710 IAC 4-4-2 - Contents of prospectus

Authority: IC 23-19-6-5

Affected: IC 23-19-3-4

Sec. 2.

(a) The prospectus, other than an offering circular to be utilized pursuant to a Regulation A offering pursuant to the Securities Act of 1933, filed as a part of any application for registration by qualification shall contain the following material which shall appear on the front page of the prospectus:

NAME OF ISSUER

Address

Total Shares Offered

(Same in Indiana if different from above)

Price to Public Underwriting or Selling Commission Net Proceeds to Issuer After Expenses Estimated at $ _______
Per Share or Unit: $ $ $
Aggregate: $ $ $

THESE ARE SPECULATIVE SECURITIES

THE INDIANA SECURITIES DIVISION HAS NOT IN ANY WAY PASSED UPON THE MERITS OR

QUALIFICATIONS OF OR RECOMMENDED OR GIVEN APPROVAL TO, THE SECURITIES HEREBY OFFERED,

OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE

CONTRARY IS A CRIMINAL OFFENSE.

NAME OF UNDERWRITER NAME OF RESIDENT AGENT

Address Address

The date of this prospectus is:

(b) If applicable, the following additional material shall appear on the front page:

IN CONNECTION WITH THIS OFFERING THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF (identify each class of securities in which this type of transaction may be effected) AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. THE STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

(A statement that the securities are offered only to bona fide residents of the state of Indiana and any other restrictions on the purchase or resale of the offered securities.)

(c) A table of contents shall appear on the inside front cover. The table of contents shall list the items or topics contained in the prospectus, which shall, to the extent appropriate, appear in substantially the following order and shall contain the following information:

TABLE OF CONTENTS

Page

Introduction ...................................................................................

The Company .................................................................................

The Purpose of the Offering and Use of Proceeds .......................................................

Management's Discussion and Analysis of Financial Condition ............................................

Description of the Business .......................................................................

Dividends ....................................................................................

Capitalization .................................................................................

Dilution ......................................................................................

Marketability and Price Range of Offered Securities ....................................................

Management and Principal Stockholders .............................................................

Control ......................................................................................

Remuneration and Transactions with Management .....................................................

Options and Warrants ...........................................................................

Escrow of Proceeds .............................................................................

Pending or Anticipated Litigation ..................................................................

Material Contracts ..............................................................................

Underwriter, Broker-Dealer or Plan of Distribution .....................................................

Selling Stockholders ............................................................................

Legal Opinions ................................................................................

Experts ......................................................................................

Opinion of Independent Accountants ................................................................

Financial Statements ............................................................................

(d) The following information shall, to the extent applicable, appear in the prospectus under appropriate captions or headings:
(1) The introductory paragraph should contain a brief statement covering the following areas (if applicable):
(A) The corporation will face competition that will have substantially greater capital and more experienced management.
(B) Success or failure of a new corporation depends largely on the ability of management.
(C) Securities of small, newly-established corporations are not readily marketable after the primary issue is closed and often remain not marketable until a time as the corporation has established a large number of shareholders.
(D) The corporation is under no obligation to repurchase securities once sold and does not intend to make any repurchases.
(2) The following information about the issuer:
(A) The name, address, and form of organization of the issuer.
(B) The state or foreign country in which organized and the date of its organization.
(C) If the issuer has not yet begun business, a statement to that effect, a statement as to any events on which the beginning is contingent, and a statement as to the expected date of commencement.
(D) A statement as to the general character of its business or businesses and the places where the business or businesses are conducted.
(E) A statement of the general competitive conditions in the industry in which the issuer is or will be engaged.
(F) If the issuer or its shareholders are subject to any unusual:
(i) federal;
(ii) state; or
(iii) local;

tax treatment, a statement as to the effect of this treatment.

(3) A statement as to the application of the proceeds of the offering as set out in IC 23-19-3-4(b)(9), other than the raising of funds for the application.
(4) A section on management's discussion and analysis of financial condition containing the following information:
(A) A discussion of the issuer's:
(i) financial condition;
(ii) changes in financial condition; and
(iii) results of operations.

