This article is from the Investing Articles: Public Offerings: IPO and DPO series.
27.1(a) Exact corporation name, state and date of incorporation, street address of principle office, company telephone number, fiscal year, and the name of the person to contact at Company with respect to offering.
27.1(b) Introductory Statement. The objective of this statement is to summarize, for the potential investor, the full Small Corporate Offering Registration Form (Form U-7). This summary should consist of very brief statements.
27.2 List, in order of importance, the factors which the Company considers to be the most substantial risks to an investor in this offering in view of all the facts and circumstances or which otherwise make the offering one of high risk or speculative (i.e. those factors which constitute the greatest threat that the investment will be lost in whole or in part, or not provide an adequate return).
27.3 With respect to the business and its properties:
27.3(a) Describe, in detail, what business the Company does and proposes to do, including what products or goods are or will be produced and/or what services are being or will be rendered.
27.3(b) Describe how these products or services are to be produced or rendered and how and when the Company intends to carry out its activities. If the Company plans to offer a new product(s), state the present stage of development, including whether or not a working prototype(s) is in existence.
27.3(c) Describe the industry in which the Company is selling or expects to sell its products or services and, where applicable, any recognized trends within the industry. Describe that part of the industry and the geographic area in which the business competes or will compete. Indicate whether competition is or is expected to be by price, service, or other basis. Indicate the current or anticipated prices or price ranges for the Company's products or services, or the formula for determining prices, and how these prices compare with those of the competitors' products or services.
27.3(d) Describe, specifically, the marketing strategies the Company is employing or will employ in penetrating its market or in developing a new market.
27.3(e) State the backlog of written firm orders for the products and / or services as of a recent date (within the last 90 days) and compare it with the backlog of a year ago from that date.
27.3(f) State the number of the Company's present employees and the number of employees it anticipates it will have within the next 12 months. Indicate any supplemental benefits or incentives arrangements the Company has or will have with its employees.
27.3(g) Describe, generally, the principal properties (such as real estate, plant and equipment, patents, etc.,) that the Company owns.
27.3(h) Indicate the extent to which the Company's operation depends or is expected to depend upon patents, copyrights, trade secrets, know-how, or other proprietary information and the steps undertaken to secure and protect this intellectual property.
27.3(i) If the Company's business, products, or properties are subject to material regulation (including environmental regulations) by federal, state, or local government agencies, indicate the nature and extent of regulations and their effects or potential effects upon the Company.
27.3(j) State the names and subsidiaries of the Company, their business purposes and ownership, and indicate which are included in the Financial Statements attached hereto. If not included, or if included but not consolidated, please explain.
27.3(k) Summarize the material events in the development of the Company (including any material mergers or acquisitions) during the past five years.
27.4(a) If the Company was not profitable during the last fiscal year, list below in chronological order the events must or should occur for the Company to become profitable, and indicate the method by which the Company will achieve the milestones.
27.4(b) State the probable consequences to the Company of delays in achieving each of the above events.
If the securities offered are common stock, or are exercisable for or convertible into common stock, the following factors may be relevant to the price at which the securities are being offered.
27.5 What were net, after-tax earnings for the last fiscal year?
27.6 If the Company had profits, show offering price as a multiple of earnings.
27.7(a) What is the net tangible book value of the Company? If the net tangible book value per share is substantially less than this offering (or exercise or conversion) price per share, explain the reason for the variation.
27.7(b) State the dates on which the Company sold or otherwise issued securities during the last 12 months.
27.8(a) What percentage of the outstanding shares of the Company will the investors in this offering have?
27.8(b) What post offering value is management implicitly attributing to the entire Company.