| The Small Corporate Registration was designed | | | | launching a DPO. Some of the advantages of a DPO |
| specifically for small businesses. It allows small | | | | are that it be advertise to the public, the company can |
| companies to raise equity or debt capital publicly | | | | solicit investors, and it works best when offered |
| without having to register with Securities and | | | | directly to targeted group.These groups are referred |
| Exchange Commission. It is designed to streamline the | | | | to as affinity groups or groups that have some type |
| state review process by using standardized forms and | | | | of connection with the company, its product or it |
| reviews. Each states separately reviews the | | | | services. A company that can easy contact its |
| company's filings and issues a permit allowing general | | | | customer has an advantage over one that may have |
| solicitation to the public in that state.Permits are | | | | many customers but no information on them at all. For |
| generally issue within 30 days ( in Nevada) or it may | | | | example a company in the medical field may target |
| take up six months (as is the case in California) | | | | doctors, but since it is impossible to know all the |
| depending on each state's regulatory standard.This | | | | doctors in the area it may need to purchase a list of |
| form of registration is available to small securities | | | | doctors from a direct mail company.Regulation D 504 |
| issuers pursuant to Regulation D, Rule 504, of the | | | | does not require audited financial but you can only sell |
| Securities and exchange Act of 1933, as amended.It | | | | to 35 non-accredited investors the rest must be |
| allows small companies to be able to raise up to one | | | | accredited. |
| million dollars in equity financing with certain limitations | | | | Soliciting and advertising for investors is not |
| and guidelines. This program is known as Registration | | | | allowed.An accredited investor: |
| By Exemption because it is basically a hybrid between | | | | · A natural person who has individual net worth, |
| a public offering and a private placement.This type of | | | | or joint net worth with the person's spouse, that |
| offering is often referred to as DPO, or Direct Public | | | | exceeds $1 million at the time of the purchase. |
| Offering because the stock can be sold to the public | | | | · Accredited investors are natural persons with |
| without the use of an underwriter or agent (Broker). | | | | income exceeding $200,000 in each of the two most |
| These securities can also be sold to the public and be | | | | recent years or joint income with a spouse exceeding |
| resold into established secondary market.Under an | | | | $300,000 for those years and a reasonable |
| SCOR offering a company can advertise for | | | | expectation of the same income level in the current |
| investors, and sell securities to anybody who | | | | year. |
| expresses an interest, this provides a great advantage | | | | · A broker/dealer registered with the Commission |
| over a 504 offering where the offering is restricted to | | | | under the Exchange Act purchasing for its own |
| only 35 non-accredited investors.Being able to list the | | | | account as an investment is included. [Rule 501(a)(1)]. |
| securities on the Nasdaq Bulletin Board or the Pink | | | | · A trust with assets in excess of $5 million, not |
| Sheets is another positive for DPO's because it makes | | | | formed to acquire the securities offered, whose |
| the investment more liquid and appealing to | | | | purchases a sophisticated person makes. |
| investors.You can anticipate receiving comments from | | | | · A charitable organization, corporation, or |
| examiners in many of the states in which registration is | | | | partnership with assets exceeding $5 million. |
| sought, depending on the regulatory approach taken | | | | · A director, executive officer, or general partner |
| by the state, those comments may be limited to | | | | of the company selling the securities. |
| request for disclosure of additional information or may | | | | Regulation D 504 Is easy, fast and inexpensive to |
| require certain terms of the offering to be modified | | | | prepare. No underwriter, broker or agent is required, |
| with the states fairness laws.Failure to resolve | | | | stock may sold company employees.None of these |
| outstanding comments can lead to denial of application | | | | type offerings are one-sized fits all each must be |
| for registration by the state. The states may make | | | | evaluated on its own merit and the needs of the |
| applicable substantive fairness standard as an | | | | company. Nor are these the only options.Upon |
| appendix to the filing instructions or make use other | | | | completion of the offering the company must request |
| means to make the available.SCOR offering may be | | | | for a Market Maker to file a 15c211 to have the shares |
| done in selected states and it requires audited financial | | | | of the company publicly quoted.For additional |
| statements. An experience securities lawyer is | | | | information please visit: Quinones, President of Genesis |
| required, one that is familiar with the process and is | | | | Corporate Advisors has spent over 25 years in the |
| familiar with states requirements.The issuer must be | | | | securities industry. In 1992 he founded JDQ Financial |
| incorporated since it will selling stock in the corporation, | | | | Group, Inc. and proceeded to build it up from a one |
| It must have a Business Plan because much of the | | | | Man operation to the point where it employed many |
| information required in the offering circular can be | | | | traders, advised numerous client, and generated millions |
| taken from the business plan.A company should | | | | in revenues. |
| gauged investors interest in the offering before | | | | |