Raising Capital

A Guide for Small Businesses
Seeking to Raise Capital in Wisconsin

Important Background Information

One of the ways businesses raise capital is by issuing securities which are offered for sale to investors. Small businesses, however, are sometimes reluctant to use this option because of their perception that doing so would be either too complicated or too costly, or both, in light of state and federal laws and regulations. This Guide briefly discusses securities regulation in general, identifies the responsible state and federal agencies, and describes avenues which have been developed by the State of Wisconsin to assist potential issuers of securities to understand the different securities financing options available to them.

The Division of Securities

As part of the State of Wisconsin's Department of Financial Institutions, the Division of Securities (the "Division") recognizes that innovative programs are needed to serve the securities financing needs of small businesses. The Division has approached this challenge in several ways:

First, we have worked with issuers, attorneys, and others to develop securities-offering alternatives that are geared specifically toward small companies. In addition to adopting exemption provisions for the benefit of small and start-up companies, the Division helped to develop the Small Company Offering Registration (SCOR) form, which is a "question and answer" form of disclosure document. It is described in more detail later in this Guide.

Second, we produce a wide array of informational materials to explain the options that are available and the procedures involved in making a securities offering.

Third, we have created a Small Business Information Center to work with small issuers on certain types of offerings. The small business section is staffed by analysts who specialize in issues unique to small business. They are available to discuss the various financing options described in this brochure. They are also available for prefiling conferences in which you can learn about the application process and get an idea of potential problems before you begin. You may also review disclosure documents from prior offerings that were filed with the Division, so you can become familiar with the kind of information you will be required to disclose in your own offering.

Lastly, the Division has adopted a "Solicitation of Interest" or "Testing the Waters" provision which allows certain potential issuers to solicit indications of interest from potential investors prior to the preparation and filing of a final prospectus. This allows the small business issuer to determine the likelihood of success prior to incurring the expenses usually entailed in registering an offering. It is also an avenue for the potential issuer to obtain input on how to structure the offering to make it attractive to a sufficient number of investors. The requirements for use and other criteria are discussed in more detail later in this Guide and in a brochure containing the Solicitation of Interest form (Form SOI) which is available from the Division.

The Securities Regulation Process

Laws governing the offer and sale of securities have been enacted in every state, as well as by Congress, in order to protect investors while still providing a mechanism for capital formation and economic growth. An additional benefit of such laws has been to increase confidence in the securities markets. Effective securities regulation helps to maintain the public's willingness to invest in business.

The primary concern in the regulation of offers and sales of securities is that all material facts and risks be fully disclosed to potential investors before they commit to purchase securities. Failure by an issuer to disclose fully all material facts and risks may result in violations of securities Statutes and administrative rules, which, in turn, could lead to civil and perhaps even criminal liability.

The regulatory concern with full disclosure is addressed in part by the registration and exemption requirements contained in securities laws. To conduct an offering, it is often required that an application or notification be filed with the federal Securities and Exchange Commission (the "SEC"), and with the securities division of every state in which the offering will be made.

Offers and sales of securities are regulated by the SEC on the federal level and, in Wisconsin, by the Division. This Guide focuses on Wisconsin's securities laws. Although federal laws may also apply to an offering, they are not discussed in this Guide.

In Wisconsin, a security must either be registered with the Division or qualify for an exemption from registration before it is offered or sold. Most securities offered for sale in Wisconsin by small business entities are exempt from registration, thereby making it easier for small businesses to seek capital. Nevertheless, even if an offer or sale of securities is exempt from registration, the issuer of the securities must disclose all material facts to a prospective investor.

The Securities Offering Process

1. Develop a business plan.
Before you attempt to obtain any type of financing, you should develop a sensible and realistic business plan. This plan should describe in detail the product or service you sell, what and where your market is, who your competition is, your managers and their backgrounds, a history of your business, and the financial condition of your business.