The discussion shall provide information as specified in clause (B)(i) through (B)(iii) and also shall provide any other information that the issuer believes to be necessary to an understanding of its financial condition. Discussions of liquidity and capital resources may be combined whenever the two (2) topics are interrelated. Where in the issuer's judgment a discussion of segment information or of other subdivisions of the issuer's business would be appropriate to an understanding of the business, the discussion shall focus on each relevant, reportable segment or other subdivision of the business and on the registrant as a whole.

(B) Required discussion of the following:
(i) Identify any known liquidity issues including:
(AA) trends;
(BB) demands;
(CC) commitments;
(DD) events; or
(EE) uncertainties;

that will result in or that are reasonably likely to result in the registrant's liquidity increasing or decreasing in any material way. If a material deficiency is identified, indicate the course of action that the registrant has taken or proposes to take to remedy the deficiency. Also identify and separately describe internal and external sources of liquidity, and briefly discuss any material unused sources of liquid assets.

(ii) The following concerning capital resources:
(AA) A description of the issuer's material commitments for capital expenditures as of the end of the latest fiscal period, with an indication of the general purpose of the commitments and the anticipated source of funds needed to fulfill the commitments.
(BB) A description of any known material trends, favorable or unfavorable, in the issuer's capital resources. Include in that description any expected material changes in the mix and relative cost of the resources. The discussion shall consider changes between equity, debt, and any off-balance sheet financing arrangements.
(iii) The following concerning results of operations:
(AA) A description of any unusual events or transactions or any significant economic changes that materially affected the amount of reported income from continuing operations and, in each case, indicate the extent to which income was so affected. In addition, describe any other significant components of revenues or expenses that, in the registrant's judgment, should be described in order to understand the registrant's results of operations.
(BB) A description of any known trends or uncertainties that have had or that the registrant reasonably expects will have a material impact, whether favorable or unfavorable, on net sales, revenues, or income from continuing operations. If the issuer knows of events that will cause a material change in the relationship between costs and revenues (including known future increases in costs of labor or materials, price increases, or inventory adjustments), the change in the relationship shall be disclosed.
(CC) To the extent that the financial statements disclosure of material increases in net sales or revenues, including a narrative discussion of the extent to which the increases are attributable to increases in prices or to increases in the volume or amount of goods or services being sold or to the introduction of new products or services.
(DD) For the three (3) most recent fiscal years of the issuer, or for those fiscal years in which the issuer has been engaged in business, whichever period is shorter, a discussion of the impact of inflation and changing prices on the registrant's net sales and revenues and on income from continuing operations.
(5) A description of the business and property of the issuer including the following:
(A) A description of the general development of the business of the registrant, its subsidiaries, and any predecessor or predecessors during the past five (5) years, or a shorter period as the registrant may have been engaged in business. Information shall be disclosed for earlier periods if material to an understanding of the general development of the business.
(i) In describing developments, information shall be given as to matters including the following:
(AA) The year in which the registrant was organized and its form of organization.
(BB) The nature and results of any bankruptcy, receivership, or similar proceedings with respect to the registrant or any of its significant subsidiaries; the nature and results of any other material reclassification, merger, or consolidation of the registrant or any of its significant subsidiaries.
(CC) The acquisition or disposition of any material amount of assets otherwise than in the ordinary course of business.
(DD) Any material changes in the mode of conducting the business.
(ii) Describe, if formulated, the issuer's plan of operation for the remainder of the fiscal year, if the registration statement is filed prior to the end of the issuer's second fiscal quarter. Describe, if formulated, the issuer's plan of operation for the remainder of the fiscal year and for the first six (6) months of the next fiscal year if the registration statement is filed subsequent to the end of the second fiscal quarter. If the information is not available, the reasons for its not being available shall be stated. Disclosure relating to any plan should include matters as the following:
(AA) A statement in narrative form indicating the issuer's opinion as to the period of time that the proceeds from the offering will satisfy cash requirements and whether in the next six (6) months it will be necessary to raise additional funds to meet the expenditures required for operating the business of the issuer. The specific reasons for the opinion shall be set forth and categories of expenditures and sources of cash resources shall be identified; however, amounts of expenditures and sources of cash resources need not be provided. In addition, if the narrative statement is based on a cash budget, the budget should be furnished to the division as supplemental information, but not as a part of the registration statement.
(BB) An explanation of material product research and development to be performed during the period covered in the plan.
(CC) Any anticipated material acquisition of plant and equipment and the capacity thereof.
(DD) Any anticipated material changes in number of employees in the various departments including research and development, production, sales, or administration.
(EE) Other material areas that may be peculiar to the registrant's business.
(B) A narrative description of the business including the following:
(i) A description of the business done and intended to be done by the issuer and its subsidiaries. The description should include, if material to an understanding of the registrant's business, a discussion of the following:
(AA) The principal products produced and services rendered and the principal markets for and methods of distribution of the products and services.
(BB) The status of a product or service if the issuer has made public information about a new product or service that would require the investment of a material amount of the assets of the registrant or is otherwise material.
(CC) The estimated amount spent during each of the last two (2) fiscal years on company-sponsored research and development activities determined in accordance with generally accepted accounting principles. In addition, state the estimated dollar amount spent during each of the years on material customer-sponsored research activities relating to the development of new products, services, or techniques or the improvement of existing products, services, or techniques.
(DD) The number of persons employed by the issuer indicating the number employed full time.
(EE) The material effects that compliance with federal, state, and local provisions that have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment may have upon the capital expenditures, earnings, and competitive position of the registrant and its subsidiaries. The issuer shall disclose any material estimated capital expenditures for environmental control facilities for the remainder of its current fiscal year and for the further periods as the registrant may deem material.
(ii) A description of those distinctive or special characteristics of the issuer operations or industry that may have a material impact upon the registrant's future financial performance. Examples of factors that might be discussed include the following:
(AA) Dependence on one (1) or a few major customers or suppliers (including suppliers of raw materials or financing).
(BB) Existing or probable governmental regulation.
(CC) Expiration of material labor contracts or patents, trademarks, licenses, franchises, concessions, or royalty agreements.
(DD) Unusual competitive conditions in the industry.
(EE) Cyclicality of the industry.
(FF) Anticipated raw material or energy shortages to the extent management may not be able to secure a continuing source of supply.
(C) A brief statement on the location and general character of the principal plants, and other materially important physical properties of the issuer and its subsidiaries. If any of the property is not held in fee or is held subject to any major encumbrance, so state and briefly describe how held.
(6) A statement of the cash and stock dividends paid by the issuer during the year of the application and for at least five (5) preceding years. If no dividends were paid, state that fact.
(7) A statement of the long-term and short-term debt and each class of capital stock or other interest in the issuer before the offering and after the offering and application of proceeds. Present this information in substantially the same tabular form as follows:

