Preparation of the Registration Statement

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Preparation of the Registration Statement
Copyright (c) 2007 Pillsbury Winthrop Shaw Pittman LLP
By Robert B. Robbins and William L. Horton and Philip L. Rothenberg
The Securities Act of 1933, as amended (the "Securities Act"), prohibits anyone from publicly selling or offering to sell any security unless that security is the subject of a registration statement that has been declared effective by the Securities and Exchange Commission (the "SEC"). n1 As a result, every company that wants to "publicly" sell its securities (a term which is very broadly defined, n2) is required to prepare and file a registration statement with the SEC.

n1 Sections 3 and 4 of the Securities Act, along with their related regulations, exempt from this registration requirement certain securities and transactions.
n2 "Security" is defined in Section 2(1) of the Securities Act as "any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a 'security,' or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing."

I. Educating the Company

If the company is not already a public company, before deciding to file a registration statement (i.e. "go public"), it should weigh the benefits and costs, or consequences, of going public and being a public company.

A. Going Public

The benefits of going public are well-known:
- Shareholders receive liquidity for their holdings.
- Stock valuations may be higher.
- A public company will have enhanced ability to raise capital and to reward management with equity interests.

  • A public offering will typically raise significant capital which can be used for a variety of purposes including the retirement of existing debt.

The costs of going public are also significant and include:

- Underwriting discounts and commissions and other offering expenses such as legal and accounting fees, printing costs, transfer agent fees, stock exchange listing fees and blue sky expenses. (Typically, underwriting expenses are 7% of the offering price for an initial public offering (an "IPO") and 4-6% of the offering price for a secondary offering. Other expenses are likely to range from $ 400,000 to $ 800,000 for a $ 20 million IPO).
- The consumption of considerable management time to prepare the registration statement.
- The effect of disclosures that are required to be in the registration statement and that may put the company in a disadvantageous competitive position or may be embarrassing to the company, such as disclosures involving excessive management compensation and insider transactions.
B. Being Public

Being a public company also carries considerable costs, including:

- The burden of compliance with SEC reporting requirements, which results in increased administrative costs and responsibilities, and which mandates periodic disclosure that may be embarrassing or create a competitive disadvantage.
- An increase in the likelihood of litigation given that the adequacy of disclosure in SEC reports is often viewed in hindsight.
- Market pressures because investors in public securities tend to increase the focus on short-term results rather than long-term goals.
- Management being subject to the constant pressures of securities analysts, which increases short-term performance pressure and creates additional risks arising from incomplete or incorrect disclosures.
- The federal securities acts place restrictions on transactions in the company's stock by management and major shareholders.
- Visibility afforded by being public may make the company a more attractive acquisition target.
- The loss of managerial control that stems from the often significant increase in the size of the shareholder base and the laws that govern public companies and require shareholder approval of certain corporate actions.
C. Alternatives

Companies should consider some alternatives to a public offering of their securities before making the decision to go public. A company can be semi-public (or semi-private) and still raise significant capital through offerings pursuant to several exemptions from registration such as Rule 144A (for institutional offerings), Regulation S (for offshore offerings), Regulation A (for small offerings), Regulation D (for limited offerings) and intrastate offerings. The availability of the exemption for each of these offerings depends upon compliance with certain conditions which generally limit the marketability of the securities. As a general rule, these exempt offerings impose fewer ongoing costs and responsibilities, but will yield a lower price per unit of the security, because investors will discount the price of the securities to reflect the restrictions on transfer.

II. Initial Preparation

A. Selecting the Underwriter

Once a company has decided to engage in a public offering, the next step is usually to select underwriters of the offering. Securities may be offered to the public through an underwriter who buys the securities from the company and sells them to the public (a "firm commitment underwriting") or may be sold on a "best efforts" basis by the underwriter as an agent for the issuer, which means that the underwriter will use its best efforts to sell the securities but will not purchase the securities itself. In the alternative, the securities may be self-sold without an underwriter directly by the company and its agents.

