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Going Public

Which method is right for you?

Use chart to determine which method might work best for your company:

Feature Private Placement IPO SCOR
General solicitation permitted? No Yes, but it isn't allowed for offering small offerings in some states. Yes
Audited financials required? No Yes No, only if the offering is over $500K
Stock sold is free trading? No, it is restricted for 2 years. Yes Yes
Attorney must file? No, but it is recommended due to the complexity of blue sky filings. Actually not, although someone would be crazy to do one on their own and we've never seen one done without an attorney. No, simplified form makes it much easier. However, it is recommended that an attorney review the completed form to ensure adequate disclosures.
Investor suitability apply? Yes Yes. Brokers who sell to unsophisticated investors can be held liable No
Sales to non-accredited investors limited? Yes. Only 35 can be sold No No. You can sell to an unlimited number.
Must investors be accredited? Any number of investors past 35 must be accredited No No
Cost? $4k to $30k. $30k to $175k Unknown, but less than either if done by individual.
Must company repay principal and interest to investors? No, this is equity financing. No, this is equity financing No, this is equity financing
Are stock certificates legended and considered restricted stock or 144 stock? Yes No No
Disclosure documents are complex and difficult to complete? Yes Yes No
One form covers every state? No No Yes, 46 of 50
Can you sell to people you don't know via ads? No Yes, most of  the time Yes
Are stocks tradable on an exchange or OTC market? No Yes, if they qualify. Yes, if they qualify.

Source: DataMerge, Inc. 1996

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