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Step 6. It is now time to develop
a prospectus
. It is required for
raising the necessary funds to build the prototype parts, order soft
tooling, test equipment, etc.
The prospectus is
essentially a well written business plan. Unless you are proficient at this
activity, you should definitely hire someone to do it. A poorly written
plan would generate for you absolutely no money. So make sure your business
plan has a powerful punch in attracting potential investors.
We list here the
essential elements of a prospectus for an initial public offering (IPO.) So
if your company has not yet reached that stage, just develop the necessary
data per the level of your business.
Executive Summary
Risk Factors Early Stage of Development
and Commercialization; Limited Relevant Operating History | Limited
Revenues; History of Losses
Anticipated Future
Losses | Reliance on Development of New Products and Obtaining Regulatory
Clearances to Market Existing Products in the primary country market |
Government Regulation
Product Approvals
Uncertain | Market Acceptance Uncertain | No Assurance of Clinical
Advantages (if it is a medical, pharmaceutical product) | Patient
Population Estimates Uncertain (if required) | Reliance on International
Sales | Limited Sales and Marketing Capability
Dependence on
Distributors | Highly Competitive Markets ( this is true for almost all
businesses today) | Risk of Technological Obsolescence | Dependence on
Patents and Proprietary Technology | Ongoing Royalty Obligation (if it is
applicable) | Limited Manufacturing Experience | Dependence on Management
and Other Key Personnel | Product Liability Risk
Insurance (if it is
applicable) | Uncertainty of Government Health Care Policy and Third-Party
Reimbursement (if applicable) | Control by Officers, directors and
Principal Stockholders | Future Additional Capital Requirements
No Assurance Future
Capital Will Be Available | Shares Eligible for Future Sale | No Prior
Public Market for Common Stock
Potential Volatility
of Stock Price | Absence of Dividends
Dilution (if this is
the case) | Possible Issuances of Preferred Stock
Anti-Takeover Effect
of Certain Bylaw and Statutory Provisions
Use of Proceeds
Dividend Policy
Capitalization
Dilution
Selected
Consolidated Financial Data
Management Discussion
and Analysis of Financial Condition and Results of Operations
Overview, Results of
Operations, Liquidity and Capital Resources
Business
Overview, Strategy,
Technology, Products, Distribution, Sales and Marketing, Patents and
Proprietary Rights, Competition, Manufacturing, Government Regulation,
Third-Party Reimbursement, Employees, Legal Proceedings, Product Liability
and Insurance, Facilities
Management
Directors, Executive
Officers and Senior Management, Board of Directors, Executive Compensation,
Compensation Committee Interlocks and Insider Participation, Stock option
Plans
Important Company
Transactions
Principal
Stockholders
Description of
Capital Stock
Common Stock, Undesignated
Preferred Stock, State Law and Certain Provisions of the Bylaws,
Limitations on Liability of Officers and Directors, Shares Eligible for
Future Public Sale, Transfer Agent
Underwriting
Legal Matters
Experts
Accounting Firm
Additional
Information
Index to
Consolidated Financial Statements
Report of Independent
Accountants
Consolidated Balance
Sheets of Company
Consolidated
Statements of Operations
Consolidated
Statements of Stockholders' Equity
Consolidated Statements
of Cash Flows
Notes to Consolidated
Financial Statements
The prospectus should
be written having in mind the type of individuals to which is going to be
presented. A strategy also has to be developed for reaching the desired
group of potential investors. Again, unless you know what you are doing,
you should hire someone expert to do this for you.
Note: Any mailed materials to us
will not be returned unless you a) clearly specify so and b) provide us
with sufficient funds via a money order to cover the shipping and handling
expenses.
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