Posted by: DCschmoeka
In reply to: Simplistic who wrote msg# 109681 Date:6/24/2004 8:44:50 AM
Post #of 181142
TSBB/1-E Dilution: IT ALL STARTS WITH FORMS N-54A or N-5
Register and become a
- Small Business Investment Company ("SBIC" under the Securities Act of 1933 and the Investment Company Act of 1940 (Form N-5) sec.gov
- Business Development Companies (“BDC”) like TSBB & TFCT did, under the same act as noted above, via FORM N-54 sec.gov
and you will be under REGULATION E, which lets you do the 1-E dilution:
Regulation E [17 CFR 230.601 to 230.610a], promulgated pursuant to Sections 3(b) and 3(c) of the 1933 Act and Section 38 of the Investment Company Act of 1940 (“1940 Act”), exempts securities of small business investment companies (“SBICs”) registered as investment companies under the 1940 Act and business development companies (“BDCs”) from registration under the 1933 Act provided certain conditions are met. Rule 604 [17 CFR 230.604] under the 1933 Act requires SBICs and BDCs, when making an offering of securities pursuant to Regulation E, to notify the Commission of the offering by filing Form 1-E [17 CFR 239.200]. The Commission staff uses the information to monitor usage of and compliance with Regulation E. The information collected on Form 1-E is publicly available. Any member of the public may direct to the Commission any comments concerning the accuracy of the burden estimate of this Form and any suggestions for reducing the burden of the Form."
(From the bottom disclaimer of Form 1-E: sec.gov )
Regulation E Full Text: sec.gov
So, there´s Regulation D and the REGDEX, and here we have Regulation E and the 1-E. I agree, that puts us close to being pink.
And, as TSBB notes in its latest Q, being a BDC gives them abundant liberties to "create" their balance sheets and via depreciation/appreciation get whatever EPS they like. In the latest quarter, they claimed NET UNREALIZED APPRECIATION ON INVESTMENTS 1,004,389 and thus they posted a net profit - of course that amount is a "subjective determination by the BOD" and may not at all be the same amount determined by a fair and public market for those investments!
This is a disclosure from the 10-Q:
Because there is generally no established market for which to value its investments, the Company’s board of directors’ determination of the value of our investments may differ materially from the values that a ready market or third party would attribute to these investments.
"Under the 1940 Act the Company is required to carry its portfolio investments at market value, or, if there is no readily available market value, at fair value as determined by the board. The Company is not permitted to maintain a general reserve for anticipated loan losses. Instead, the Company is required by the 1940 Act to specifically value each individual investment and to record any unrealized depreciation for any asset that has decreased in value. Because, there is typically no public market for the loans and equity securities of the companies in which it invests, the Company’s board will determine the fair value of these loans and equity securities pursuant to its valuation policy. These determinations of fair value may necessarily be somewhat subjective. Accordingly, these values may differ materially from the values that would be determined by a party or placed on the portfolio if there existed a market for the Company’s loans and equity securities."
Investing in Private Companies Involves a High Degree of Risk.
"The Company’s portfolio consists of primarily long-term loans to and investments in private companies. Investments in private businesses involve a high degree of business and financial risk, which can result in substantial losses and accordingly should be considered speculative. There is generally no publicly available information about the companies in which the Company invests, and the Company relies significantly on the due diligence of its employees and agents to obtain information in connection with its investment decisions. If the Company is unable to uncover all material information about these companies, it may not make a fully informed investment decision and the Company may lose money on its investments.
In addition, some smaller businesses have narrower product lines and market shares that their competition, and may be more vulnerable to customer preferences, market conditions or economic downturns, which may adversely affect the return on, or the recover of, the Company’s investment in such business"
on TSBB, interesting:
The subordinated debenture noted above is from a company affiliated with TSB Holdings, Inc. and bears interest at 6.0%. A portion of the acquired shares is held in escrow pending Surety and Bond performance on debenture terms. Principal is payable at as follows:
Date
--------------------------------------------------------------------------------
Amount
--------------------------------------------------------------------------------
June 2002 $ 312,500
June 2003 312,500
June 2004 625,000
--------------------------------------------------------------------------------
$1,250,000
--------------------------------------------------------------------------------
In addition, the Surety & Bond has the option after June 2004 to covert the debenture into stock of the affiliated company at the then existing market price.
At March 31, 2004 and through May 18, 2004 TSB and/or its affiliated company has not made its scheduled principal and interest payments. Further Surety and Bond has been unsuccessful in raising debt funds and acquiring operating companies. At March 31, 2004, unpaid interest on the debenture amounted to $209,332.
