The Secrets of Wall St. Course – Testing the Waters
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Question 1 of 17
1. Question
All states allow “Testing the Waters.”
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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.
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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.
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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.
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Question 5 of 17
5. Question
You need not disclose the use of debt in any securities-offering document used to raise equity capital.
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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.
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Question 7 of 17
7. Question
It’s appropriate to directly compensate an officer or director for the sales of privately placed securities.
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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.
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Question 9 of 17
9. Question
The executive summary of a Red Herring would include:
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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.
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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.
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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.
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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).
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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.
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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.
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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.
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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.
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