General Information Regarding Disclosure

The following suggestions may be of some assistance to an issuer in filling out an application for Registration using a Form U-7, Form RL, or a Registration by Qualification (RQ).

The "RISK FACTORS" section should disclose all risks (in order of importance) associated with the following:

• The risks of the general business in which the company participates.
• The risks of the specific business of the company.
• The risks of the securities offering being conducted by the company.

The following examples of RISK FACTORS may be of some assistance:

• Limited operating history of company (development stage).
• Financial condition and past operating losses of company.
• Future capital needs.
• Officers /Directors and control of the company.
• Dependence on particular technologies.
• Competition.
• Dependence on key personnel.
• Use of proceeds for benefit of Officers/Directors.
• Ability to achieve goals.
• Dependence on new or unproved products.
• Seasonality.
• Determination of offering price.
• Dilution of new investor's funds.
• Need for additional financing.
• No public market for company's securities.
• Governmental regulation.
• No dividends.

The "USE OF PROCEEDS" section should list all of the offering expenses and then all of the major uses of the "Net Proceeds". Some possible examples of net proceeds are:

• Increase inventory or equipment.
• Accounts payable.
• Salaries.
• Marketing expenses.
• Research and development.
• Building rent or purchase.
• Working capital.

You should use footnotes to provide further explanation, when necessary.

The "FINANCIAL STATEMENTS" must always be prepared according to Generally Accepted Accounting Principles (G.A.A.P.). In some cases the financial statements must be audited within 3 months of the filing date. In all cases, the financial statements must be either "Reviewed" or "Audited" and audited financial statements should always be provided annually to the shareholders.

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