Outstanding as of December 31, 2003
Common Stock, $.001 par value
78,946,700
Outstanding as of March 31, 2004
Common Stock, $.001 par value
236,265,297
Full regulation E wording for the freaks:
sec.gov
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REGULATION E
EXEMPTION FOR SECURITIES OF SMALL BUSINESS INVESTMENT COMPANIES
Definitions of Terms Used in §230.601 to 230.610a
Reg. §230.601. As used in §§230.601 to 230.610a, the following terms shall have the meaning indicated:
Act. The term “Act” refers to the Securities Act of 1933 unless specifically stated otherwise.
Affiliate. An “affiliate” of an issuer is a person controlling, controlled by or under common control with such issuer.
An individual who controls an issuer is also an affiliate of such issuer.
Notification. The term “notification” means the notification required by §230.604.
Offering Circular. The term “offering circular” means the offering circular required by §230.605.
State. “State” is any State, Territory or insular possession of the United States, or the District of Columbia.
Underwriter. The term “underwriter” shall have the meaning given in section 2(11) of the Act.
Securities Exempted
Reg. §230.602.
(a) Except as hereinafter provided in this rule, securities issued by any small business investment company which is
registered under the Investment Company Act of 1940, or any closed-end investment company that has elected to
be regulated as a business development company under the Investment Company Act of 1940 or has notified the
Commission that it intends to elect to be regulated as a business development company pursuant to section 54 of the
Investment Company Act of 1940, will be exempt from registration under the Securities Act of 1933, subject to the
terms and conditions of §§230.601 and 230.610a. As used in this paragraph, the term “small business investment
company” means any company which is licensed as a small business investment company under the Small Business
Investment Act of 1958 or which has received the preliminary approval of the Small Business Administration and
has been notified by the Administration that it may submit a license application. As used in this paragraph, the term
“business development company” means any closed-end investment company which meets the definitional requirements
of section 2(a)(48)(A) and (B) of the Investment Company Act of 1940 [15 U.S.C. 80a-2(a)48)].
(b) No exemption under §§230.601 to 230.610a shall be available for the securities of any issuer if such issuer or any
of its affiliates—
(1) has filed a registration statement which is the subject of any proceeding or examination under section 8 of the
Act, or is the subject of any refusal order or stop order entered thereunder within five years prior to the filing
of the notification.
(2) is subject to pending proceedings under §230.610 or any similar rule adopted under section 3(b) of the Act, or
to an order entered thereunder within five years prior to the filing of such notification.
(3) has been convicted within five years prior to the filing of such notification of any crime or offense involving the
purchase or sale of securities;
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(4) is subject to any order, judgment or decree of any court of competent jurisdiction, entered within five years prior
to the filing of such notification, temporarily or permanently restraining or enjoining such person from engaging
in or continuing any conduct or practice in connection with the purchase or sale of securities;
(5) is subject to pending proceedings under section 8(e) of the Investment Company Act of l940 or to any suspension
or revocation order issued thereunder;
(6) is subject to an injunction issued pursuant to section 35(d) of the Investment Company Act of 1940; or
(7) is subject to a United States Post Office fraud order.
(c) No exemption under §§230.601 to 230.6l0a shall be available for the securities of any issuer, if any of its directors,
officers or principal security holders, any investment adviser or any underwriter of the securities to be offered, or
any partner, director or officer of any such investment adviser or underwriter—
(1) has been convicted within ten years prior to the filing of the notification of any crime or offense involving the
purchase or sale of any security or arising out of such person’s conduct as an underwriter, broker, dealer or
investment adviser;
(2) is temporarily or permanently restrained or enjoined by any court from engaging in or continuing any conduct
or practice in connection with the purchase or sale of any security or arising out of such person’s conduct as an
underwriter, broker, dealer or investment adviser;
(3) is subject to an order of the Commission entered pursuant to section 15(b) or 15A(1) of the Securities Exchange
Act of 1934; has been found by the Commission to be a cause of any such order which is still in effect; or is
subject to an order of the Commission entered pursuant to section 203(d) or (e) of the Investment Advisers Act
of 1940;
(4) is suspended or has been expelled from membership in a national securities dealers’ association or a national
securities exchange for conduct inconsistent with just and equitable principles of trade; or
(5) is subject to a United States Post Office fraud order.
(d) No exemption under §§230.601 to 230.610a shall be available for the securities of any issuer if any underwriter of
such securities, or any director, officer or partner of any such underwriter was, or was named as, an underwriter of
any securities—
(1) covered by any registration statement which is the subject of any proceeding or examination under section 8 of
the Act, or is the subject of any refusal order or stop order entered thereunder within five years prior to the filing
of the notification; or
(2) covered by any filing which is subject to pending proceedings under §230.610 or any similar rule adopted under
section 3(b) of the Act, or to an order entered thereunder within five years prior to the filing of such notification.