2. Determine if a securities offering is appropriate for your business.
The next step is to determine whether a securities offering is the best way to obtain financing for your business. You will have to devote a significant amount of time to putting the offering together and making sure that you have complied with the federal and state securities laws. The selling process will probably take even more time. If your equity offering is successful, you will have given up a portion of your business and you must answer to your investors. These investors will expect periodic reports on the company's progress, and they may want to talk to management, attend board meetings, or visit the company facilities on a regular basis. You may want to utilize the "Testing the Waters" exemption to help determine the chances of successfully completing the offering.

3. Select the most appropriate offering exemption or registration and security type.
If you decide to undertake a securities offering, the next step is to determine the offering exemption or registration that is most appropriate for your needs. Your choice will be based on the amount of money you need to raise, the number of investors you think will be necessary to raise that amount, how much time you can spare from running your business, and how much you can afford for the professional services of lawyers and accountants.

In addition, you must determine the type of security you will offer. Depending on the type of offering you choose, you may issue common stock, preferred stock, debt, limited partnership interests, or interests in a limited liability company or partnership. Again, Testing the Waters may be helpful in determining the structure of your offering.

4. Prepare the disclosure document.
When preparing the disclosure document, you must clearly explain your company's business and how the funds from the offering will be used. If you make any earnings or cost projections, you must carefully explain and justify the assumptions on which the projections are based. Unjustified or otherwise inappropriate assumptions are a frequent problem, so you should consult the Division before including any projections in your document. You should also double check figures and proofread all documents to avoid errors, omissions, and discrepancies.

Complex offerings, start-up companies, and companies in a unique business often have special disclosure problems that complicate the review process. If you are unfamiliar with securities laws, or are having trouble completing the application, you should consider hiring a securities attorney or other professional.

Developing the prospectus can be demanding. However, you must remember that you will be asking investors to part with money that could be placed in a financial institution and insured against loss. Investing in small businesses is inherently highly risky, and the law seeks to ensure that investors have enough information to make an informed investment decision.

5. Obtain clearance for the offering from the Division.
Many securities offerings in Wisconsin are subject to a filing requirement with the Division. Some offerings, particularly those that may be sold to the general public through advertising or general solicitation, require registration. For others, a notice filing of exemption may be all that is necessary. This Guide should be helpful in determining what the filing requirements for your offering are.

6. Sell the securities.
Preparing the documents for a securities offering is a difficult task, but your greatest challenge will usually be finding investors. Small offerings tend to involve a high degree of risk, and investors are often wary. Furthermore, many securities broker-dealers do not handle small offerings because they cannot make enough in commissions to cover their marketing costs. In addition, some registration exemptions do not allow you to advertise your securities. For the most part, you will be relying on family, friends, and business acquaintances to invest in your offering.

Remember, Testing the Waters can be an invaluable tool in structuring an offering to increase the chances of success.

Summary

The Wisconsin securities law contains over 30 registration exemptions. A number of the registration exemptions currently available and commonly used by small business issuers in Wisconsin are described below. In addition, the staff of the Small Business Assistance Center (1-800-472-4325 or 266-8557 in the Madison, WI area) will answer questions about exemption or registration procedures and, if you represent a Wisconsin-based issuer, will meet with you on a pre-filing basis to assist you in selecting the appropriate exemption or answer questions regarding the registration process.

Because the assistance we provide cannot and does not involve giving "legal advice," consideration should be given to seeking professional advice (e.g., legal, financial) about making an offering of securities. Remember, violations of the Wisconsin Uniform Securities Law may result in administrative, civil, or criminal liability.

Exemptions from Registration

Preorganization Subscriptions
(Sec. 551.23 (9), Wis. Stats.)

