Rightsmile, Inc. (RIGH)

[john12341]

righ s a alternative reporting company and was deregistered a/o June 11,2007.

Reporting Status Dark: Alternative Reporting Standard
Deregistered a/o Jun 11, 2007

reference source
http://www.otcmarkets.com/stock/RIGH/profile




Title:

Deregistered and delisted? No worries: a growing number of public companies are voluntarily moving to the over-the-counter market



Author(s):

Vincent Ryan


Source:

CFO, The Magazine for Senior Financial Executives. 29.3 (Apr. 2013): p22.


Document Type:

Article




Copyright:
COPYRIGHT 2013 CFO Publishing Corp.
http://www.cfo.com/magazine/



Full Text:


Once considered a backwater inhabited by companies near bankruptcy or plagued by scandal, over-the-counter markets are becoming increasingly respectable. Small-cap public companies are finding that they can deregister with the Securities and Exchange Commission but still maintain their share price and keep their stock liquid on an OTC exchange. Indeed, some companies are voluntarily moving from Nasdaq and other exchanges to OTC trading platforms.


[ILLUSTRATION OMITTED]


At the forefront of this movement are community banks, which are taking advantage of a provision in the Jumpstart Our Business Startups (JOBS) Act that lets companies have as many as 2,000 stockholders of record, up from 500, without filing with the SEC. Banks, in particular, can deregister if the number of their shareholders is fewer than 1,200; the previous threshold was 300.


One such institution is Coastal Banking, a Florida bank with $475 million in assets, which deregistered its securities in May 2012 and moved from Nasdaq to an over-the-counter market. As a result, it no longer has to do things like meet certain provisions of the Sarbanes-Oxley Act, convert files to XBRL and pay attorneys to review them, or file a Section 16 form every time an insider trades stock.


The bank is saving $150,000 to $200,000 a year, and "the cost savings keep compounding," says CFO Paul Garrigues. Meanwhile, Coastal's stock price has doubled, and its average trading volume has jumped from 400 to 2,000 shares year-over-year (partly because its earnings have increased), says Garrigues.


Brendan McGill, CFO of $802 million Harleysville Savings Financial, says that after delisting from Nasdaq in December, the bank saved about 6 cents per share. As a result it was able to increase its fourth-quarter dividend.


Both Coastal Banking and Harleysville Financial list their shares on over-the-counter marketplaces created by OTC Markets. OTC Markets offers five tiers of trading marketplaces, based on the quality of an issue's business and the strength of its financial reporting. The highest tier, the OTC-QX marketplace, added 86 companies in 2012 and now has issues from 400 companies trading electronically among broker-dealers (see chart, next page). The aggregate market capitalization of the securities reached $1.2 trillion last year, according to OTC Markets.


Unlike another over-the-counter market, the OTC Bulletin Board, OTC Markets combines a company's financial results with its stock pricing and trading information, letting broker-dealers and investors find the data in one place.


Same Info, Fewer Pages


Transparency is key to success on the OTC Markets platform, says R. Cromwell Coulson, the company's CEO. Over-the-counter stock markets, like the so-called pink sheets, have always been opaque, with companies providing limited information on their performance. Many are also viewed as the place where equity issuers end up when they can't meet the listing requirements of Nasdaq or the New York Stock Exchange, most often because they miss an SEC filing or are in distress. What's more, many investors (exchange traded funds, for one) buy only listed securities.


But Coulson insists that a lot of companies don't get the benefit of being listed that they expect. "Many small companies think they will go on an exchange and have all these big investors buy their stock," but then that doesn't happen, he says.


Coulson encourages companies on his platform to be as transparent as an SEC-registered or exchange-listed issuer. For example, CFO McGill plans to continue to release quarterly financial information for Harleysville Savings and compare it against the last four quarters. The bank will also disclose important benchmarks such as return on equity, efficiency ratios, loans held on the balance sheet, and the makeup of deposits. On an annual basis, it will also publish insider ownership information.


Unregistered issuers have the freedom to make their financial filings more readable. Garrigues's team creates the equivalents of a 10-Q and a 10-K and posts them to the OTC Markets site, but these documents are less onerous than SEC filings, the CFO says. "We provide the same information but have halved the number of pages in the disclosures," he says. "In a 10-Q or 10-K you have to repeat yourself many times, and include eight pages of risk factors and disclosure of all the new accounting rules. Nobody reads the things."


For companies in some industries, amassing all that financial data might reduce the savings harvested from deregistering or delisting. But many companies and community banks are already heavily regulated, so they have the data at hand. American depositary receipts of non-U.S. companies are highly suited to the OTC markets, and 1,500 of these securities from large international firms trade on OTC Markets's platform. Foreign companies already report to their domestic securities regulator, so they can provide the same deep financial data as if the securities were registered with the SEC.


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OTC issuers do have one problem related to transparency. While their information may be of high quality, it may not be as readily available to investors as it is for listed companies. "It becomes harder for certain subsets of investors to get the company's disclosures," says Coulson. To address this, OTC Markets has a news service for issuers that is affiliated with PR Newswire. Once published on the OTC Markets website, some company data is distributed to financial portals such as Yahoo Finance. Issuers can also arrange for information to go to Regulation FD-compliant news portals and professional databases.


Secondary Concerns


What about secondary offerings? Because of the JOBS Act, more companies may begin issuing securities, like private placements, that can be traded on marketplaces like those of OTC Markets. The act also lifts the prohibition on the general solicitation and advertising of Rule 144a and Regulation D Section 506 placements, so these securities can be marketed widely. Investors will then be able to trade the shares on OTC platforms. (In the case of Rule 144a placements this will happen immediately.)


The JOBS Act also increases the amount of capital that companies can raise in Regulation A offerings. An underused form for small-cap companies, Reg A securities will also be allowed to trade immediately on secondary-market OTC platforms. Raising the Reg A limit to $50 million will encourage more companies to use this kind of offering, Coulson says, because previously companies couldn't justify the cost of doing the "miniregistration" tiling that such deals require.


Garrigues says the JOBS Act changes related to capital raising were crucial to Coastal Banking's migration to OTC Markets. "When we get to the point where we want to expand again, we could do a secondary offering and still be deregistered," he says.


The SEC has yet to propose rules surrounding these registration-exempt offerings, so all of the changes are in limbo. Once the rules do take effect, a company will be able to expand its pool of investors without being on an exchange, Coulson says. Investors will pay higher premiums if securities are free trading from the outset, he points out. Future capital raises will also be more likely to succeed, he says: "It's easier to raise capital if your shares are traded, because investors have a choice--they can sell if they disagree with something."
Countermoves

As companies move away from
traditional stock exchanges
to over-the-counter listings,
they are enlarging the trading
volumes on some OTC
platforms.

(Annual dollar volume of shares traded
on the OTCQX platform, in billions)

'08 13.0
'09 10.2
'10 15.3
'11 24.0
'12 22.9

Source: OTC Markets

Note: Table made from a bar graph.




Ryan, Vincent


Source Citation (MLA 7th Edition)

Ryan, Vincent. "Deregistered and delisted? No worries: a growing number of public companies are voluntarily moving to the over-the-counter market." CFO, The Magazine for Senior Financial Executives Apr. 2013: 22+. Academic OneFile. Web. 17 May 2014.

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