(e) Paragraph (b), (c) or (d) shall not apply to the securities of any issuer if the Commission determines, upon a showing
of good cause, that it is not necessary under the circumstances that the exemption be denied. Any such determination
by the Commission shall be without prejudice to any other action by the Commission in any other proceeding or
matter with respect to the issuer or any other person.
Amount of Securities Exempted
Reg. §230.603.
(a) The aggregate offering price of all of the following securities of the issuer shall not exceed $5,000,000:
(1) all securities presently being offered under §§230.601 to 230.610a, or specified in the notification as proposed
to be so offered;
(2) all securities previously sold pursuant to an offering under §§230.601 to 230.610a, commenced within one year
prior to the commencement of the proposed offering; and
(3) all securities sold in violation of section 5(a) of the Act within one year prior to the commencement of the
proposed offering.
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Notwithstanding the foregoing, the aggregate offering price of all securities so offered or sold on behalf of
any one person other than the issuer shall not exceed $100,000, except that this limitation shall not apply if the
securities are to be offered on behalf of the estate of a deceased person within two years after the death of such
person.
(b) The aggregate offering price of securities, which have a determinable market value shall be computed upon the basis
of such market value as determined from transactions or quotations on a specified date within 15 days prior to the
date of filing the notification, or the offering price to the public, whichever is higher; provided, that the aggregate
gross proceeds actually received from the public shall not exceed the maximum aggregate offering price permitted
in the particular case by paragraph (a) above.
(c) In computing the amount of securities which may be offered under §§230.601 to 230.610a, there need not be
included unsold securities the offering of which has been withdrawn with the consent of the Commission by
amending the pertinent notification to reduce the amount stated therein as proposed to be offered.
Filing of Notification on Form 1-E
Reg. §230.604.
(a) At least 10 days (Saturdays, Sundays and holidays excluded) prior to the date on which the initial offering or sale
of any securities is to be made under §§230.601 to 230.610a, there shall be filed with the Commission four copies
of a notification on Form 1-E. The Commission may, however, in its discretion, authorize the commencement of the
offering or sale prior to the expiration of such 10-day period upon a written request for such authorization. At the
time of filing the notification, the applicant shall pay to the Commission a fee of $100, no part of which shall be
refunded.
(b) The notification shall be signed by the issuer and each person, other than the issuer, for whose account any of the
securities are to be offered. If the notification is signed by any person on behalf of any other person, evidence of
authority to sign on behalf of such other person shall be filed with the notification, except where an officer of the
issuer signs on behalf of the issuer.
(c) Any amendment to the notification shall be signed in the same manner as the original notification. Four copies of
such amendment shall be filed with the Commission at least 10 days prior to any offering or sale of the securities
subsequent to filing of such amendment, or such shorter period as the Commission, in its discretion, may authorize
upon a written request for such authorization.
(d) A notification or any exhibit or other document filed as a part thereof may be withdrawn upon application unless the
notification is subject to an order under §230.610 at the time the application is filed or becomes subject to such an
order within 15 days (Saturdays, Sundays and holidays excluded) thereafter; provided, that a notification may not
be withdrawn after any of the securities proposed to be offered thereunder have been sold. Any such application shall
be signed in the same manner as the notification.
Filing and Use of the Offering Circular
Reg. §230.605.
(a) Except as provided in paragraphs (b) or (f) of this rule and in §230.606:
(l) No written offer of securities of any issuer shall be made under §§230.601 to 230.610a unless an offering
circular containing the information specified in Schedule A or Schedule B, as appropriate, is concurrently given
or has previously been given to the person to whom the offer is made, or has been sent to such person under such
circumstances that it would normally have been received by him at or prior to the time of such written offer; and
(2) no securities of such issuer shall be sold under §§230.601 to 230.610a unless such an offering circular is given
to the person to whom the securities were sold, or is sent to such person under such circumstances that it would
normally be received by him, with or prior to any confirmation of the sale, or prior to the payment by him of all
or any part of the purchase price of the securities, whichever first occurs.
(b) Any written advertisement or other written communication, or any radio or television broadcast, which states from
whom an offering circular may be obtained and in addition contains no more than the following information may be
published, distributed or broadcast at or after the commencement of the public offering to any person prior to
sending or giving such person a copy of such circular:
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(1) the name of the issuer of such security;
(2) the title of the security, the amount being offered, and the per-unit offering price to the public; and
(3) the identity of the general type of business of the issuer.
(c) (1) The offering circular may be printed, mimeographed, lithographed or typewritten, or prepared by any similar
process which will result in clearly legible copies. If printed, it shall be set in roman type at least as large as tenpoint
modern type, except that financial statements and other statistical or tabular matter may be set in roman
type at least as large as eight-point modern type. All type shall be leaded at least two points.
