Founder: Ronald Woessner, Lectures Regarding Difficulty of Raising Capital for Smaller-Cap Companies

Lectures Regarding Capital Raising in the Post Dodd-Frank World

Raising capital is HARD in the post Dodd=Frank world. In fact, it’s the  hardest task any CEO will every do.  This task is particularly difficult for start-ups and smaller-cap companies because of the current in-hospitability of the public markets to smaller-cap companies. This in-hospitability cascades down into the private company ecosphere and  negatively impacts the ability of startups and small businesses to raise capital as well.

Mr. Woessner writes and lectures on the topic of the current in-hospitability of the public markets to smaller-cap companies and how this negatively impacts private company startups and small businesses.

This inhospitability typically manifests itself in the following manner:

  1. An illiquid stock.[1]
  2. NO investment analyst coverage, except (perhaps) for one research report written by an analyst for the issuer’s investment banking firm.  Academic research shows this report will receive little to no attention, for the reasons explained in Woessner’s article,[2] written after extensive research on the topic in connection with the movement of “JOBS Act 3.0”[3] through the US House of Representatives in 2018.
  3. NO investment banking firm committing significant capital to making a market in the Company’s stock.  Following a successful up-list from OTC to NASDAQ, the issuer’s investment banking firm typically ceases supporting the stock with significant capital once the S-1 purchasers in connection with the NASDAQ up list have exited their positions.
  4. NO brokers calling retail clients to solicit orders to purchase the stock in the open market
  5. No available capital other than “toxic” capital.[4] With an illiquid stock, no institution or sophisticated investor will invest capital for the reasons explained in this article,[5] written after extensive research.
  6. A falling stock price because there is no strong “buy” side interest in the stock. The falling price will merely be the operation of the law of “supply and demand.”  With little demand for the stock, it will continue to drift downward. As it continues to drift downward, it may become the target of stock manipulators, which will accelerate its decline and possibly precipitate a downward “death” spiral.

[1] As reported by the SEC at its Washington DC April 2018 Roundtable on Thinly Traded Securities, 3,500 of the 8,700 NYSE & NASDAQ ticker symbols have average daily trading volumes (ADV) of less than 50,000 shares per day and approximately 50% had ADV of less than 100,000 per day.

[2] https://www.equities.com/why-do-investment-analysts-ignore-smaller-cap-companies

[3] https://www.skadden.com/insights/publications/2018/07/the-jobs-act-regulatory-reforms

[4] “Toxic” capital is defined to mean a convertible note with original issue discount (OID), conversion price at a sharp discount to the share price, and austere warrant coverage.

[5] https://bullsnbears.com/2018/05/09/stock-trading-liquidity-is-key-for-small-cap-company-survival/

           Lectures & Writing Informed by  “Real World” Experiences

Mr. Woessner’s lectures and writing are informed by his  “real-world” experiences,  knowledge of Wall Street practices, and Capitol Hill experience, as discussed below.

  • Helping the start-up, emerging businesses he’s been affiliated with raise over $120M in capital from Main Street retail investors and Wall Street professional investors.
  • Executing more than 100 major corporate transactions, including public and private debt and equity financings, M&A transactions, and joint ventures in four countries.
  • He is a recognized subject matter expert on the topic of the difficulties US small & emerging businesses face in accessing capital, with articles published by equities.com and elsewhere.
  • His work experience encompasses:
    • serving as Senior Counsel to the Financial Services Committee of the House of Representatives where he was special advisor to the Chairman for capital formation, public capital markets, and fintech issues.
    • serving as General Counsel to two technology NASDAQ-listed companies.
    • corporate/securities attorney with a major Dallas-based law firm representing start-up, emerging business.

Mr. Woessner’s early career

Mr. Woessner, of Dallas, Texas began his career as a corporate securities/merger & acquisition attorney at a major Dallas-based law firm, where one of his law partners was former Florida governor and US Senator Rick Scott.  He subsequently worked in the public, startup & smaller-cap company ecosphere for 25+ years.  This resulted in years of real-world, hands-on experience working in the trenches, in the capacities of General Counsel, senior executive and CEO.

Business experience in startup, smaller-cap company ecosphere

His years of real-world, hands-on experience working in the trenches, in the capacities of General Counsel, senior executive and CEO , make him uniquely qualified to write and lecture on the  topic of the current in-hospitability of the capital markets to smaller-cap companies and how this negatively impacts the ability of startups and small businesses to raise capital as well.

During the years in the startup & smaller-cap company ecosphere, in his roles as either as attorney, business principal or investor Mr. Woessner participated in over 100 corporate transactions (M&A, public offerings, private placements, acquisitions, divestitures, NASDAQ listings, bank financings, equity investments, international joint ventures, technology licensing arrangements, government procurements and others). Moreover, Mr. Woessner managed dozens of the typical legal controversies that often arise for public companies, such as securities class action lawsuits, employment discrimination litigation, “whistleblower” claims, patent and trademark infringement disputes, ordinary course of business contract disputes, and FINRA and SEC inquiries.

