The registered spinoff, (also known as registered stock dividend distribution) offers yet another method of going public. In a spinoff, a privately-held company becomes a public company by issuing shares of its common stock to an existing affiliate company which has a base of shareholders. That stock is then registered with the SEC and distributed to the shareholders of the existing company. The stock distributed of the once privately-held company is considered a "spinoff" of the private company's shares. Once received by the shareholders and you have a market maker, some of these shares begin to be traded, a trading market develops in the stock of the once-private company, and the company is now public.

The Registered spinoff differs from a reverse merger in the following ways:

• The private company may structure the new public company to meet its particular needs, such as amount and classes of stock, warrants, etc.
• A merger requires that the private company accept the structure of the existing company or change it by shareholder vote, including outside shareholders. Typically only a small percentage of the private company's shares are distributed as a spinoff. This serves to preserve the corporate ownership of the existing shareholders for future financial transactions
• The spinoff prepares the stock market for a secondary public offering later on, which typically occurs at a cost more desirable than an IPO
• Principals and shareholders of the private company can include their securities in the registration statement for the stock dividend distribution. This can allow them to then sell their securities in the public market, subject to the volume limitations of Rule 144. If the private company is an overseas company, it may not want to become an American company as it would in a merger into a shell. A stock dividend distribution (registered spinoff) is a solution to that problem. The overseas company can have their securities traded in the United States on a U.S. Stock Exchange without requiring them to become a U.S. company or a U.S. subsidiary. A domestic company may also prefer a stock dividend distribution to a merger with a shell if it wants "custom features" which it does not find in a shell, e.g., two classes of stock owned by shareholders of the private company and/or warrants.

We assist our clients in evaluating and executing regristered spin-offs. However, we do not perform the services of a broker/dealer, nor are we in the sercurities business. Our role in a regristered spin-offs is a consulting role.

Requirements prior to entering into a reverse merger or a registered spinoff are the following:  

• A private company will require approval of the majority of its shareholders for a merger with a public corporation.
• Once a company is taken public through a reverse merger or a registered spinoff the financial markets hold the following future prospects in the capital markets for the newly public corporation: the market value of a public company is often substantially higher than a private company with the same structure in the same industry.
• Capital is easier to raise for public companies because the stock has market value and can be traded
• The public corporation may be used for special purposes.
• The public trading price of the public company's securities serves as a benchmark for the offer price of a subsequent public or private securities offering
• Acquisitions can be made with stock since publicly traded stock is viewed as currency for mergers and acquisitions.
• It is essential that public companies, especially newly public companies, actively maintain and manage a financial communications program.
• A newly public company would be well-advised to invest in consulting services to plan and execute a strategy for building and maintaining an interest in your company within the financial community. However, we do not engage in stock promotion on behalf of our clients.

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