(2) Where an offering circular is distributed through an electronic medium, issuers may satisfy legibility requirements
applicable to printed documents by presenting all required information in a format readily communicated
to investors.
(d) If the offering is not completed within nine months from the date of the offering circular, a revised offering circular
shall be prepared, filed and used in accordance with these rules as for an original offering circular. In no event shall
an offering circular be used which is false or misleading in light of the circumstances then existing.
(e) Four copies of the offering circular required by this rule, which is to be used at the commencement of the offering,
shall be filed with the notification at the time such notification is filed and shall be deemed a part thereof. If the
offering circular is thereafter revised or amended, four copies of such revised or amended circular shall be filed as
an amendment to the notification at least 10 days prior to its use, or such shorter period as the Commission may, in
its discretion, authorize upon a written request for such authorization.
(f) An offering circular filed pursuant to paragraph (e) may be distributed prior to the expiration of the 10-day waiting
periods for offerings provided for in §230.604(a) and (c) and paragraph (e) of this section and such distribution may
be accompanied or followed by oral offers related thereto, provided the conditions in paragraphs (f)(l) through (f)(4)
are met. For the purposes of this section, any offering circular distributed prior to the expiration of the ten day
waiting period is called a Preliminary Offering Circular. Such Preliminary Offering Circular may be used to meet
the requirements of paragraph (a)(2) of §230.605, provided that if a Preliminary Offering Circular is inaccurate or
inadequate in any material respect, a revised Preliminary Offering Circular or an offering circular of the type
referred to in paragraph (f)(4) shall be furnished to all persons to whom the securities are to be sold at least 48 hours
prior to the mailing of any confirmation of sale to such persons, or shall be sent to such persons under such
circumstances that it would normally be received by them 48 hours prior to their receipt of confirmation of the sale.
(1) Such Preliminary Offering Circular contains substantially the information required by this section to be included
in an offering circular, or contains substantially that information except for the omission of information with
respect to the offering price, underwriting discounts or commissions, discounts or commissions to dealers,
amount of proceeds, conversion rates, call prices, or other matters dependent upon the offering price.
(2) The outside front cover page of the Preliminary Offering Circular shall bear the caption “Preliminary Offering
Circular,” the date of its issuance, and the following statement which shall run along the left hand margin of the
page and printed perpendicular to the text, in boldface type at least as large as that used generally in the body
of such offering circular:
A notification pursuant to Regulation E relating to these securities has been filed with the Securities and
Exchange Commission. Information contained in this Preliminary Offering Circular is subject to completion or
amendment. These securities may not be sold nor may offers to buy be accepted prior to the time an offering
circular which is not designated as a Preliminary Offering Circular is delivered. This Preliminary Offering
Circular shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sales of
these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state.
(3) The Preliminary Offering Circular relates to a proposed public offering of securities that is to be sold by or
through one or more underwriters which are broker-dealers registered under Section 15 of the Securities
Exchange Act of 1934, each of which has furnished a signed Consent and Certification in the form prescribed
as a condition to the use of such offering circular;
(4) An offering circular which contains all of the information specified in Schedule A or Schedule B (17 CFR
230.610a) and which is not designated as a Preliminary Offering Circular is furnished with or prior to delivery
of the confirmation of sale to any person who has been furnished with a Preliminary Offering Circular pursuant
to this paragraph.
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Offering Not in Excess of $100,000
Reg. §230.606. No offering circular need be filed or used in connection with an offering of securities under §§230.601
to 230.610a if the aggregate offering price of all securities of the issuer offered or sold without the use of such an offering
circular does not exceed $100,000 computed in accordance with §230.603, provided the following conditions are met:
(a) There shall be filed as an exhibit to the notification four copies of a statement setting forth the information (other
than financial statements) required by Schedule A or Schedule B to be set forth in an offering circular.
(b) No advertisement, article or other communication published in any newspaper, magazine or other periodical and no
radio or television broadcast in regard to the offering shall contain more than the following information:
(1) the name of the issuer of such security;
(2) the title of the security, amount offered, and the per-unit offering price to the public;
(3) the identity of the general type of business of the issuer; and
(4) by whom orders will be filled or from whom further information may be obtained.
Sales Material to Be Filed
Reg. §230.607. Four copies of each of the following communications prepared or authorized by the issuer or anyone
associated with the issuer, any of its affiliates or any principal underwriter for use in connection with the offering of any
securities under §§230.601 to 230.610a shall be filed with the Commission at least five days (exclusive of Saturdays,
Sundays and holidays) prior to any use thereof, or such shorter period as the Commission, in its discretion, may authorize.
(a) every advertisement, article or other communication proposed to be published in any newspaper, magazine or other
periodical;
(b) the script of every radio or television broadcast; and
(c) every letter, circular or other written communication proposed to be sent, given or otherwise communicated to more
than ten persons.
