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Level Brands’ (LEVB) Becomes Second RA+ IPO To List On The NYSE.

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Level Brands creates bold, unconventional and socially responsible branding for leading businesses. With a focus on corporate brand management and consumer products marketing art, beauty, fashion, health & wellness including the beverage space, entertainment, and real estate. Licensed brand marketing is at the core of the Level Brand businesses: Ireland Men One or I’M1, for millennial men and the women who love them; Encore Endeavor One or EE1. Working closely with Chairman Emeritus and Chief Brand Strategist, Kathy Ireland, the Chairman, CEO and Chief Designer of kathy ireland® Worldwide, Level Brands seeks to secure strategic licenses and joint venture partnerships for our brands.

Level Brands’ IPO Lists On The NYSE; How And Why They Switched To Regulation A+.

Level Brands Inc became the seventh Regulation A+ IPO to complete and the second to list and trade on the NYSE American Exchange. The company raised its maximum of $12 million by selling 2 million shares at $6 each at a pre-money valuation of $35 million. The ticker is NYSE: LEVB

Martin Sumichrast, CEO of Level Brands Inc. said; “We were probably one week away from completing our S-1 IPO when we decided to change direction and make a Reg A+ IPO instead. We felt that with Kathy Ireland’s huge affinity group as our focus we would do well to market our offering broadly and provide democratic access to our IPO – unlike the very limited availability that is usual for an S-1. Kathy has always been a disrupter, and she liked this approach.” Kathy is Chairman Emeritus and has a significant role in the company. Advantages of Reg A+ over a traditional IPO.

“The ability to go out and market the offering and to talk to investors that Reg A+ provides is a welcome change, ” he said.Martin did a conventional Road Show over a three week period that he started before the SEC Qualified the offering, using the testing the waters feature of Reg A+ that allows companies to check investor interest without taking investments or binding commitments before Qualification. The entire offering process from SEC Qualification on October 27th through to listing took three weeks.

Level Brands is in the licensing, marketing and brand management business, and Marty found that he was able to generate a substantial number of new customer agreements through investment discussions that evolved into win/win situations combining investment with new client contracts.

Of the $12 million raised, half came from existing investors and friends of the company. This level of commitment from insiders is a good indication and also makes the capital raise far easier to accomplish, of course.

Martin said that the seasoned Broker-Dealer team of Joseph Gunnar and TriPoint/BANQ was very effective and that with their help he was able to meet with numerous institutional investors. The offering was heavily oversubscribed with some investors complaining because their allocation was cut back so much. A good problem to have!

He recommended that CEO’s planning their Reg A+ IPO allocate four to six weeks to market to and bring in online consumer investors to leverage the equal access to an investment that Regulation A+ makes possible. It does take time to build marketing momentum, and a two or three-week window is very short and challenging to conduct cost effectively.

The company delivered revenue of $2.6 mill with losses of $3.9 mill in fiscal 2016 and $4.2 mill revenue with losses of $1.1 mill in fiscal 2017 (ending March 2017). In the second quarter of calendar 2017 revenue grew to an annualized rate of $7.5 mill with profits of an annualized $2.69 mill. Check the Offering Circular for Level Brands Inc.

TriPoint CEO Mark Elenowitz said, “Martin’s investment banking experience combined with the strong brand awareness of Kathy Ireland were key factors in the success of this offering”. TriPoint has now brought three companies public via Reg A IPOs – NYSE: MYO, NASD: FAT and today NYSE: LEVB. In addition, two of these three listed on the NYSE American. This is impressive, and I look forward to seeing how Mark and his team expand on their early lead.

Martin gave a great deal of credit to the SEC; “The SEC was proactive and helped us – we worked as a team. This is the first time that a company has made a last minute switch from S-1 (traditional IPO) to a Regulation A+, and the conversion took sixty days in total, including the three weeks we took to re-write our filing.”

CEO Marty comes from a 24-year investment banking background and in my opinion, he is taking the long view of building success as a public company. Guidance on what it takes to deliver after your IPO here. I like the fact that he raised a relatively small amount of capital which can set the stage for secondary offerings in future years as needed while keeping ownership dilution at a modest level in the short term.

I am looking forward to full commitment underwritten Reg A+ IPOs – they bring with them the option to use the Green Shoe which provides a valuable method for underwriters to limit naked shorting of newly listed stocks. In my view, it is just a matter of time before this development, as underwriters gain experience with Reg A+ and Regulation A+ earns credibility while the kinks in the process get solved by all involved. I am seeing larger underwriters paying more attention to Reg A+ IPOs, and they are more likely to make full commitment transactions.

List of service providers for this IPO.

Lead Broker-Dealer Joseph Gunnar

Co-Manager TriPoint/BANQ

External Marketing Agency CrowdFundX

Clearing of Shares ViaFolio

Audit Cherry Beckaert LLP

SEC Filing Pearlman Law Group LLP

Transfer Agent VStock Transfer, LLC

Rod Turner is a seasoned serial entrepreneur. CEO of Manhattan Street Capital, he helps CEOs raise capital via IPOs, Regulation A+ and Compliant ICOs  for Mid-Stage companies.

 

Level Brands Announces Closing of $12 Million Initial Public Offering

 

 

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