Title of Class Outstanding As of _____, 20___ After the Offering
Short-term debt: $
Long-term debt:
Notes to banks $
Notes to others $
_____ % Convertible Debentures due $
Total long-term debt: $
Capital Stock
Preferred stock par
$ ______ ______ shares _____ shares
______ shares authorized
______ % cumulative dividend preference
Common stock par
$ ______ _____ shares _____ shares
_____ shares authorized
(8) An explanation where common equity securities are being registered and there is substantial disparity between the public offering price and the effective cash cost to officers, directors, promoters, and affiliated persons of common equity acquired by them in transactions during the past five (5) years, or that they have the right to acquire, a comparison of the public contribution under the proposed public offering and the effective cash contribution of these persons. In these cases, and in other instances where common equity securities are being registered by a registrant that has had losses in each of its last three (3) fiscal years and there is a material dilution of the purchasers' equity interest, the following shall be disclosed:
(A) The net tangible book value per share before and after the distribution.
(B) The amount of the increase in the net tangible book value per share attributable to the cash payments made by purchasers of the shares being offered.
(C) The amount of the immediate dilution from the public offering price that will be absorbed by the purchasers.
(9) A section describing the securities issued, including an explanation of the following:
(A) Whether the securities offered consist of:
(i) capital stock;
(ii) the rights of security holders as to voting;
(iii) dividends;
(iv) liquidation; and
(v) any other material rights or restrictions.
(B) If the securities offered are debt securities, the rights of the purchasers as to:
(i) interest;
(ii) interest payment dates;
(iii) convertibility;
(iv) redemption (including the existence or lack of a sinking fund provision); and
(v) the degree of subordination, if any;