Prohibition of Certain Statements
Reg. §230.608. No offering circular or other written or oral communication used in connection with any offering under
§§230.601 to 230.610a shall contain any language stating or implying that the Commission has in any way passed upon the
merits of, or given approval to, guaranteed or recommended the securities offered or the terms of the offering or has
determined that the securities are exempt from registration, or has made any finding that the statements in any such offering
circular or other communication are accurate or complete.
[As adopted in Release No. 33-4005, December 17, 1958, 23 F.R. 10484.]
Reports of Sales Hereunder
Reg. §230.609. Within 30 days after the end of each six-month period following the date of the original offering
circular, or of the statement required by §230.606, the issuer or other person for whose account the securities are offered
shall file with the Commission four copies of a report on Form 2-E containing the information called for by that form. A final
report shall be made upon completion or termination of the offering and may be made prior to the end of the six-month period
in which the last sale is made.
Suspension of Exemption
Reg. §230.610.
(a) The Commission may, at any time after the filing of a notification, enter an order temporarily suspending the
exemption, if it has reason to believe that—
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(1) no exemption is available under §§230.601 to 230.610a for the securities purported to be offered hereunder or
any of the terms or conditions of §§230.601 to 230.610a have not been complied with, including failure to file
any report as required by §230.609;
(2) the notification, the offering circular or any other sales literature contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements made, in the light of the circumstances
under which they are made, not misleading;
(3) the offering is being made or would be made in violation of section 17 of the Act;
(4) any event has occurred after the filing of the notification which would have rendered the exemption hereunder
unavailable if it had occurred prior to such filing;
(5) any person specified in paragraph (b) of §230.602 has been indicted for any crime or offense of the character
specified in subparagraph (3) thereof, or any proceeding has been initiated for the purpose of enjoining any such
person from engaging in or continuing any conduct or practice of the character specified in subparagraph (4) of
such paragraph;
(6) any person specified in paragraph (c) of §230.602 has been indicted for any crime or offense of the character
specified in subparagraph (1) thereof, or any proceeding has been initiated for the purpose of enjoining any such
person from engaging in or continuing any conduct or practice of the character specified in subparagraph (2) of
such paragraph; or
(7) the issuer or any officer, director or underwriter has failed to cooperate, or has obstructed or refused to permit
the making of an investigation by the Commission in connection with any offering made or proposed to be made
hereunder.
(b) Upon the entry of an order under paragraph (a) of this rule, the Commission will promptly give notice to the persons
on whose behalf the notification was filed (1) that such order has been entered, together with a brief statement of
the reasons for the entry of the order, and (2) that the Commission, upon receipt of a written request within 30 days
after the entry of such order, will, within 20 days after the receipt of such request, set the matter down for hearing
at a place to be designated by the Commission. If no hearing is requested and none is ordered by the Commission,
the order shall become permanent on the thirtieth day after its entry and shall remain in effect unless or until it is
modified or vacated by the Commission. Where a hearing is requested or is ordered by the Commission, the
Commission will, after notice of an opportunity for such hearing, either vacate the order or enter an order
permanently suspending the exemption.
(c) The Commission may at any time after notice of and opportunity for hearing, enter an order permanently suspending
the exemption for any reason upon which it could have entered a temporary suspension order under paragraph (a)
of this rule. Any such order shall remain in effect until vacated by the Commission.
(d) All notices required by this rule shall be given to the person or persons on whose behalf the notification was filed
by personal service, registered or certified mail or confirmed telegraphic notice at the addresses of such persons
given in the notification.
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SCHEDULE A
CONTENTS OF OFFERING CIRCULAR FOR SMALL BUSINESS INVESTMENT COMPANIES
Reg. §230.610a. General Instructions.
l. The information in the offering circular should be organized to make it easier to understand the organization and
operation of the company. The required information need not be in any particular order, except that Items l and 2 must be
the first and second items in the offering circular.
2. The offering circular, including the cover page, may contain more information than is called for by this Schedule,
provided that it is not incomplete, inaccurate, or misleading. Also, the additional information should not, by its nature,
quantity, or manner of presentation, obscure or impede understanding of required information.
Item 1. Cover Page.
The cover page of the offering circular shall include the following information:
(a) The name of the issuer;
(b) The mailing address of the issuer’s principal executive offices including the zip code and the issuer’s telephone
number;
(c) The date of the offering circular;
(d) A list of the type and amount of securities offered (e.g., if the securities offered include redemption or conversion
features, so state);
(e) The following statement in capital letters printed in bold face roman type at least as large as ten-point modern type
and at least two points leaded:
“THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION
WITH THE SECURITIES AND EXCHANGE COMMISSION; HOWEVER, THE COMMISSION HAS NOT
MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES BEING OFFERED ARE EXEMPT
FROM REGISTRATION. THE SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE
MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING,
NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR
OTHER SELLING LITERATURE.”
