PROPOSED COMPANY OFFERING

This is the first step in negotiating financing for your company.

Your initial proposal/offering may change considerably once negotiations begin. You must indicate the amount of funds required and how you are going to obtain them. You must tell the investors how you are going to use their invested funds and the rate of return on their investment. You must also tell them of any other funds borrowed or loaned to help start this venture.

If you are doing this with your own funding then write down all the information you would have given to any investors to ensure you meet your financial goals.

Desired Financing
This is the amount of money required to reach the point in your business where it becomes profitable. This will be the cumulative loss over startup months or years plus interest plus a 5% or 10% buffer. The source of all funds to achieve this goal must be stated here. This amount can be obtained from your financial work sheets.

Offering
This is an area where a financial consultant, familiar with securities issues, will be needed. Some of the items you will have to cover: common stock, convertible debentures, debt plus stock, debt with warrants, unit pricing, number of securities to sell, interest, maturity, conversion, etc. You must show the percentage of the company that the stockholders will hold after all transactions are completed.

If this is not a public offering the securities should be accompanied by statement containing the following: the securities are restricted, they can not be readily resold, sale may be restricted for an indefinite period of time, purchaser must execute a Non-Distribution Agreement.

Capitalization
This is the number of shares offered, number of shares outstanding, number of shares held by company management (you+), number of shares reserved for stock options for future employees. Expert advice is recommended here.

Use of Funds
This is straight forward and is required for any investor. It is recommended that you do it for your own benefit to ensure that sufficient funds are allocated for each area and that they are applied as planned.

Investors Return
Your investors will want to know how much they are going to make on their investment. People make loans or investments to make money. They must see a harvest or exit mechanism that will return their investment plus expected profit. These can be an outright sale, a public offering, a merger, a buy-out, etc., any legal method for obtaining cash or a cash equivalent.