towards his goals, but they were always long term goals in the first place.  Rolling back regulation, check.  Obamacare reform, well, working on it…

Now onto other updates:

  • I always follow what Alchemy OTC Markets Specialist does and thinks, so here is his latest update – “SEC Issues Progress Report on United States Title III Equity Crowdfunding Growth Rate“.
  • If you are in the public markets and you’re not reading the monthly OTC Markets’ newsletter, you should.  Here is the March 2017 issue.  Here is an excerpt from it that I think all of the PR / IR professionals need to heed, “Make sure to follow and tag us @otcmarkets in your latest news, positive earnings and corporate actions on Facebook and Twitter. Use the hashtag #OTCQB, to make it easier for investors to find your latest updates.

 

 
Leave a comment

Posted by on March 22, 2017 in BLOG, Public markets

 

Tags: , , ,

OTCQB versus S&P 500

A funny happened in the last couple of weeks – the global weaknesses in the economies around the world have shone through.  China, the powerhouse economy growing at over seven percent (7%) a year (see the World Bank’s numbers at 7.7% in 2013, 7.8% in 2012 and so on on their website) has stumbled.  Our own Federal Reserve doesn’t know if it will raise the rate it lends to banks.  Europe is in the midst of a crisis of immigration and other issues. To steal a line from Ghostbusters

…real wrath of God type stuff.
…, dogs and cast living together… mass hysteria…

SO what does this mean for us, the micro-cap investors who believe in the little guy and who work in and around entrepreneurs who aren’t part of the S&P 500 index?

A little notoriety

An article in the New York Business Journal entitled “Early – stag companies fair better on the OTCQB than S&P 500 during these turbulent days” is an interesting view of what is happening right now.  Of course, OTC Markets loves the exposure and they have shared this article with many of us who follow them (I would recommend joining their mailing list).  In essence, the OTCQB hasn’t seen the decline that the S&P has (take a look at the OTCQB index on the OTC Markets’ website).  The OTCQB index has only declined by 3.31% in the two week period ending August 28th, 2015 versus the S&P 500 dropping by 5.46%. Why?

First, why are the S&P 500 companies highly sought after by investors?  Because they are big enough to ride out ups and downs.  They are big enough to have robust operations.

Secondly, why are all the globe’s markets down?  China is a harbinger of the global economy being a slump / recession that is deeper than we expected.  Our economy really hasn’t rebounded that much from the 2007 debacle.  Now the rest of the world sees that.

Lastly, the OTCQB is a “venture” marketplace.  The risk is already figured into the stock price since investing in these stocks are smaller and don’t have the resources that the S&P companies do.  But therein is where they fair better in down markets – we’re placing a bet that these guys will graduate to the S&P 500 someday.  That risk isn’t greater because the world’s markets are basket cases.  In fact, that means that innovation and risk takers will be rewarded to an even greater extent.

My conclusions

2015 through 2020 will probably be sideways markets – giving up as much as they give.  Including some up and coming stocks in your portfolio is how I’m mitigating the risk that my portfolio does absolutely no growing during that time.  Of course, I am focused on bonds for current income, but that is pitiful right now.  All in all, it’s a good time to ensure that your business operations yield lots of cash and worry about where you’re going to put it all.  Happy hunting…

 
Leave a comment

Posted by on September 8, 2015 in Business, Public markets

 

Tags: , , , , , ,

OTCQB Snapshot

Go to http://web.otcmarkets.com/OTCQB-Americas-Venture-Market/ for more information straight from the source of this infographic.

 

Tags: , ,

Public companies, who are your shareholders…

Since Rhodes Holdings LLC does work out (when they get into dire situations, we are engaged to help work out of the situation, bringing everyone to the table and putting a plan together that gets everyone to the goal) on public companies and provides ongoing support for public companies who are SEC reporting (1934 Act registered), we cover processes that aren’t necessarily covered by “Being Public 101“.  This is a class that we provide to new clients to ensure that they understand all of the intricate details and interactions of the public disclosure process.