(f) The name of the underwriter or underwriters, if applicable;
(g) A cross-reference to the place in the offering circular discussing the material risks involved in purchasing the
securities, printed in bold face roman type at least as high as ten-point modern type and at least two points leaded;
(h) The approximate date when the proposed sale to the public will begin; and
(i) The information called for by the following table shall be given, in substantially the tabular form indicated, on the
outside front cover page of the offering circular as to all securities being offered (estimate, if necessary):
Offering Underwriting Proceeds to
Price to Public discounts and issuer or
commissions other persons
Per share or other unit basis
Total
If the securities are to be offered on a best efforts basis, the cover page should set forth the termination date, if any, of
the offering, any minimum required sale, and any arrangements to place the funds received in an escrow, trust, or similar
arrangement. The following tabular presentation of the total maximum and minimum securities to be offered should be
combined with the table required above:
8
Offering Underwriting Proceeds to
Price to Public discounts and issuer or
commissions other persons
Total Minimum
Total Maximum
Instructions:
l. The term “commission” shall include all cash, securities, contracts, or anything else of value, paid, to be set aside,
disposed of, or understandings with or for the benefit of any other persons in which any underwriter is interested, made in
connection with the sale of such security.
2. Only commissions paid by the issuer in cash are to be indicated in the table. Commissions paid by other persons or
any form of non-cash compensation shall be briefly identified in a note to the table with a cross-reference to a more complete
description elsewhere in the offering circular.
3. If the securities are not to be offered for cash, state the basis upon which the offering is to be made.
4. (a) If it is impracticable to state the price to the public, briefly state the method by which the price is to be
determined.
(b) any “finder’s fees” or similar payments must be disclosed in a note to the table with a reference to a more
complete discussion in the offering circular.
(c) The amount of the expenses of the offering borne by the issuer, including underwriting expenses to be borne by
the issuer, should be disclosed in a note to the table.
5. If any of the securities are to be offered for the account of any security holder, state the identity of each selling
security holder, the amount owned by him, the amount offered for his account and the amount to be owned after the offering.
Item 2. General Description of Issuer.
(a) Concisely discuss the organization and operation or proposed operation of the issuer. Include the following:
(i) basic identifying information, including:
(A) the date and form of organization of the issuer and the name of the state under whose laws it is organized;
(B) a brief description of the nature of a small business investment company; and
(C) the classification and subclassification of the issuer as specified in sections 4 and 5 of the Investment
Company Act of 1940.
(ii) a concise description of the investment objectives and policies of the issuer, including:
(A) if those objectives may be changed without a vote of the holders of the majority of the voting securities,
a brief statement to that effect; and
(B) a brief discussion of how the issuer proposes to achieve its objectives, including:
(1) the types of securities (for example, bonds, convertible debentures, preferred stocks, common stocks)
in which it may invest, and the proportion of the assets which may be invested in each type of security;
(2) if the issuer proposes to have a policy of concentrating in a particular industry or group of industries,
identification of such industry or industries. (Concentration, for purposes of this item, is deemed to be
25% or more of the value of the issuer’s total assets invested or proposed to be invested in a particular
industry or group of industries).
(C) a concise description of any other policies of the issuer that may not be changed without the vote of the
majority of the outstanding voting securities, including those policies which the issuer deems to be
fundamental within the meaning of Section 8(b) of the 1940 Act.
9
(D) a concise description of those significant investment policies or techniques (such as investing for control
or management or investing in other investment companies) that are not described pursuant to subparagraphs
(B) and (C) above that the issuer employs or has the current intention of employing in the
foreseeable future.
Note: If the effect of a policy is to prohibit a particular practice, or, if the policy permits a particular
practice but the issuer has not employed that practice within the past year and has no current intention of
doing so in the foreseeable future, do not include disclosure as to that policy.
(b) Discuss briefly the principal risk factors associated with investment in the issuer, including factors peculiar to the
issuer as well as those generally attendant to investment in a small business investment company with investment
policies and objectives similar to the issuer.
Item 3. Plan of Distribution.
(a) If the securities are to be offered through underwriters, give the names of the principal underwriters, and state the
amounts underwritten by each. Identify each underwriter having a material relationship to the issuer and state the
nature of the relationship. State briefly the nature of the underwriters’ obligation to take the securities.
(b) State briefly the discounts and commissions to be allowed or paid to dealers, including all cash, securities, contracts
or other consideration to be received by any dealer in connection with the sale of the securities.
(c) If “finder’s fees” are to be paid, identify the “finder,” the nature of the services rendered and the nature of any
relationship between the “finder” and the issuer, its officers, directors, promoters, principal stockholders and
underwriters (including any affiliates thereof). If a “finder” is not registered with the Commission as a broker or
dealer, disclose that fact.
