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° Draw a simple diagram on the whiteboard.
° Turn off the slides.
° Tell a brief story.
° Give an example.

Have a Good Closing
– In closing, summarize your main points and, if appropriate, issue a “call
to action.”
– Also consider the “big finish.” This oft-ignored tool is much more effec-
tive than simply saying, “Thank you.” The big finish is the wrap-up
story or point you make after the Q&A is finished.

Prepare Visuals
Although there are other software products that can be used to create your
presentation, PowerPoint provides an advantage because investors can eas-
ily view a copy of your presentation after the meeting. Print extra copies of
How to Write and Present an Investor-Oriented Business Plan

the slides and hand out to meeting participants before you begin. If you
should encounter problems with your computer or the digital projector, you
can quickly proceed using the handouts. Some experts prefer only using
handouts to keep the investor™s attention on you rather than the screen.
Color presentations are more persuasive than black and white. However,
visuals for their own sake are meaningless. Have a purpose for the visuals
and remember that they are tools. PowerPoint does not give the presentation.
You do.
In preparing visuals, include only a few talking points per slide. A good
guideline is no more than 20 words or six lines. Better yet, use a diagram or
other visual. And do not fill every square inch of the slide. Less is more.
Use a clear, easy-to-read typeface such as Tahoma or Arial. Make your
typeface at least 18 points. Use the same size font for items of equal impor-
tance and vary the size for items of lesser importance.
Put your name, company, and contact information on the last slide.
Keep that slide up while you take questions.
When you are basically finished, have someone review the presentation.
It™s amazing how many typos or inconsistencies can crop up during the

Outline Suggestions
Your outline will vary depending on the company stage of development;
however, the following suggestions provide a starting point:

– One sentence description of the company, the problem it addresses, and
the solution it provides. Is this the next big thing?
– Market opportunity. Size, growth rate, demographics, leading compa-
nies. What is the vision? What are the trends? What new opportunities
are emerging? What are the urgent unsolved problems? What solutions
would transform the industry? Is the market ready?
– Business model. What are the specific markets and target customers?
What products and services will be offered? What is the pricing model?
How will we reach the target customer (distribution and marketing)?
Who are the competitors and what are the company™s unique, sustain-
able advantages? What is the financial engine (revenue sources, cost
structure) that drives the business? Is the overall business model viable,
sustainable, and (eventually) profitable?
– Operating/development plan and key milestones. What is the company™s
current status? What are the major components of the operating/devel-
opment plan over the next year? What performance measures are in
place to manage the business? What are the key milestones that validate

the business and cause exponential growth in market share, profitabil-
ity, and shareholder value (and are they achievable)?
– Management, advisers, and partners. Who are they? What role do they
play? What are their qualifications and track record? What additional
players are ready to join, are in negotiations, or are targeted? Can this
team execute the plan?
– Financial forecast and funding plan. Three-year forecast of revenues;
gross margin; earnings before interest, taxes, depreciation, and amorti-
zation (EBITDA); and cash flow. Major assumptions. Funding require-
ments and plan. Use of proceeds. Can this company reach critical mass
– Investment opportunity. What is the company offering? What does the
company need besides money? What is the profile of the ideal investor?
Who are the comparable companies and what ROI did they produce for
investors? What are the possible exit strategies and can they be achieved
at a high ROI within a reasonable time? Why should I invest in this deal?

As you create your presentation, be aware that your slides are visuals to
enhance your key points”almost like a billboard. It is up to you to present
the business and to enhance the investor™s understanding of the business

Legal Primer on Securities Law
Issues for Nonlawyers
(Emphasis on Small Business and California)
William D. Evers, Esq.
Attorney at Law
1700 California St.
Suite 470
San Francisco, CA 94109
(415) 202-0906

Note: This is a brief summary and is not to be relied on for legal advice. The
subject of securities laws is arcane, and decisions as to how to proceed are
factually based. The author assumes no responsibility for action undertaken
pursuant to this primer.

11. Overview
1.1 Federal Acts
1.1.1 General”Full Disclosure
1.1.2 Securities Act of 1933
1.1.3 Securities Exchange Act of 1934
1.1.4 Investment Company Act of 1940
1.2 Federal Rules and Regulations”Exemptions from Registration
1.2.1 Regulation D
1.2.2 Regulation A: Public, Limit $5 Million
1.2.3 Rule 504, SCOR: Public or Private, Limit $1 Million
1.2.4 Rule 505: Private, Limit $5 Million


1.2.5 Rule 506: Unlimited Private, Preemption
1.2.6 Regulation S
1.3 The States
1.4 California Laws
1.4.1 General: Merit Review, Suitability
1.4.2 Section 25113(b)(i): Qualification, Public
1.4.3 Section 25113(b)(ii): Qualification, Public
1.4.4 Section 25102(f): Private, No Review
1.4.5 Section 25102(n): Private with Announcement
1.5 Accredited and Excluded Investors
2. Private Offerings”The First Step
2.1 Introduction
2.2 Multistate: Section 4(2) and Rule 506
2.3 California: Section 25102(f)
2.4 Mixture: 25102(n)
3. Public Offerings
3.1 Rule 504: $1 Million Maximum
3.2 SCOR Offerings
3.2.1 California SCOR: Public Offering
3.3 Small Business Rules: Suitability
3.4 Regulation A: Public, $5 Million Maximum
3.5 SB-2: Public, No Maximum
3.6 S-1: Public, No Maximum
4. Disclosure Documents
5. Integration Rules: Timing
5.1 Problem
5.2 Five Tests
5.3 Safe Harbor”Reg. D
5.4 California Rules
6. Restricted Securities and Trading
6.1 Rule 144
6.2 Nonissuer “Secondary” Trading (by a Shareholder, Not the Issuer)
7. The Internet
7.1 In General
7.2 The Offer
7.3 Suitability
7.4 The Sale
8. Federal/State
9. The ™40 Act
10. The Usual
11. Sales””Agents” (California)
Legal Primer on Securities Law Issues for Nonlawyers