For underwritten offerings, the selection of the underwriter is vital to the success of the offering. The underwriter is responsible for advice on structuring the offering, pricing the securities, and maintaining the after-market for the securities. Because the underwriter plays such an integral role in the offering process, it is rare for a company to begin preparing a registration statement prior to selecting an underwriter.

In selecting an underwriter consideration should be given to the following factors:

- Reputation in the investment community.
- Track record in initial public offerings (IPOs) and in the after-market trading in the stock.
- Industry expertise, which may be demonstrated by the types of transactions the underwriter is typically involved in or by whether the underwriter has a respected analyst who follows the industry.
- Possible conflicts.
- Strengths of its corporate finance and syndication departments.
- Proposed offering terms, including pricing, underwriting commissions and discounts, and any benefits sought by the underwriter such as options and warrants, rights of first refusal, etc.
- Proposed retail and institutional distribution.
- Commitment to the company's offering in terms of senior staffing and time.

In addition, it is important to assess personal interaction and trust between management and the underwriters who will actually staff the deal as the team will spend considerable time together over several months to prepare the offering. It often is helpful to solicit formal presentations from several prospective underwriters, which should include the persons from the corporate finance and syndication departments who actually will be working on the offering. It is admittedly difficult in an interview to assess responsiveness which is a key attribute. As a result, it also is advisable to check on the underwriter's performance in recent offerings with management of the companies involved.

B. Assembling the Working Group

Assembling an effective working group is essential when preparing a registration statement. The registration statement must discuss the issuer, its financial position, the risks associated with its business and securities, its goals and strategies, its industry and the rights related to the securities being offered. As a result, it is necessary to have input from a wide variety of individuals in order to assemble the information required to be included in the registration statement. The various members of the working group have differing but complementary roles. It is important that these roles be understood at the outset and that each person know what is expected of him or her and when it is expected. These roles are defined at the organizational meeting which is described below.

The typical working group involves some of the following:

1. Issuer -- This is the most important party in the offering process. The company issuing the securities (the "Issuer") is involved in almost all aspects of the process, including preparing the offering document, providing due diligence materials, sending executives on the Road Show and reviewing and revising various legal documents, such as the Underwriting Agreement

2. Issuer's Counsel -- This party takes the lead in drafting the offering document and will be involved in the due diligence process, reviewing and commenting on the Underwriting Agreement and will be responsible for filing the necessary papers to get the Issuer listed on a stock exchange or quoted on Nasdaq. Issuer's Counsel will educate the company as to its obligations during the offering (e.g., publicity during the offering, the Issuer's website, insider trading, various investor relations activities, etc.), and for an IPO, Issuer's Counsel will also be responsible for educating the Issuer as to its continuing legal reporting obligations after it becomes a public company. Issuer's Counsel will also provide a legal opinion (disclosure letter and 10b-5 opinion) at the closing of the transaction that is required as a condition to the Underwriter's obligation to purchase and pay for the securities.

3. Directors -- Directors of the Issuer will have to hold a board meeting where they agree to both the listing and the offering and will have to review and sign the Registration Statement.

4. Officers and Employees -- Officers and employees will have to partake in the due diligence process by making documents available for review and inspection, by allowing officers and other key employees to participate in management due diligence sessions in which lawyers and Underwriters find out more about the Issuer via presentations and Q&A sessions, and by reviewing and commenting on the draft Prospectus and Registration statement to ensure the accuracy of the information in it and that it does not omit any information necessary to make the information in the Registration Statement not misleading.

5. Selling Shareholders and Counsel -- Selling Shareholders, depending on how large a portion of the Issuer that they own, may have to sign the Underwriting Agreement if they have the ability to control the Issuer and what goes into the Registration Statement (e.g., an IPO of a wholly-owned or majority-owned subsidiary in which the parent is the Selling Shareholder) and therefore may want to review and comment on the disclosure in the Registration Statement.