should be carefully enumerated in addition to any other material facts regarding the rights of holders.

(C) The names and addresses of the registrar and transfer agent should be stated, if applicable.
(10) A statement on the marketability and price range of offered securities, that shall include the following:
(A) A statement as to what provisions, if any, have been made to provide for the marketing of the offered security by purchasers in the offering. If a broker-dealer has made or has agreed to make a market for the securities, a statement as to the name and capitalization of the broker-dealer. If the broker-dealer is a member of the Financial Industry Regulatory Authority, a statement to that effect may be made in lieu of enumerating the capitalization of the broker-dealer.
(B) A statement on the range of the bid price for the offered security in any regularly maintained market (if any) during the year of application and the preceding five (5) years.
(C) If there has been no regularly maintained market for the offered security, state the price at which any shares or units have been sold by the issuer or applicant during the year of application and the five (5) preceding years. State whether any of the shares or units were issued to any person identified under subdivision (11) to any member of the family of that person or to any trust or corporation or other business entity in which that person or any member of his or her family has a beneficial or ownership interest, and set out the consideration given.
(11) A description of management and principal shareholders including the following:
(A) A list of each:
(i) officer;
(ii) director;
(iii) holder of more than ten percent (10%) of the voting shares in the issuer; and
(iv) employee who makes a significant contribution to the business of the issuer;

and supply a brief description of the business background of each person. Do not include nonbusiness positions unless particularly relevant to the business of the issuer. Include the names of all corporations (including those no longer in existence) that each person has served as director or officer and a very brief statement of the business of each corporation. Include any conviction of a misdemeanor or felony involving fraud in any form and any civil or criminal litigation involving any federal or state securities law to which any person is or has been a party.

(B) Provide in tabular form the following information as to each person identified in clause (A). Present holdings shall be as of a specified date within thirty (30) days prior to the filing of the application. Shares subscribed for shall be added. The fourth column of the table is necessary only in companies formed within two (2) years of the filing of the application.

Name No. of Shares Owned As Of ____, 20 Cash Price As Of _____ , 20___ % of Shares If Offering Sold % of Cash Paid In If Offering Sold % of Shares If All Options or Warrants Exercised
Total for group

Total for public Grand Total
Name Total Subscription Unpaid Balance
Total _________ _________
(C) If all shares subscribed for by any person identified in clause (A) have not been fully paid for or have been issued for less than par or stated value as of the date of filing of the application, also include the following table, as well as a statement of the opinion of counsel for the issuer as to the present or contingent liabilities of those persons to the issuer:

"The following persons had not yet fully paid for _____ shares for which they had subscribed as of _____, 20 _____, and that are shown as owned by those persons in the above table.".

Name Total Subscription Unpaid Balance
Total ________ _________
(D) If any of the persons identified in clause (A) has purchased any of the shares shown as owned in the table required by clause (B) from any person other than the issuer, the table shall show the cash price paid for the shares and include a footnote indicating from whom the shares were purchased and what consideration the issuer received for their initial issue.
(E) Shares owned by or for the benefit of any:
(i) person;
(ii) spouse;
(iii) child;
(iv) brother;
(v) sister; or
(vi) parent;

of that person shall be deemed owned by the person for purposes of inclusion in the table required by clause (B). An explanatory footnote to the table shall be included if any shares are so treated.