This primer is intended to assist our clients in thinking through what route
to follow when embarking on a program to finance their business. It is not a
complete guide, but we hope it will be of some help. It should not be con-
sidered legal advice.


There is a jumble of terms, rules, and regulations in the securities regulatory
area. This primer concentrates on a portion of the spectrum”the offering of
equity (stock) by small and emerging companies.
There are three primary federal statutes: the Securities Act of 1933 (the
™33 Act), the Securities Exchange Act of 1934 (the ™34 Act), and the
Investment Company Act of 1940 (the ™40 Act).
The SEC administers these laws at the federal level and issues rules, reg-
ulations, and orders pursuant to the terms of these laws.
The states also have jurisdiction. It™s as if there were 50 countries to be
dealt with. A minority of the states use full disclosure (also used by the SEC)
and the rest use merit review (used by California). New York has a unique
antifraud approach. Clearing with the states is called “blue skying.” The
higher up the scale one goes in being a reporting company (to the SEC),
being listed on an exchange, and having substantial assets, the easier it is to
be qualified to sell securities in the states. Small business, lacking these at-
tributes, has an expensive and difficult time getting qualified.

1.1 Federal Acts
1.1.1 General”Full Disclosure
The SEC administers the ™33 Act based on the policy of requiring full disclo-
sure. The idea is, “Let the facts be told, precisely and accurately, and then,
caveat emptor”let the buyers beware.” The SEC usually reviews the filing
of an application very thoroughly. Regulation A and SB-2 offerings are re-
viewed in Washington. The initial response is usually received in one month.
One then responds to the SEC comments and gets the second round of com-
ments in two to three weeks. Each response cycle is usually shorter than the
initial response time. Finally, if and when the SEC finds that their comments
have been responded to adequately, the SEC will declare the filing effective.
Only when a filing is effective can the actual sale of securities begin.

1.1.2 Securities Act of 1933
The ™33 Act deals with the offer, sale, and issuance of securities. Transactions
that involve more than one state are under the SEC™s jurisdiction: Both pub-
lic and private transactions are covered.
Under the ™33 Act, all companies wishing to sell their stock or other secu-
rities must go through a registration process unless the transaction is one that
by law or regulation is exempt from registration. Section 3(b) of the ™33 Act
allows the SEC to exempt from registration small offerings under $5 million.
Thus, we have the SCOR for up to $1 million under Rule 504 and Reg. A of-
ferings for up to $5 million. Section 4(2) of the ™33 Act covers those offerings
not involving a public offering and provides the authority for Rule 506 of Reg.
D (see below). Section 4(6) of the ™33 Act exempts from registration up to $5
million of sales to certain high-income or high-net-worth individuals or insti-
tutions (“Accredited Investors”). All these sections are in the ™33 Act.

1.1.3 Securities Exchange Act of 1934
As its name implies, this act deals with trading and regulation of the ex-
changes. The primary method of regulating broker-dealers is through a
self-regulating organization (SRO), the National Association of Securities
Dealers (NASD).
The impact of this act on issuers (companies selling securities) relates to
the reporting requirements and to trading in the company™s securities.
When one files for registration of a public offering, as in an SB-2 filing
(but not in a Reg. A offering, which, though public, is anomalously an ex-
emption from registration), one becomes a reporting company. Reporting
companies are required to file annual, quarterly, and other periodic reports
(on Forms 10-K, 10-Q, and 8-K) with the SEC, submit shareholder proxy
statements to the SEC, and follow various other reporting requirements, in-
cluding being subject to the rather draconian provisions of the Sarbanes-
Oxley Act.
Companies also can become reporting companies voluntarily by filing
with the SEC. A company must become a reporting company if it has at least
500 shareholders and $10 million in assets.
A small company can have a broker-dealer file information akin to that
in a prospectus by complying with the requirements of Rule 15(c)(2)(11)
under the ™34 Act. This then allows the company to have a market maker
and to be posted on the Bulletin Board maintained by the NASD. Bulletin
Board stocks are limited to reporting companies only. This has knocked off
about half of the stocks previously on the Bulletin Board. Presumably the
possible knock-offs have either become reporting companies or have mi-
grated to the “Pink Sheets.” Any stock that is traded and has a market maker
Legal Primer on Securities Law Issues for Nonlawyers

can be listed on the Pink Sheets, maintained by the National Quotation

1.1.4 Investment Company Act of 1940
The ™40 Act controls mutual funds and numerous other activities including
investment advisers (advising as to funds over $25 million).
This act comes into play when a fund has over 100 investors. It is very
restrictive and is the reason venture capitalists have fewer than 100 partners.
Quite simply, it inhibits our country from having any “peoples” or “public”
venture capital activity. A pity, in that the venture capitalists are no longer


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