6. Lead Manager / Managing Underwriter -- This underwriter has the ultimate control of the offering and controls all aspects of the offering, including how many shares are allocated to each co-manager, n3 the timing of the Road Show, the ultimate pricing of the deal, conducting the due diligence sessions (both documentary and management) with the Issuer, participating in the drafting sessions of the registration statement and fining investors willing to purchase the Issuer's securities.

7. Co-Manager / Underwriting Group -- These participants are chosen by the Lead Manager and have less responsibility than the Lead Manager, but still are responsible for their allotted amount of shares to be sold.

8. Selling Group -- These participants are allocated shares to sell but do not receive an underwriting fee, only a selling concession, for any shares they are allowed to sell and do sell.

9. Research Analysts -- Research analysts play an important role in providing coverage of public companies in a certain industry. IPO companies want to make sure that their company will be adequately covered after the IPO in order that they may be able to adequately disseminate news about their company to the public.

10. Underwriters' Counsel -- This party will participate extensively in both the drafting sessions and the due diligence sessions, attempting to ensure that a thorough investigation of the Issuer is made, that the Issuer and its business is understood, and that all material information about the Issuer is clearly disclosed in the offering document. In addition, Underwriters' Counsel takes the lead in drafting the Underwriting Agreement and coordinates discussions regarding the "comfort letter" among between the Managing Underwriter and the Independent Accountants. "Blue Sky" issues (i.e., state law issues), if any, are also handled by Underwriters' Counsel.

11. Independent Certified Public Accountants -- The outside auditing firm will audit the financial statements of the Issuer and must consent to the inclusion in the offering document of the accountant's report regarding the audited financial statements of the Issuer and any significant subsidiary that are contained in the offering document. If there are any interim financial statements included in the offering document, the accountants may conduct a limited review of such interim financial statements, in accordance with Statement of Accounting Standards No. 71 (SAS 71, now SAS 100). The accountants will also help to draft/review the MD&A n4 section, will participate in due diligence regarding financial information, and will be required to deliver a "comfort letter" to the Underwriters.

n3 Important note: The number of shares allocated to each co-manager to sell and the number of shares that appears by each managers name in the Underwriting section of the Prospectus may be different. The number of shares in the Underwriting section of the Prospectus is the number of shares that each Underwriter has agreed to sell, but the actual allocation to each Underwriter by the Lead Manager may be quite lower, if any at all.
n4 MD&A = Management's Discussion and Analysis of Financial Condition and Results of Operations. See Regulation S-K, Item 303.

C. Underwriting fees


Underwriting Fee

Selling Concession


% of Total





Who gets it?


Managing Underwriter

Underwriters who actually


and Co-Manager

sell the shares -- paid on a

per share sold basis

D. Basic Steps in an Initial Public Offering of Securities

1. Submit information to NYSE (or other exchange) needed to begin listing process

2. Due diligence and drafting the registration statement and prospectus

3. Filings with the SEC, the SEC review process, and responding to SEC comments

4. Prepare the stock exchange listing documents

5. Begin to prepare the post listing SEC required disclosures, including Forms 3, 4 and 5

6. Print the preliminary prospectus

7. The "Road Show"

8. Acceleration request and effectiveness -- Rule 430A (Prospectus in a Registration Statement at the Time of Effectiveness), Rule 461 (Acceleration of Effective Date) and Rule 473 (Delaying Amendments)

9. Pricing the securities and signing the underwriting agreement
E. The Organizational Meeting

The organizational meeting is the formal starting point for the registration process. It is usually chaired by the managing underwriter and is attended by all the members of the working group. The purpose of the organizational meeting is four-fold: (i) to allocate tasks and responsibility among the working group members; (ii) to identify threshold issues and assign responsibility for addressing them, (iii) to agree upon a proposed timetable for preparation, filing with the SEC and effectiveness of the registration statement; and (iv) to plan due diligence..

