This article is from the Investing Articles: Public Offerings: IPO and DPO series.
SCOR (Small Corporate Offering Registration) is a do-much-of-it-yourself securities registration document ("prospectus") in the form of a 50-question form designed so that knowledgeable business people, their attorneys and accountants can create the documents needed to sell state-registered securities to the general public--a direct public offering.
SCOR gives small businesses access to public capital by making the
process affordable. It is up to them to seize that
opportunity, and to make something of it. Selling debt or equity securities (common or preferred stock, bonds, promissory
notes, etc.) directly to the public, (that is, without having to pass muster with the Securities and Exchange Commission and
stock exchanges such as the New York, American, or NASDAQ the national market, or even regional exchanges such as the Boston, Philadelphia, Chicago, or Pacific) is an option every small business--start-up, developing, or going concern--should consider.
More than 700 companies have attempted to register almost $1
billion in equity and more than $100 million in debt using this
process. While not all have succeeded, many have. Several companies
have used direct public offerings (DPO) to move their
businesses from their garages onto national or regional exchanges.
SCOR is an Important Part of the DPO Process
Small companies have been able to sell securities directly to the public without having to go through the expense of a full SEC registration since 1982. However, it was not until 1989 when the North American Securities Administrators Association
adopted the Small Corporate Offering Registration form, that the process of state registration became truly practical.
SCOR refers to both a public offering of $1 million or less and the
form used as the offering document (prospectus). Companies seeking to
raise up to $1 million in a 12-month period must register the
securities only in the states in which they
intend to sell them.
Who can use the SCOR form?
While the federal exemption is very broad, there are additional limitations on who can use the SCOR Form. Generally, the form may be used by all small corporations except: Blank check and blind pool companies (companies that have no specific purpose for the funds they are trying to raise); Companies involved in extractive industries, such as oil and gas, and mining companies; Reporting companies (companies required to make regular reports such as 10-K and 10-Q to the Securities and Exchange Commission); and Investment companies. Other than those, the form has been used by high tech, low tech, real estate, lifestyle, manufacturing, merchandising and financial companies at stages of development.