(d) Outline briefly the plan of distribution of any securities being issued which are to be offered through the selling
efforts of brokers or dealers or otherwise than through underwriters.
(e) (l) Describe any arrangements for the return of funds to subscribers if all of the securities to be offered are not sold;
if there are no such arrangements, so state.
(2) If there will be a material delay in the payment of the proceeds of the offering by the underwriter to the issuer,
the nature of the delay and the effects on the issuer should be briefly described.
Item 4. Management and Certain Security Holders of the Issuer.
(a) Give the full names and complete addresses of all directors, officers, members of any advisory board of the issuer
and any person who owns more than 5 percent of any class of securities of the issuer (other than the Small Business
Administration if the issuer is a small business investment company as defined in section 230.602(a) of this chapter).
(b) Identify each person who as of a specified date no more than 30 days prior to the date of filing of this registration
statement, controls the issuer as specified in section 2(a)(9) of the Investment Company Act of 1940.
(c) Give the business experience over the last five years of any person named in (a) above who is or is expected to be
significantly involved in the investment decisions of the issuer or in providing advisory services, direction or control
of portfolio companies of the issuer.
(d) State the aggregate annual remuneration of each of the three highest-paid persons who are officers or directors of
the issuer and all officers and directors as a group during the issuer’s last fiscal year. State the number of persons
in the group referred to above without naming them.
(e) Describe all direct and indirect interests (by security holdings or otherwise) of each person named in (a) above (i)
in the issuer and (ii) in any material transactions within the past two years or in any material proposed transaction
to which the issuer was or is to be a party. Include the cost to such persons of any assets or services for which the
issuer was or is to be a party. Include the cost to such persons of any assets or services for which any payment by
or for the account of the issuer has been or is to be made.
(f) Provide, if applicable, for each investment adviser of the issuer as defined in section 2(a)(20) of the Investment
Company Act of 1940:
10
(i) the name and address of the investment adviser and a brief description of its experience as an investment adviser,
and, if the investment adviser is controlled by another person, the name of that person and the general nature
of its business. (If the investment adviser is subject to more than one level of control, it is sufficient to give the
name of the ultimate control person.)
(ii) a brief description of the services provided by the investment adviser. (If, in addition to providing investment
advice, the investment adviser or persons employed by or associated with the investment adviser are, subject to
the authority of the board of directors, responsible for overall management of issuer’s business affairs, it is
sufficient to state that fact in lieu of listing all services provided.)
(iii) a brief description of the investment adviser’s compensation. (If the issuer has been in operation for a full fiscal
year, provide the compensation paid to the adviser for the most recent fiscal year as a percentage of average net
assets. No further information is required in response to this Item if the adviser is paid on the basis of a
percentage of net assets and if the issuer has neither changed investment advisers nor changed the basis on which
the adviser was compensated during the most recent fiscal year. If the fee is paid in some manner other than on
the basis of average net assets, briefly describe the basis of payment. If the registrant has not been in operation
for a full fiscal year, state generally what the investment adviser’s fee will be as a percentage of average net
assets, including any breakpoints, but it is not necessary to include precise details as to how the fee is computed
or paid.)
Item 5. Portfolio companies.
Furnish the following information, in the tabular form indicated, with respect to the portfolio companies of the issuer,
as of a special date within 90 days prior to the date of filing the notification with the Commission pursuant to an offering
of securities under Regulation E.
Name and Nature Title of Number of
address of of its Securities shares or
portfolio principal owned, amount of loan
companies business controlled or to portfolio
held by companies
issuer
Percentage of Value Percentage of
class of securities total value of
owned, portfolio
controlled or companies
held by issuer
Instructions:
l. Provide the city and state for address of portfolio companies.
2. State the value as of date of balance sheet required under Item 7.
Item 6. Capital Stock and Other Securities.
(a) Describe concisely the nature and most significant attributes of the securities being offered, including: (i) a brief
discussion of voting rights; (ii) restrictions, if any, on the right freely to retain or dispose of such security; (iii)
conversion rights, if applicable; and (iv) any material obligations or potential liability associated with ownership
of such security (not including investment risks).
(b) If the rights of holders of such security may be modified otherwise than by a vote of majority or more of the shares
outstanding, voting as a class, so state and explain briefly.
(c) If the issuer has any other classes of securities outstanding (other than bank borrowings or borrowings that are not
senior securities under Section 18(g) of the Investment Company Act of 1940) identify them and state whether they
have any preference over the security being offered.
(d) Describe briefly the issuer’s policy with respect to dividends and distributions, including any options shareholders
may have as to the receipt of such dividends and distributions.