A business in the preorganization stage may offer subscriptions for its securities without registering with the Division beforehand. A "preorganization subscription agreement" is a non-binding indication of interest in purchasing securities to be issued by a business entity that has not yet been formed. Note, however, that this exemption may NOT be used for the actual sale of the securities themselves. No filing is required, but this exemption is available only if all of the following requirements are met:

• No commissions, finders' fees, or other forms of remuneration are paid for soliciting subscribers;
• No advertising is published or circulated unless filed with (fee is $10 per item) and permitted by the Division; and
• The subscription agreement is not binding upon subscribers, and no payment is made by them to the business unless and until the actual securities are registered with the Division or another exemption from registration is available for their sale.

NOTE: Advertising material must be filed for review and approval if circulated to more than ten persons.

Any business that has already been formed is ineligible to use this exemption . However, the Solicitation of Interest exemption, as discussed below, may be considered for such businesses, and may be utilized by businesses in the preorganization stage as well.

Solicitations of Interest (Testing the Waters)
(Section DFI-Sec 2.027, Wis. Adm. Code)

This "Testing the Waters" exemption permits a small business issuer to make a general solicitation, including use of media ads, to solicit indications of interest in a proposed securities offering.

The exemption allows an interested person to express interest in a potential securities offering by requesting a prospectus or offering circular of the issuer. This in no way commits the interested person to purchase any securities or to invest any money.

Use of this procedure may allow small business issuers to determine whether there is a reasonable probability of success prior to incurring the often considerable expense of selling the securities.

To use this exemption, the issuer must intend either to register in this state or to utilize an exemption from the registration process. This procedure allows for offers only. Sales are permitted only after the securities are registered in this state, or an exemption from registration becomes available for the sales. During the solicitation-of-interest period, the issuer cannot solicit or accept money or a commitment to purchase securities.

NOTE: If the small business intends to rely on the federal private placement exemptions in Rule 505 or 506 of Regulation D under the Securities Act of 1933 to raise capital in the future, the solicitation-of-interest process may invalidate the federal exemption which precludes general solicitation or general advertising (such as newspaper or magazine ads or articles; television, radio, electronic or other broadcast media; or public seminars).

The solicitation-of-interest form ("Form SOI") sets forth the minimum information required for soliciting indications of interest. Additional information may be included. Form SOI is published in section DFI-Sec 9.01(1)(c), Wis. Adm. Code. The Division also has published a "Testing the Waters" brochure which includes both the text of the rule and Form SOI.

NOTE: All information given to the potential investor must be accurate. Any investor who receives materially incomplete or incorrect information, whether written or oral, during the solicitation-of-interest process may later have a cause of action under the Wisconsin Securities Law, and administrative and criminal liability could also arise.

There are certain very specific, detailed steps that the issuer must follow. Any offer that fails to conform to the conditions of the procedure may constitute an unregistered, unlawful offer for which civil, administrative, and criminal liabilities may attach under the Wisconsin Securities Law. Following are the required steps:

• Not later than the date of the initial solicitation of interest, the potential issuer must file with the Division a completed Form SOI, together with any other materials to be used to conduct the solicitations of interest, including, but not limited to, the script of any broadcast to be made and a copy of any notice to be published. No fee is required.
• Not later than the date of use, the potential issuer must file with the Division amendments to materials already filed or additional materials to be used to conduct the solicitations of interest.
• The text of any published notice or script for broadcast, and any printed material delivered in any solicitation of interest, must begin with the disclosures and information required by Form SOI and follow the format of that form.
• The solicitations of interest must stop once the potential issuer files a registration application or files a claim of exemption or commences use of any self-executing exemption.
• Sales are not permitted until 20 days after the last delivery of a solicitation-of-interest document or a radio or television broadcast or other media publication, and an exemption from registration for the sales becomes available or the securities become registered.

NOTE: If a small business or its controlling persons or affiliates have been the subject of certain legal or administrative actions, in Wisconsin or elsewhere, they are disqualified from use of this exemption. See sec. 551.23(19)(c), Wis. Stats.

