The Secrets of Wall St. Course – Testing the Waters

Question 1 of 17

1. Question

All states allow “Testing the Waters.”

True
False

Question 2 of 17

2. Question

A “Red Herring” document is generally used by larger publicly traded companies to detect the market’s “indications of interests” of a potential type of securities offering.

True
False

Question 3 of 17

3. Question

“Testing the Waters” is rarely used by younger companies, due to the impracticality of the time it takes, but a simple rendition may be helpful.

True
False

Question 4 of 17

4. Question

If you get Conditional Letter of Commitment from a bank, it’s important that it’s written and signed.

True
False

Question 5 of 17

5. Question

You need not disclose the use of debt in any securities-offering document used to raise equity capital.

True
False

Question 6 of 17

6. Question

You must have a Conditional Letter of Commitment from a bank before soliciting equity securities to investors, if the capitalization plan includes traditional debt.

True
False

Question 7 of 17

7. Question

It’s appropriate to directly compensate an officer or director for the sales of privately placed securities.

True
False

Question 8 of 17

8. Question

Everyone has the legal right to directly solicit investors for a direct investment, as opposed to using a financial intermediary.

True
False

Question 9 of 17

9. Question

The executive summary of a Red Herring would include:

a. The industry in which your Company will engage and compete.
b. The problems or changes within that industry that provide the opportunity to profit from selling your Company’s product and/or service line(s).
c. The solutions your Company’s product and/or service line(s) shall provide to solve those problems or address those changes.
d. The opportunity to profit from selling your Company’s product and/or service line(s) and for investors in terms of rate-of-return projections by investing in the securities to be offered by your Company.
e. The exit strategy for the investors.
f. All the Above
g. None of the Above
h. Only a & e

Question 10 of 17

10. Question

Although the concept of R&D for a securities offering is homogeneous to R&D for a product or service launch, the approach and process of a securities offering is highly regulated but only on the federal level.

True
False

Question 11 of 17

11. Question

The inherent benefit concepts extends itself when prospecting for capital through a securities offering, as approaching those who at least understand and/or will directly benefit from your Company’s new project or product line.

True
False

Question 12 of 17

12. Question

You can use Regulation D, Rule 506(c) as cover for your Red Herring to garner indications of interest from the general public.

True
False

Question 13 of 17

13. Question

Testing of the waters should be done for the private placement of seed capital to pre-existing investor contacts (friends and family).

True
False

Question 14 of 17

14. Question

Red Herrings rarely backfire; because if you do get positive indications of interest, you can use that document as your securities-offering document.

True
False

Question 15 of 17

15. Question

The inherent-benefit position goes further toward the “dealing with like minds” concept of solicitation and sales of securities.

True
False

Question 16 of 17

16. Question

Fortune 1,000 companies would be good strategic alliances to approach for an investment in an early stage, but not a start-up company.

True
False

Question 17 of 17

17. Question

It is better to wait for the results from “Testing the Waters” before creating the last draft copy of your company’s securities-offering document.

True
False

The Secrets of Wall St. Course – Testing the Waters