If you are interested in retaining us (Rhodes Holdings LLC) for work out services, interested in the “Being Public 101” class for your company, or just working with us to walk through the reporting process with your SEC professionals, please contact us either from our Contact Us Page, e-mailing info@rhodes-holdings.com, or calling 281-435-3917.  Here are a few miscellaneous topics that have come up recently for a few clients…


CUSIP

Most public companies have only one registered security that is traded in the public markets – most frequently their Common Stock shares.  Of course, there could be multiple classes of Common Stock (not a common practice, but we have seen it, most notably with Colorado Goldfields Corp, website, who has two different classes of Common Stock, Class A and B) and multiple classes of Preferred Stock as well.  Some large capitalization stocks not only have Common Stock but also have multiple Preferred Stock shares and bonds.  If these are traded in the public markets, each class of stock or bond will have its own unique identifier – in this case its CUSIP number, which stands for Committee on Uniform Securities Identification Procedures (see the SEC.gov definition below).

“A CUSIP number identifies most securities, including: stocks of all registered U.S. and Canadian companies, and U.S. government and municipal bonds. The CUSIP system—owned by the American Bankers Association and operated by Standard & Poor’s—facilitates the clearing and settlement process of securities…”

QUESTION

How do I get a CUSIP for a new security?

ANSWER

Your SEC counsel will most likely do this for you, but they will go through CUSIP.com to receive one.

QUESTION –

How do I find out what the CUSIP is for my shares?

ANSWER –

The quick answer is look on the face of your paper certificate if you have one.  Most certificates come with the CUSIP on its face as do most bonds.  Transfer agents usually subscribe to a service that provides all this information and they will probably be happy to help you find out the CUSIP number.  If you’re looking for the online equivalent, we haven’t found one lately – if you know of one, please post it here.

Common stock issued in 1967

Common stock issued in 1967 (Photo credit: Wikipedia)


NOBO and OBO Lists

Building upon our knowledge of securities at this point, the next step will be doing due diligence on who your shareholder base is.  This will come in three forms:

  1. Paper certificate holders
  2. Non objecting beneficial shareholders (‘NOBO’)
  3. Objecting beneficial shareholders (‘OBO’)

If you have every opened a brokerage account, you will have filled out countless forms and one of them asked, “Do you object to the brokerage releasing your name to the company?”  If you replied in the affirmative, you became an OBO for all the stocks held in your brokerage account.  If you replied in the negative, you became a NOBO.

To understand more about this, all the brokerage houses subscribe to a service called the Depository Trust & Clearing Corporation or DTCC for short (sometimes people still use DTC for short).  Basically all the brokerage houses deposit their stock certificates and shares with the DTCC and their holdings become a book entry in the DTCC accounts.  Each brokerage account holder at the brokerage is held in “street name”, or more precisely only the brokerage’s name is held at the DTCC.  The DTCC then takes the certificate and holds this in its vaults (interesting aside – their vault is in lower Manhatten Island and was flooded out during the last hurricane that swept through.  Many of the paper certificates were lost, and the public markets are still coming to grips with what that means).

So, when an officer or professional associated with a public company wants to get a list of the shareholders of the company, they would ask a company called Broadridge Financial Solutions, Inc. to provide a NOBO list.  This NOBO list ties all the DTCC street name entries to the brokerage account holders that have not objected.  You can find more information on receiving these lists at Broadridge’s website page for Corporate Issuer Solutions.

Remember though, it requires two days at least to receive so you have to plan ahead (it always takes me about a week though).


© 2014 by Rhodes Holdings LLC, all rights reserved.

 
Leave a comment

Posted by on September 30, 2014 in BLOG, Business, Public markets

 

Tags: , , , , , , , , , ,

Just when you thought John O’Quinn couldn’t get any more interesting…

…even when he died in 2009, his legacy continues to live on.  John O’Quinn is remembered for his large litigation win against tobacco and is thought to have won over $1.5 billion for his law firm over his career (Wikipedia’s biography).

In the news this week, a former client of John O’Quinn sued O’Quinn’s law firm.  You’re hearing about it here as the client, Eagletech Communications, Inc., was in litigation to stop “naked short selling”, which is a huge institutionalized problem that we are still dealing with today.  Here are the stories that came out this week:

To get more information on the Eagletech Communications, Inc. case and the issues involved, take a look at this movie, The Wall Street Conspiracy:

More information available:

 

 
 

Tags: , , , , , , ,