Fifteen-Security-Holder Exemption
(Sec. 551.23 (10), Wis. Stats.)

A business whose principal office is located in Wisconsin may sell securities if, after the sale, the total number of holders of all the issuer's securities is fifteen or fewer (not counting certain "institutional investors" such as banks, insurance companies, mutual funds, and principal officers and directors of the business). No filing is required (except as below) and no fee is required, but the following conditions must be met:

• No commissions, finders' fees, or other forms of remuneration are paid for soliciting investors in Wisconsin, except to securities broker-dealers or agents who are licensed in Wisconsin; and
• No advertising is published unless filed with and permitted by the Division.

NOTE: Sec. 551.23(8), Wis. Stats., and sections DFI-Sec 2.02 (4), (5)(a) and (b) Wis. Adm. Code, should be consulted for the requirements concerning who should be counted as a holder of the issuer's securities and how affiliated issuers are treated under this exemption.

Offers-to-Ten-Persons Exemption
(Sec. 551.23(11), Wis. Stats.)

A business may make OFFERS of securities without registration with the Division to not more than 10 persons in Wisconsin in any consecutive twelve-month period (not counting certain "institutional investors," but including non-institutional persons to whom securities were offered in the same period, using the exemption in sec. 551.23 (10), Wis. Stats., discussed above). SALES of securities made under this exemption may result only from the 10 or fewer offers. This exemption is available only if all of the following additional requirements are met:

• The offeror reasonably believes that all investors are purchasing for investment purposes rather than for resale;
• No commissions, finders' fees, or other forms of remuneration are paid to any person for soliciting investors in Wisconsin, other than reasonable commissions to securities broker-dealers or agents who are licensed in Wisconsin; and
• If the securities represent limited partnership interests in oil, gas or mining activities, investment contracts, or certificates of interest or participation in oil, gas, or mining leases or titles, a notice (no specific form required) and filing fee of $200 may be required to be filed with the Division at least 10 days PRIOR to offering the securities to any person in Wisconsin under circumstances described in section DFI-Sec 2.02 (5)(d) 1., Wis. Adm. Code.

NOTE: Certain issuers are disqualified for use of this exemption. See section DFI-Sec 2.02(5)(d)2., Wis. Adm. Code.

Sales-to-Existing-Security-Holders Exemption
(Sec. 551.23(12), Wis. Stats.)

Under this exemption, a business may offer securities to those already holding any of its securities, and under a related exemption in section DFI-Sec 2.02 (9)(c), Wis. Adm. Code, may offer to an additional 10 persons in this state. The exemptions are available only if the following additional requirements are met:

• No commissions, finders' fees, or other forms of remuneration are paid for soliciting any existing security holder in Wisconsin; and
• A notice is filed (no specific form required), together with a $200 filing fee and a copy of any disclosure document to be used, with the Division at least 10 days before any offers or sales are made in Wisconsin.

Sales to Officers, Directors and Employees
(Secs. 551.22(10) and 551.23(18), Wis. Stats.)

1. An exemption under sec. 551.22(10), Wis. Stats., which is self -executing and requires no filing with the Division, permits a business to offer its securities pursuant to a written employee benefit plan, other than a stock option plan, provided that the plan is qualified under section 401 of the Internal Revenue Code.
2. Section DFI-Sec 2.02(9)(m), Wis. Adm. Code, permits a business to offer securities pursuant to a written employee benefit plan, provided that any offers and sales qualify for exemption under rule 230.701 pursuant to sec. 3(b) of the federal Securities Act of 1933. No filing or fee payment need be made to the Division to utilize this exemption. However, federal rule 230.701 specifies that securities exempt under the rule must be issued as compensation, not for the purpose of raising capital.
3. If an employee benefit plan (other than a stock option plan, see paragraph following) is not qualified under section 401 of the Internal Revenue Code and employee contributions are required, and if the self-executing exemption outlined in paragraph 2 above is not available, a notice (no specific form required), together with plan disclosure materials and a $200 fee, must be filed with the Division 10 days in advance of any offers or sales under the plan. See section DFI-Sec 2.01(6), Wis. Adm. Code.
4. Lastly, if none of the exemptions set forth above is available for an employee stock option plan, the issuer can file a notice (no specific form required), together with the plan disclosure materials and a $200 fee, ten days in advance of any offers or sales under the plan, under sec. 551.23 (18), Wis. Stats., and section DFI-Sec 2.02 (9)(f), Wis. Adm. Code.