1. Allocation of responsibility

In general the company and its counsel take the lead in drafting the registration statement. The underwriter and its counsel participate in the drafting, primarily in a review capacity although, depending on the relative experience levels, the underwriter and its counsel may take the drafting lead. The underwriter and its counsel prepare the various underwriting documents (underwriting agreement, agreement among underwriters, selling agreement, etc.), which in turn are reviewed by the company and its counsel. The auditors prepare the certified financial statements, review the company's unaudited financials and furnish a "cold comfort" opinion letter on certain specified financial numbers at effectiveness of the registration statement and at the closing.

2. Threshold Issues

Another purpose of the organizational meeting is to identify key threshold issues which have a bearing on successful completion of the offering. These may include such issues as the presentation of certain items in the financial statements, the exemption from registration for past security sales, the integration of the proposed offering with prior securities offerings, and the need, or desire, for confidential treatment of certain disclosures. It may be desirable to request a pre-filing conference with the staff of the SEC to resolve certain of these issues well in advance of the filing.

3. Timetable

The timetable outlines various actions which are to be performed by specified dates and indicates the person or persons who are responsible for performing them. The timetable may be divided into three main parts: the pre-filing period; the waiting period during which the SEC reviews (or decides not to review) the registration statement; and the post-effective, or selling period, which ends at the closing of the transaction. A sample timetable of a firm commitment underwriting of an IPO is appended to this outline.

4. Due Diligence

Section 11 of the Securities Act imposes strict liability upon the issuer and liability on other designated persons (i.e., persons who sign the registration statement, directors or partners, experts, underwriters and control persons) for any material misstatements or omissions in a registration statement. These persons, other than the issuer, have a defense to liability if they have conducted "a reasonable investigation resulting in reasonable grounds to believe" that the information in the registration statement is accurate. n5 This defense is commonly referred to as the "due diligence" defense. Because this defense is available, all parties participate in a due diligence effort designed to satisfy the requirements of the "reasonable investigation" standard of the defense.

n5 National Association of Securities Dealers, Inc., Special Report: Due Diligence Seminars (July 1981) ("NASD Special Report") ("'[D]ue diligence' may be construed as a standard that depends to some extent on what constitutes commonly accepted commercial practice. If you can establish that the steps taken meet the standard of trade as it presently exists, a court should not, in applying the Section 11(c) standard, hold you liable for not being duly diligent despite the fact that you missed something and there was a material omission in the registration statement").

5. Other issues that will often be discussed include:

a. Size of the offering

b. Participation of selling shareholders

c. Green shoe option

d. Financial statements availability/accounting issues

e. Comfort letter

f. Disclosure of confidential documents and confidential treatment requests to the SEC

g. Gun jumping issues, such as a discussion about the Issuer's recent public communications and future communication plans

h. Trying to identify critical issues, such as 40 Act issues, and assigning responsibility to trying to resolve these issues

i. Considering which documents (or parts thereof) the Issuer wishes to remain confidential so that the issuer and its counsel can begin to prepare confidential treatment requests for such material
F. Registration and Sales -- A 3-Step Process

1. First, file a registration statement with the SEC

2. Second, use the prospectus, which is part of the registration statement, to market (i.e., offer) the securities offering

a. The registration statement is almost like a dust jacket of a book, wrapping itself around the prospectus

3. Third, once the registration is declared "effective" by the SEC, sales can be made.
G. Basic sections of the prospectus




page length

Prospectus Summary

This section, which appears near the front of

1 to 10

the Prospectus, summarizes the key aspects of

the Issuer in a few pages. This may be one of

the few sections that perspective investors

actually read and thus should provide a

balanced summary of all the key information.

Selected Financial

This section provides selected historical

1 to 3


financial data regarding the Issuer for recent


Risk Factors

Located near the front of the Registration

8 to 20

Statement, this section identifies the most

important risks facing the company (i.e., what

could go wrong that could cause the

shareholders to lose much of their

investment). This section, if well

thought-out, hopefully provides the Issuer

with protection in the event of later

litigation regarding the adequacy of

disclosure in the Prospectus of certain risks.

