Brad has come across an excellent recipe for a new beer, and he and 20 college friends decide to go into business. They form a corporation named New Brew Inc., issuing stock only to the 21 of them and not selling any stock outside the group. The beer is a huge success, and they soon need to expand. They decide to sell stock to members of the public to raise capital.

What type of corporation is New Brew before the sale of stock to the public? Aside from stock disclosure requirements, what must they do, and how will it affect their corporate status?