Rule 505, Regulation D Exemption
(Sec. 551.23 (19), Wis. Stats.)

A business may offer or sell securities without registration with the Division to up to 35 "non-accredited" investors (in Wisconsin and elsewhere), and to an unlimited number of "accredited" investors in Wisconsin (those who meet certain high income or net worth standards set out in Regulation D of the federal Securities Act of 1933), after having filed a notice of exemption with the Division not later than the first sale in Wisconsin or the first use of any offering document in Wisconsin, whichever comes first. The filing must be made in conjunction with a "Rule 505 Regulation D" filing with the SEC which limits the offering amount to $5,000,000. The notice in Wisconsin must include:

• A completed Form D;
• A copy of the offering materials, that comply with Rule 502 of Regulation D; and
• The required $200 filing fee.

No commissions, finders' fees, or other form of remuneration may be paid to any person who solicits investors in Wisconsin under this exemption, unless that person is licensed in Wisconsin as a securities broker-dealer or agent. In addition, no general solicitation for the offering may be made. ("General solicitation" includes all forms of public media advertising as well as mass mailings and public seminars.)

NOTE: If issuers of securities, controlling persons, affiliates or selling broker-dealers have been the subject of certain legal or administrative actions, in Wisconsin or elsewhere, they are disqualified from use of this exemption. See sec. 551.23 (19)(c), Wis. Stats.

Rule 506, Regulation D Exemption
(Sec. 551.29 (2), Wis. Stats.)

A business may offer or sell securities without registration with the Division to up to 35 "non-accredited" investors (in Wisconsin and elsewhere), and to an unlimited number of "accredited" investors in Wisconsin (those who meet certain high income or net worth standards set out in Regulation D of the federal Securities Act of 1933) in conjunction with a "Rule 506 Regulation D" offering with the SEC. There is no dollar limitation on the amount of the securities to be offered or sold.

Not later than 15 days after the first sale in Wisconsin, a notice must be filed, consisting of:

• A completed Form D, either manually signed or containing a photocopy signature. [The State Appendix (page 7 and 8 of Form D) should be included, reflecting sales as of the date of the filing in Wisconsin.]; and
• The required $200 filing fee.

Each "non-accredited" investor, either alone or with a purchaser representative, must understand the merits and risks of the offering or the issuer must reasonably believe, prior to the sale, that each such investor is sophisticated.

No commissions, finders' fees, or other form of remuneration may be paid to any person who solicits investors in Wisconsin under this exemption, unless that person is licensed in Wisconsin as a securities broker-dealer or agent. In addition, no general solicitation for the offering may be made. ("General solicitation" includes all forms of public media advertising as well as mass mailings and public seminars.)

Wisconsin-Issuer Exemption by Filing
(Section DFI-Sec 2.028, Wis. Adm. Code)

A business having its principal office and the majority of its full-time employees located in Wisconsin may offer and sell securities without registration with the Division if all of the following conditions are met:

• Securities sold in Wisconsin are purchased by no more than 100 investors (exclusive of officers and directors of the issuer, certain "institutional investors", "accredited investors", and members of the immediate family of any executive officer or director of the issuer having the same permanent residence as such officer or director).
• No commissions, finders' fees, or other forms of remuneration are paid except to broker-dealers or agents licensed in Wisconsin.
• The aggregate offering price of the securities sold in Wisconsin in the offering does not exceed $1,000,000.
• The issuer reasonably believes that all sales are suitable for the investors and that each investor has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the investment.
• An offering circular meeting the requirements of Regulation D of the federal Securities Act of 1933 is delivered to each prospective investor PRIOR to sale of the securities. (A corporate issuer may, however, elect to deliver an offering circular that complies with the North American Securities Administrators Association Form U-7 instead. Form U-7, or SCOR as it is commonly known, is described later in the Registration section of this Guide.)
• A letter describing how the conditions of the exemption are met is submitted to the Division, together with the offering document, a $200 filing fee, and a copy of all advertising to be used in connection with the offer. All must be filed with the Division not later than first use of the offering document and advertising unless previously submitted as a Solicitation of Interest filing.

NOTE: If issuers of securities, controlling persons, affiliates, or selling broker-dealers have been the subject of certain legal or administrative actions, in Wisconsin or elsewhere, they are disqualified from use of this exemption. See section DFI-Sec 2.028(3), Wis. Adm. Code.

Discretionary Exemption
(Sec. 551.23(18), Wis. Stats.)

If none of the exemptions previously described in this Guide is available for the issuance of the securities or the transaction to be effected, there is an additional exemption alternative to the registration process.

An offer or sale of securities may be exempted from registration in Wisconsin if the Division, by issuance of a discretionary order of exemption under sec. 551.23(18), Wis. Stats., determines that registration is not necessary or appropriate for the protection of investors. An issuer may request such an exemption by writing to the Division to explain why registration of the securities should not be required, and by submitting copies of the offering materials and a $200 fee together with the letter.

Registration of Securities

If an offering and sale of securities does not qualify for any registration exemption, then the securities must be registered with the Division before being offered or sold in Wisconsin (sec. 551.21, Wis. Stats.). However, keep in mind the earlier discussion in this Guide regarding the "Test the Waters" exemption that allows an issuer to solicit indications of interest to determine the likelihood of success in selling the securities. Registration involves:

• Compilation and filing of registration materials by the issuer; and
• Review of the offering materials by the Division for full disclosure unless the offering is to be registered with the SEC and has received a full review by the SEC (see sections DFI-Sec 3.02 and 3.03, Wis. Adm. Code).

Midwest Regional Review Program

To assist small businesses wanting to register their securities in more than one state, the Division has helped develop and is participating in the Midwest Regional Review Program.

The Program allows an issuer of securities, exempt from registering federally with the Securities and Exchange Commission under either Regulation A or Rule 504 of Regulation D, to file an application simultaneously in each state where it proposes to sell securities. A single member state--usually the state in which the issuer is domiciled--will be responsible for reviewing or coordinating the review of the registration application and will communicate with the issuer to resolve problems. Once the reviewing state has permitted the registration to become effective, all other states in which regional review has been requested will also make the registration effective.

The states participating in the Program are Illinois, Indiana, Iowa, Kansas, Michigan, Missouri, Nebraska, North Dakota, South Dakota, and Wisconsin.

No additional fees are imposed upon the issuer for participating in this Program. The only additional procedure is the filing of a brief application for regional review along with the registration application for each state. To be eligible for the Program, the issuer's offering must satisfy the criteria pertaining to offering size, type, price, etc., which are listed on the application.

Participation in the Program is strictly voluntary; an issuer is always free to file an application for registration separately in each state.

For further information, or to obtain the Program application and instructions, contact the Division.

Compilation and Filing of Registration Materials

In order for securities to become registered with the Division, an issuer first must submit a registration application on Form U-1, together with the $750 filing fee, and a copy of the applicable offering documents as described in the Exhibit Section of Form U-1. The primary document is the prospectus which must fully disclose all material information relating to the issuer and the offering. Sec. 551.27, Wis. Stats., and sections DFI-Sec 3.02 and 3.03, Wis. Adm. Code, list the information required to be included in the prospectus.