Use of Proceeds

This section specifically discloses how the

Less than 1

Issuer intends to use the proceeds from the


Business section

This section presents a complete and well

10 to 20

balanced discussion of the company and its

various operations.


This section is intended to give investors a

15 to 25

Discussion and

chance to look at the Issuer through the eyes

Analysis of

of its management in order for investors to


truly understand the Issuer's financial

Condition and

results. The MD&A focuses on material events

Results of

and uncertainties to the company that would


cause the reported financial information not


necessarily to be indicative of future

operating results or financial condition.


This is the heart of the offering document.

More than


Investors will examine both the full fiscal


year and interim financial statements

carefully to get a true understanding of the

Issuer and its financial position.

H. Content of Form S-1

1. Eligibility Requirements for Use of Form S-1

a. This form, which is used to register securities of all registrants under the 33 Act, is used when no other form is authorized or prescribed. Incorporation by reference is not allowed, and thus all of the information about the company must be in the registration statement.

2. Application of General Rules and Regulations

a. Drafters of the Form S-1 must pay attention to separate regulations -- Regulation C and Regulation S-K.

(1) Regulation C -- Reg C contains the general requirements for preparing and filing the S-1.

(2) Regulation S-K -- Reg S-K contains the requirements for the non-financial parts of the S-1. Described by the SEC as the "central repository of disclosure requirements" under the 33 Act and the 34 Act. By putting the non-financial requirements in Reg S-K instead of in form, it makes it easier for the SEC to update these requirements which apply to various different forms.

3. General Regulation S-K requirements

a. Item 10(b) of Reg S-K

(1) This describes the SEC's policy with respect to projections of future economic performance.

(2) The SEC encourages the use of projections of future economic performance "that have a reasonable basis and are presented in an appropriate format."

(3) Most issuers do not use projections in their IPO registration statements.

b. Item 10(d) of Reg S-K

(1) This describes "incorporation by reference" rules.

c. Item 10(e) of Reg S-K

(1) This describes the use of non-GAAP financial measures n6 in filings with the SEC.

(2) If non-GAAP financial measures are used in the issuer's registration statement, Item 10(e) explains what additional disclosure the SEC will require n7 as well as what disclosure of non-GAAP financial measures are prohibited. n8

4. Items 1 through Items 12 -- Part I information -- Information Required in Prospectus

a. Part I of the Form S-1 Registration Statement is the Prospectus, which is the offering document provided to potential investors. Part I information includes all important facts about the business operation, financial condition, management, possible risks and other information about the issuer.

5. Item 1. Forepart of the Registration Statement and Outside Front Cover Page of Prospectus

a. Item 501 of Reg S-K.

(1) Registration Statement -- Must use Plain English, and should consider a Rule 473 delaying amendment

(2) Prospectus -- Must use Plain English and limit the outside cover page to one page

(a) If applicable, must disclose:

i) Name of the registrant

ii) Title and amount of the securities offered.

iii) Offering price of the securities

iv) Any securities exchange (or NASDAQ market) which lists / will list the securities offered

v) Cross-reference to the risk factors section, including page number where it appears

vi) State legends required by law

vii) SEC legend

viii) Names of lead or managing underwriter and an indication of the nature of the underwriting agreement

ix) Date of the prospectus

x) "Subject to Completion" legend for Preliminary Prospectuses

6. Item 2. Inside Front and Outside Back Cover Pages of Prospectus

a. Item 502 of Reg S-K. Must disclose:

(1) A reasonably detailed table of contents.

(2) A legend advising dealers of their prospectus delivery obligations.

7. Item 3. Summary Information, Risk Factors and Ratio of Earnings to Fixed Charges

a. Item 503 of Reg S-K. Must disclose:

(1) Prospectus summary, if useful.

(2) Complete mailing address and telephone number.

(3) A discussion of the most significant factors that make the offering speculative or risky (i.e., Risk Factors).

(4) If debt securities are registered -- ratio of earnings to fixed charges; If equity securities are registered -- ratio of combined fixed charges and preference dividends to earnings.