(F) A column "% of Shares Subject to Option or Warrant" shall be included only if options or warrants are issued. If it is included, a footnote shall refer to "options and warrants" at the appropriate page in the prospectus.
(12) A statement of the percentage of voting power to be held by persons identified under subdivision (11). Include a statement of the ability of the persons to control the corporation if they vote as a unit.
(13) A statement on remuneration and transactions with management including the following:
(A) In tabular form:
(i) total salary;
(ii) commissions; or
(iii) other remuneration;

paid by the issuer or any parent, affiliate, or subsidiary of the issuer to any person identified in subdivision (11), or any person to whom payments totaling twenty-five thousand dollars ($25,000) or more were made during the twelve (12) months prior to the filing of the application, and the estimated total of the payments in the next twelve (12) months.

(B) Include any material transactions between the issuer and any person identified in subdivision (11) or any corporation in which that person has an interest as:
(i) an officer;
(ii) a director; or
(iii) a shareholder.
(14) A statement whether any options or warrants to purchase any securities of the issuer are outstanding or proposed to be issued. If there are options or warrants, state the reason for their issue and present in tabular form the following information:

Name of Holder Shares Subject to Option or Warrant Option or Warrant Price Date of Issue Date of Expiration
(15) A description of the escrow of proceeds setting forth the relevant terms of any escrow provisions relating to the proceeds of the offering, including the:
(A) name of the escrow agent;
(B) percentage of proceeds to be escrowed;
(C) length of the escrow term; and
(D) conditions for release of the proceeds.
(16) A statement setting forth any pending or threatened litigation involving:
(A) the issuer;
(B) its officers;
(C) its directors; or
(D) its promoters; that may materially affect the issuer's business or ability to commence business.
(17) A statement setting forth a brief description of any contracts with:
(A) customers;
(B) suppliers; or
(C) others; that are of sufficient importance to the issuer that their termination would materially affect the issuer's business.
(18) A statement setting forth the names and addresses of every underwriter or recipient of a finder's fee, including (separately):
(A) cash;
(B) securities;
(C) contracts; or
(D) anything of value to accrue in connection with the sale of the securities.

If discounts, commissions, or fees are to be variable, state the basis for determination and the maximum and minimum amounts. Briefly state the terms of the underwriting arrangements or plan of distribution, including whether the underwriting is on a best efforts or firm commitment basis and whether exclusive or nonexclusive.

(19) With respect to any person on whose behalf any part of the offering is to be made in a nonissuer distribution, a statement of:
(A) the names;
(B) the addresses;
(C) the amounts of securities held by those persons as of the date of the prospectus;
(D) a description of any material interest in any transaction with the:
(i) issuer;
(ii) predecessor;
(iii) affiliate; or
(iv) subsidiary;

effected or proposed to be effected within the past three (3) years; and

(E) their reasons for making the offering.
(20) A statement of the name and address of counsel who has advised the issuer with respect to the legality of the offering and matters relating to IC 23-19. Include an opinion that the security when sold will be:
(A) legally issued;
(B) fully paid; and
(C) nonassessable;

or, if a debt security, that it will be a binding obligation of the issuer.

(21) A statement including the names and addresses of any professional or other experts, other than the counsel and accountants identified elsewhere, on whose opinion reliance has been placed in preparing any part of the prospectus.
(22) A section including the following statement: "The issuer will hold its annual meeting of shareholders at a time and place to be specified in a notice of meeting mailed at least ten (10) days prior to the meeting. An annual report to shareholders, including audited financial statements, will be distributed prior to each annual meeting.".
(23) A section incorporating a report of an independent certified public accountant or firm of public accountants based on an examination of the issuer's financial statements in accordance with generally accepted auditing standards, including tests of the accounting records and other auditing procedures as considered necessary under the circumstances and an opinion that the financial statements fairly present the financial position of the issuer and the results of its business operations for the periods stated therein.
(24) The financial statements required under IC 23-19-3-4(b).

Notes

710 IAC 4-4-2
Securities Division; 710 IAC 4-4-2; filed Jun 28, 2010, 2:36 p.m.: 20100728-IR-710100044FRA Readopted filed 5/12/2016, 1:47 p.m.: 20160608-IR-710160136RFA

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