With respect to capital, as all CEOs and CFOs of companies know:  raising capital is not a “nice to have” – it is required for survival. Without capital, the business dies.   In the capacities of investor, entrepreneur, general counsel or CEO, Mr. Woessner managed or participated in approximately 50 corporate private and public debt and equity financing transactions.  These transactions raised over $200M dollars, inclusive of $80M raised from a “cash out” strategic sale transaction.

In addition to learning the legal mechanics and various “deal structures” for corporate financings through this experience, Mr. Woessner is familiar with the art and science of the investment presentation to raise capital. To wit, he helped raise approximately $22M, inclusive of $12.4M raised in connection with up-listing from the OTC markets to NASDAQ, for a smaller-cap company whose revenues approximated $5.9M.  To put the NASDAQ up-listing accomplishment in perspective => more people routinely make it to the top of Mt. Everest every year than the number of companies that up-list from the OTC to NASDAQ.

Knowledge of Wall Street practices

Despite all of the press about the startup ventures funded by venture capitalists in Silicon Valley, venture capital investors fund approximately only 1/20th of 1% of all US startups  and virtually no minorities.  In 2018, only 1.4% of the minutely small percentage of capital provided by venture capital firms went to women-owned ventures, according to the Barron’s article here. Wall Street remains the financial capital of the world.  All startups and smaller-cap companies at one time or another in their life cycle need to go to Wall Street to obtain capital.  Mr. Woessner understands Wall Street practices.

Knowledge of Washington DC and Capitol Hill

Through Mr. Woessner’s professional experience in the public policy arena, he has a keen understanding of how the US Congress operates and how the federal agencies operate, with many  personal and professional relationships in Washington, DC.

More information about Mr. Woessner appears below

Following his graduation from the University of Minnesota Law School where he graduated magna cum laude, Mr. Woessner began his legal career as a corporate securities/merger & acquisition attorney with the Dallas-based law firm of Johnson & Gibbs, where he practiced law with US Senator Rick Scott, formerly the 45th governor of Florida.

Following private legal practice, Mr. Woessner jumped into the micro-cap and nano-cap business ecosystem where his early business endeavors were intertwined with David P. Cook, the founder of Blockbuster Entertainment.

Mr. Woessner joined Amtech Corporation (NASDAQ: AMTC) as a senior executive, which had also been founded by David P. Cook.  Amtech was the developer of a radio frequency identification technology which is used for electronic toll collection throughout the U.S. Toll collection systems installed by Amtech include the “EZ-Pass,” system used throughout the Northeast; the “SunPass” system used throughout Florida; and the “TollTag” system, used throughout Texas and Oklahoma. The system is also used to track the movement of railroad cars throughout every inhabited continent of the world.  The Amtech family of affiliated companies grew to a nearly $200MM in revenue before being sold.

Subsequent to Amtech Corporation, Mr. Woessner was one of ten employees who joined Mr. Cook to attempt to create an online system that would enable consumers to download music. “CustomTracks,” as this business venture was named, was half a dozen years too early as the record companies did not grant the necessary licenses to enable the company to digitize their catalogs so that consumers could download songs.

This core group of employees, including Mr. Woessner, then redirected their energies to creating an e-mail security services provider named ZixCorp (NASDAQ: ZIXI), another company founded by David P. Cook. The ZixCorp system is used today by healthcare providers and insurers to comply with the privacy and security requirements of the Health Insurance Portability and Accountability Act (HIPAA) and the Gramm-Leach-Bliley Act. ZixCorp has continued to grow year-after-year from zero revenues in the year founded.  In 2017, the company created positive cash flow of $18.2M on annual revenues of $65.7M.

In addition to his extensive legal and business experience in the smaller-cap company ecosphere, Mr. Woessner is a certified Toastmaster, and has also made numerous TV appearances, including two on the Fox Business Network:

Mr. Woessner’s corporate governance credentials include a director certification from the National Association of Corporate Directors (NACD).

          Business and Legal Expertise

  • Mentoring  start-ups and small businesses
  • Resolving litigation and business disputes that are impeding business progress
  • Mergers & acquisitions – completed over 40+ in career
  • Public/private financings
  • Securities laws compliance
  • Joint ventures/partnerships
  • Governmental affairs
  • Intellectual property protection
  • Employment/human resources
  • Software/technology licensing

Work Experience

  • Former Senior Counsel to the Financial Services Committee of the US House of Representatives where he was special advisor to the Chairman for capital markets and fintech matters
  • Chief Executive Officer for a NASDAQ-listed law enforcement SaaS company
  • Senior Vice President & General Counsel for a NASDAQ-listed encrypted email service provider
  • Vice President & General Counsel for a NASDAQ-listed radio frequency identification (RFID) company
  • Shareholder, Johnson & Gibbs, P.C., Dallas, Texas (corporate/securities & mergers and acquisitions)

Education

  • Texas A&M University, Bachelor of Science degree, summa cum laude
  • University of Minnesota Law School, Juris Doctor degree, magna cum laude; Law Review, Order of the Coif, Legal Writing Instructor