8. Item 4. Use of Proceeds

a. Item 504 of Reg S-K -- Must disclose the principal purposes for which the proceeds will be used.

9. Item 5. Determination of Offering Price

a. Item 505 of Reg S-K -- Must disclose a description of the various factors considered in determining such offering price.

10. Item 6. Dilution

a. Item 506 of Reg S-K -- If there is a substantial disparity between the public offering price and the effective cash cost to officers, directors, promoters and affiliated persons, then the issuer must disclose a comparison of the public contribution under the proposed public offering and the effective cash contribution of such persons.

11. Item 7. Selling Security Holders

a. Item 507 of Reg S-K. -- Must disclose information regarding selling security holders, such as the name of such security holders, the amount of securities owned by such security holders and the amount offered by such security holders.

12. Item 8. Plan of Distribution

a. Item 508 of Reg S-K -- Must disclose:

(1) The name of the principal underwriters and the respective amounts underwritten.

(2) The amount of underwriters' compensation in tabular format.

(3) Any arrangement by which an underwriter can choose a board member.

(4) Any arrangement which indemnifies the underwriters.

(5) Any amount of discounts and commissions paid to dealers.

(6) Information with respect to discretionary accounts over which any principal underwriter intends to sell.

(7) Information regarding passive market making, if any, underwriters or any selling group members intend to engage.

(8) Any transaction by which the underwriters intend to stabilize, maintain or otherwise affect the market price of the offered securities.

13. Item 9. Description of Securities to be Registered

a. Item 202 of Reg S-K.

(1) For capital stock, must disclose various matters, including:

(a) Dividend rights

(b) Voting rights

(c) Classification of the Board of Directors

(d) Liquidation rights

(e) Charter or by-law provisions that would have the effect of delaying, deferring or preventing a changed in control of the registrant

14. Item 10. Interests of Named Experts and Counsel

a. Item 509 of Reg S-K.

(1) Disclosure of information describing the interests of experts named in the registration statement or counsel for the registrant, underwriters or selling security holders must be provided.

(2) Only must disclose information if such experts were employed on a contingent basis, would receive or had a substantial interest in the registrant or was a promoter, managing underwriter, voting trustee, director, officer or employee.

15. Regulation S-K -- This provides the principal disclosure items applicable to the content of the non-financial portions of 33 Act registration statements.

a. 101 -- must disclose:

(1) General development of the business during the past five years.

(2) Financial information about each segment of the issuer's business.

(3) A narrative description of the business of the issuer.

(4) Financial information based on geographic areas.

(5) Where the public can find additional information about the issuer.

b. 102 -- Must disclose a description of the principal plants, mines and other materially important physical properties of the issuer.

c. 103 -- Must disclose a brief description of material pending legal proceedings which the issuer or its subsidiaries is a party or which their property is subject. Ordinary routine litigation incidental to the business does not have to be disclosed.

d. 201 -- Must disclose:

(1) The principal U.S. market where the stock is being traded. If there is no established public trading market, must so state.

(2) The approximate number of shareholders of each class of common equity as of the latest practicable date.

(3) The frequency and amount of cash dividends declared by the registrant over the two most recent fiscal years.

(4) Information regarding securities authorized for issuance under equity compensation plans in a tabular format.

e. 301 -- Must disclose selected financial data in comparative columnar format for each of the last five fiscal years of the issuer and any additional fiscal years necessary to not be misleading.

f. 302 -- Must disclose certain quarterly financial data for each full quarter over the past two fiscal years plus any subsequent interim period required by Article 3 of Regulation S-X.

g. 303 --

(1) Must disclose, among other things, for full fiscal years:

(a) The issuer's financial condition, changes in financial condition and results of operations.

(b) Any know trends, demands, commitments, events or uncertainties reasonably likely to materially affect the issuer's liquidity

(c) Capital expenditures that are material.

(d) Unusual or infrequent events / transactions / economic changes that materially affected the amount of reported income from continuing operations.

