Drew Field
Direct Public Offerings
Case StudiesRegency Stamps, Ltd. Logo

Regency Stamps, Ltd.

Regency Stamps conducts public auctions and online auctions of stamps and items of postage history. The company had been founded by an avid stamp collector in 1984 as a computer software business. Its sales effort shifted in 1992 to focus on the sale of stamps through auctions and the Internet.

By 1999, Regency Stamps had about 6,000 active customers, defined as collectors who were bidding in auctions at least once a year. It needed about $1 million to grow more rapidly, especially by being able to acquire a much larger inventory of stamps for resale.

The offering was 200,000 shares at $5.00 each, with a minimum purchase of 100 shares. With so few active customers, there needed to be some major investors to lead the way. The prospectus cover announced:

Regency’s Directors have collectively agreed to buy a minimum of 52,000
shares at the initial offering price of $5 per share for a total of $260,000.

This commitment also meant that there was no escrow required of monies received in the offering. Regency filed for public offerings in its home state of Missouri and in California. Approvals in those states would generally have been conditioned upon all the share sales proceeds going into a bank escrow account until a minimum amount had been sold in the offering. With the $260,000 promised investments, Regency was able to receive and use the funds from the very first sales.

The founder passed the required test for an issuer agent and was licensed to perform the selling functions permitted by Rule 3a4-1 under the federal Securities Exchange Act of 1934. In addition to Missouri and California, Regency filed for a public offering in New York and met the exemption standards for other states. A total of $919,250 was sold in the offering.