11
(e) Describe briefly the tax consequences to investors of an investment in the securities being offered. Such description
should not include detailed discussion of applicable law. If the issuer intends to qualify for treatment under
Subchapter M, it is sufficient, in the absence of special circumstances, to state briefly that in that case: (i) the issuer
will distribute all of its net income and gains to shareholders and that such distributions are taxable income or capital
gains; (ii) shareholders may be proportionately liable for taxes on income and gains of the issuer but that
shareholders not subject to tax on their income will not be required to pay tax on amounts distributed to them; and
that (iii) the issuer will inform shareholders of the amount and nature of such income or gains.
(f) Where there is a material disparity between the public offering price and the effective cash cost to officers, directors,
promoters and affiliated persons for shares acquired by them in a transaction during the past three years, or which
they have a right to acquire, there should be included a comparison of the public contribution under the proposed
public offering and the effective cash contribution of such persons. In such cases, and in other instances where the
extent of the dilution makes it appropriate, the following shall be given: (1) the net tangible book value per share
before and after the distribution; (2) the amount of the increase in such net tangible book value per share attributable
to the cash payment made by purchasers of the shares being offered; and (3) the amount of the immediate dilution
from the public offering price which will be absorbed by such purchasers.
Item 7. Financial Statements.
Furnish appropriate financial statements of the issuer as required below. Such statements shall be prepared in accordance
with generally accepted accounting principles and practices. The statements required for the issuer’s latest fiscal year shall
be certified by an independent public accountant or certified public accountant in accordance with Regulation S-X if the
issuer has filed or is required to file with the Commission certified financial statements for such fiscal year; the statements
filed for the period or periods preceding such latest year need not be certified.
(a) A balance sheet as of a date within 90 days prior to the date of filing the notification with the Commission.
(b) A profit and loss or income statement for each of the last two fiscal years and for any subsequent period up to the
date of the balance sheet furnished pursuant to (a) above.
SCHEDULE B
CONTENTS OF OFFERING CIRCULAR FOR BUSINESS DEVELOPMENT COMPANIES
General Instructions. Same as General Instructions to Schedule A.
Item 1. Same as Item l of Schedule A.
Item 2. General Description of Issuer.
(a) Concisely discuss the organization and operation or proposed operation of the issuer. Include the following:
(i) basic identifying information, including:
(A) the date and form of organization of the issuer and the name of the state under the laws of which it is
organized; and
(B) a brief description of the nature of a business development company.
NOTE: A business development company having a wholly-owned small business investment
company subsidiary should disclose how the subsidiary is regulated, e.g., as an investment company
registered under the Investment Company Act of 1940, and what percentage of the parent company’s assets
are, or are expected to be, invested in the subsidiary. The business development company should also
describe the small business investment company’s operations, including any material difference in
investment policies between the business development company and its small business investment
company subsidiary.
(ii) a concise description of the investment objectives and policies of the issuer, including:
(A) if those objectives may be changed without a vote of the holders of the majority of the voting securities,
a brief statement to that effect; and
(B) a brief discussion of how the issuer proposes to achieve such objectives, including:
(1) the types of securities (for example, bonds, convertible debentures, preferred, stocks, common stock)
in which it may invest, indicating the proportion of the assets which may be invested in each such type
of security;
(2) if the issuer proposes to have a policy of concentrating in a particular industry or group of industries,
identification of such industry or industries. (Concentration, for purposes of this item, is deemed to be
25% or more of the value of the issuer’s total assets invested or proposed to be invested in a particular
industry or group of industries).
(3) investment in companies for the purpose of exercising control or management;
(4) the policy with respect to any assets that are not required to be invested in eligible portfolio companies
or other companies qualifying under section 55 of the Investment Company Act of 1940;
(5) the policy with respect to rendering significant managerial assistance to eligible portfolio companies
or other companies qualifying under section 55 of the Investment Company Act of 1940;
(6) the policy with respect to investing as part of a group.
(C) identification of any other policies of the issuer that may not be changed without the vote of the majority
of the outstanding voting securities, including the policy not to withdraw its election as a business
development company without approval by the majority of the outstanding voting securities.
(D) a concise description of those significant investment policies or techniques (such as investing for control
or management) that are not described pursuant to subparagraph (B) or (C) above the issuer employs or has
the current intention of employing in the foreseeable future.
(b) Discuss briefly the principal risk factors associated with investment in the issuer, including factors peculiar to the
issuer as well as those generally attendant to investment in a business development company with investment
policies and objectives similar to the issuer.
Item 3. Same as Item 3 of Schedule A.
Item 4. Same as Item 4 of Schedule A.
Item 5. Same as Item 5 of Schedule A.
Item 6. Same as Item 6 of Schedule A.
Item 7. Same as Item 7 of Schedule A.
~DC~
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