(e) Known material trends in the issuer's capital resources.

(f) Any unusual or infrequent events or transactions or any significant economic changes that materially affected the amount of reported income.

(g) Known trends or uncertainties that the issuer reasonably expects will have a material favorable or unfavorable impact on net sales and income.

(h) Any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the issuer's financial condition, changes in financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

(i) Tabular disclosure of contractual obligations.

(2) Must disclose, among other things, for interim periods:

(a) Material changes in financial condition from the end of the preceding fiscal year until the most recent interim balance sheet.

(b) Material changes in the issuer's results of operations.

16. 304
Must disclose information regarding disagreements with the issuer's independent accountants with respect to the issuer's accounting and financial disclosure and changes in accountants.

17. 305
Must disclose quantitative and qualitative information about market risk.

18. 401
Must disclose:
a. The names and ages of all directors of the issuer, all positions and offices with the issuer held by each such person, the term of office of each director and any arrangement or understanding under which the director was chosen.

b. The names and ages of all executive offices of the issuer, all positions and offices with the issuer held by each such person, the term of office of the officer and any arrangement or understanding under which the officer was chosen.

c. The names and backgrounds of certain significant employees, such as production managers, sales manages, or research scientists, who are not executive officers but who make or are expected to make significant contributions to the business of the issuer.

d. The nature of any family relationship between any director, executive officer or person nominated or chosen by the issuer to become a director or executive officer.

e. The business experience during the past five years of each director, executive officer or significant employee.

f. Any other directorships held by each director.

g. Any involvement in legal proceedings (e.g., criminal proceedings, bankruptcy proceedings, violations of securities laws, etc.) over the past five years by a director or officer of the issuer that is material to an evaluation of such person.

h. Any involvement in legal proceedings by promoters and control persons.

i. Information regarding whether or not the issuer has an audit committee financial expert.

19. 402
Must disclose:

a. Information regarding how much compensation was awarded to, earned by or paid to certain executive officers and directors.

b. A summary compensation table.

c. An option/SAR grants table.

d. An aggregated option/SAR exercises and fiscal year-end option/SAR value table.

e. A long-term incentive plan ("LTIP") awards table.

f. A pension plan table or similar disclosure in narrative form.

g. A description of how directors are compensated.

h. A description of: the terms and conditions of employment contracts between the registrant and a named executive officer, and compensatory plans relating to termination of employment or change-in-control of the issuer.

i. Information regarding repricing of options/SARs.

j. Information regarding members of the compensation committee under the caption "Compensation Committee Interlocks and Insider Participation."

k. Information regarding the compensation committee's compensation policies applicable to the issuer's executive officers.

20. 403
Must disclose:

a. Security ownership of certain beneficial owners (more than 5% owners) and security ownership of management in tabular form.

b. Any arrangements which may at a subsequent date result in a change in control of the management.

21. 404
Must disclose:

a. Certain related party transactions and details regarding those transactions.

b. Certain business relationships between directors or nominees for director and other outside businesses or professional entities.

c. Certain indebtedness of management to the issuer.

d. Information regarding transactions with promoters.

22. Item 12.
Disclosure of Commission Position on Indemnification for Securities Act Liabilities (See Item 510 of Reg S-K. Disclosure of the SEC's position on indemnification of directors, officers and others and a brief description of the indemnification provisions relating to these parties may have to be made per this Item 12. (See also Item 14 of the Form S-1.))

23. Items 13 through 17.
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Preparation of the Registration Statement iconRegistration statement pursuant to section 12 (b) or (g) of the securities exchange act of 1934

Preparation of the Registration Statement iconO registration statement pursuant to section 12(b) or (g) of the securities exchange act of 1934

Preparation of the Registration Statement iconRegistration statement pursuant to section 12(b) or (g) of the securities exchange act of 1934

Preparation of the Registration Statement iconRegistration statement pursuant to section 12(b) or 12(g) of the securities exchange act of 1934


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