Either of two different types of prospectus formats are permitted under the registration process for use by small businesses. The traditional narrative form of prospectus (usually prepared by an attorney), or the Small Company Offering Registration form (SCOR, also known as the U-7) which has been designed specifically for use by small businesses seeking to raise capital, may be used. The SCOR form prospectus is in a question-and-answer format which was developed by the North American Securities Administrators Association, Inc. and has been adopted by the Division to minimize registration costs by enabling the issuer and its controlling persons to prepare some or all of the prospectus disclosure language by means of the answers to the questions listed on the SCOR form. Each section of the SCOR form requires the issuer to answer detailed questions regarding material aspects of the business and the securities offering to be made. The SCOR form is available from the Division in either printed format or computer diskette for a prepaid fee of $5.

The SCOR form, by the terms of its instructions, is available for use only if the following additional conditions are met:

• The issuer is a corporation or a limited liability company;
• If the offering is of common stock, the price is at least $1 per share;
• The issuer states both that a split in its common stock will not occur, and that a stock dividend will not be issued, within two years of the offering, if such action has the effect of lowering the price below $1 per share.
• Financial statements are prepared in accordance with generally accepted accounting principles and audited statements may be required.
• The issuer is not an investment company, a "blind pool," or involved in oil and gas exploration or the extractive or mining industries.

NOTE: Many of the limitations imposed by the SCOR form can be avoided if the traditional narrative form of prospectus is used. The Division can assist you by providing samples of previously filed prospectuses, in either the SCOR or narrative format.

A business seeking to register its securities may find it helpful to have an attorney and/or an accountant prepare the disclosure materials and application. Because the registration process can be time-consuming and costly, the possibility of using one of the registration exemptions discussed earlier in this Guide should be explored beforehand.

Review of the Offering Materials

Upon receiving a registration application, the Division staff first determines whether the application and its exhibits contain all the required documents together with the $750 filing fee. The documents include the application form itself (Form U-1), a Consent to Service of Process (Form U-2 and U-2A), and a copy of the proposed prospectus (whether the traditional narrative form or the SCOR question-and-answer form). If any required documents are not received, the issuer or its representative is notified that they need to be submitted.

NOTE: If the issuer elects to take advantage of the Midwest Regional Review Program (see description above), the issuer must file the Midwest Regional Review Application with the other required documents.

When all the required materials have been received, the Division staff reviews the proposed prospectus for disclosure of material facts and risk factors. Although the staff cannot assure that all material facts and risks are disclosed in the prospectus--because full disclosure of such matters is the legal responsibility of the issuer--the staff will alert the issuer or its representative to any deficiencies the staff has noted in the proposed prospectus and ask that they be corrected. The issuer must then file an amended prospectus with the Division for review.

If the filing requirements are determined to have been met and any disclosure deficiencies noted by the Division staff have been corrected, the staff will recommend that the registration be declared effective. The registration then remains effective for one year.

Conclusion

The Division has worked to streamline the process for meeting the technical requirements necessary to issue and sell securities in Wisconsin so that both large and small businesses can more easily raise needed capital.

If you have any questions, or would like to arrange a conference, contact the Division at:

Department of Financial Institutions
Division of Securities
PO Box 1768
Madison, WI 53701-1768
Phone: (608) 266-8557
Fax: (608) 264-7979

The Division of Securities is located on the fourth floor of 345 West Washington Avenue in Madison, three blocks from the Capitol.

Talk to someone in the Small Business Information Center, at (608) 266-8557, if you need forms, brochures, or other information.

NOTE: Users of this Guide should remember that the laws and rules discussed here are subject to revision. Also, the information provided in this Guide is summarized from those laws and rules and should not be relied upon without consulting them.

You may obtain from the Division separate booklet copies of the Wisconsin Securities Laws and Administrative Rules.

You may obtain copies of the forms mentioned above in the forms page of the Small Business Information Center.