statement could not be sold until the SEC declares the registration is " effective".

The registration statement

Registration statement consists two parts mainly.

Part I: It is the prospectus. In this part the company should describe about its business operations, financial condition and management. Everyone who wants to buy the issues needs to have access to the prospectus.

Part II: This part consists of additional information that the company does not have any obligations to deliver to the investors. The investors or anyone could get this information on request from one of the SEC's public reference rooms or SEC's website.

The basic registration form -Form- S-1

All the US companies could use the S-1 form to register with the SEC. To file this form, the company needs to describe the following in the prospectus:

• Company business
• Business properties
• Business competition
• About the management team and their compensation
• Material transaction between the company and its management team.
• Material legal proceedings involving the company or its management team.
• The securities distribution plan
• Intended use of the proceeds of the offering

Information on describing these parts is given in the SEC rules. The registration statements must also include financial statements audited by an independent certified public accountant.

Risk Factors

In addition to the above information the company also needs to provide other information to make the disclosure complete but not misleading. The company also needs to describe the risk factors in the beginning of the prospectus. Some examples of the risk factors could be Market conditions, competition, and economic status of the particular industry, lack of previous business operating history.

Alternate registration forms for small business issuers:

There are simplified business forms for companies that have qualified as small business issuers. To qualify as small business issuers

• The company must have a revenue of less than $25 million in its fiscal year and
• Has outstanding public stock worth not more than $25 million.

Form 1-A to raise $5 million or less

This form is for small issuers offering securities worth up to $5 million in a 12- month period. This forms fall under regulation A, an exemption for public offerings not exceeding $5 million in a 12-month period. The regulation A offerings do not require audited financial statements.

Form SB-1 to raise $10 million or less

This form is for small issuers offering securities worth up to $10 million in a 12- month period. The form SB-1 fillings require audited financial statements.

Form SB-2 -to raise capital of any amount

This form is for small issuers offering securities worth upto $10 million in a 12- month period for unlimited dollar amount and can be used again and again till it falls under the definition of the "small business issuer"
The SB-2 form also permits the company:

• To provide audited financial statements, prepared according to generally accepted accounting principles, for two fiscal years.
• To have a brief disclosure than the form S-1 requires, especially the business description and executive compensation could be brief.