Glossary

GLOSSARY OF FINANCING TERMINOLOGY*

The Glossary of Financing Terminology is intended to familiarize the reader with words and phrases used in conjunction with obtaining financing and financing transactions.

Accounts Receivable Financing - Short term financing used to finance accounts receivable. It is usually obtained by pledging accounts receivable as collateral.

Accredited Investor - Institutional or individual investors who meet SEC criteria regarding financial sophistication or net worth.

After Market - the trading of an issuers securities (stock or bond) after the public offering has been completed.

All Hands Meeting - a meeting among everyone involved in preparing a registration statement for a public offering, including management of the company undertaking the offering, the company's legal counsel, the company's auditors, underwriters, and the underwriters' legal counsel.

All or None Offering - A "best-efforts" offering, in which the underwriter completes the offering only if the entire issue of securities is sold.

Analyst - A specialist, often employed by an investment banking firm who researches and follows one or more companies or industries, their financial statements and reports with the purpose of providing investment advice and recommendations.

Appraisals – Business : Refer to article archive for various accepted methods used.

Appraisals – Equipment: Definition of values

Auction Value Appraisal - An opinion of the expected gross dollar amount to be realized at a professionally conducted and promoted auction sale as of the date of the appraisal

Becoming Effective - The date and time that the SEC declares a registered stock or bond offering effective, and the sale of the stock or bonds can commence.

Benchmark Goal - A stage of development that must be met by the company that signifies usually the completion of a task, or the reaching of a financial or business objective. The attainment of benchmark goals can signify the obtaining of initial financing or additional financing as a result of a partnership agreement, joint venture or venture capital funding agreement.

Best Efforts Offering - A securities offering in which the underwriter does not guarantee the sale of the securities offered, but uses his best efforts to sell the securities. The underwriters' do not commit to purchase any unsold shares. (See also "Firm Commitment Offering")

Bid Asked Prices - For shares of common stock that are traded in the over-the-counter market the bid price is the highest amount a buyer is willing to pay, and the asked or offered price is the lowest amount a seller is willing to sell the shares at.

Blank Check Company - See "Blind Pool Company"

Blind Pool Company - A company that goes public by filing with the SEC a registration statement, and raises money without having a specific company business. Blind pools are usually created as vehicles to merge with privately held companies that want to be public, and have access to raising capital. (Also called a blank check company):

Blue Sky Laws - Regulations enacted by individual states that regulate the sale of securities to residents of the state.

Blue Sky Memorandum - A memorandum, usually prepared by underwriters' counsel for an offering stating the requirements, restrictions and provisions governing the sale of ad particular issue of securities in a particular state.

Bond - An interest-bearing or discounted corporate security that usually requires the issuing company to pay to the bondholders a specific amount of money at periodic intervals as interest, and to usually repay the principal amount at the maturity date.

Bridge Financing - An interim or short-term loan used between long-term financing, or prior to the obtaining of debt or equity financing.

Broker-Dealer - A brokerage firm that buys securities for its inventory from individuals, investors and other brokerage firms, and sells securities to individuals, investors and other brokerage firms.

Call - The right to redeem bonds for payment prior to their maturity date.

Capitalization - Capitalization usually consists of the total number of shares outstanding. However, it may also consist of the total amount of equity and debt issued by the company, including both long-term and short-term debt.

Certificate of Accrual on Treasury Securities (CAT) - A debt instrument issued by the US Treasury that is sold at a discount from its face value. Also called a "zero coupon" bond, it pays no interest, but pays its full face value at maturity.

Champion - A manager of an incubator whose responsibilities include management and administration of the organization, and who also provides general advice and direction to both tenant and non-tenant members of the incubator.

Cheap Stock - See "Founders' Shares"

Closing Meeting - The final meeting for usually a public offering, but also for some private offerings where exchanges of the company's securities for proceeds and proceeds of the offering are exchanged. Other offering related costs are also paid including underwriters' commission.

Comfort Letter - A letter provided by a company's independent auditors, usually for the closing of a public offering of securities indicating that there has not been any material detrimental change in the company's financial condition, or other procedures requested by the underwriter.

Comment Letter - A letter from the staff of the SEC "commenting" on a registration statement, and describing deficiencies in the disclosure contained in the registration statement. Comment letters require that changes to the registration statement consisting usually of an amendment be made prior to the offering being declared effective by the SEC

Common Stock Purchase Warrants: See "Warrants"

Compensating Balance - The average balance agreed to, that a borrower must keep on deposit with a bank, usually agreed to as a result of a financing or loan agreement, or as a requirement for the bank to "hold" credit available, such as in the case of a revolving credit line.

Consent - For a registration statement, the consent of auditors or other experts allowing their financial statements or other reports to be included in a registration statement.

Convertible Issue - Preferred stock, bonds or other debt instruments that are exchangeable or convertible in the future, usually during a specific time period into a specific number of common shares of the issuing company, into common shares of the company at a specific price per share, or on a formula basis.

Countertrade - The exchange between two countries, or two companies located in different countries of a commodity or product.

Coupon - The interest rate on a debt security that is paid by the issuing company until maturity as an annual percentage of the face value.

Credit - A general term used to describe loans, charge account or accounts receivable obligations, open account balances, bonds or any other amounts due commercial firms. This term can also be utilized to describe unused bank letters of credit, credit lines and other types of "standby" debt financing commitments.

Credit Enhancement - The utilization of some means of financial guarantee to reduce the amount of risk of a lender entering into a debt financing transaction. It is usually a performance bond, financial guarantee instrument, or letter of credit, although it may also be a personal guarantee. Credit guarantees are usually used only with debt transactions.

Current Yield - The amount of the annual bond interest divided by the current market price of a bond, for bonds for which there is a public market.

Dealer - While a dealer can be an individual, it is usually a securities firm who buys shares either from the company as a result of a financing transaction, such as a "firm commitment" public offering, or from the public or other securities dealers as a market-maker for his inventory, and/or for resale to other brokerage firms or to investors.

Debenture - Generally, usually unsecured debt of an issuing company. In many cases a debenture is "subordinated" to other company debts and obligations.

Desktop Opinion - A professional opinion of value based on materials or information supplied to the appraiser and evaluated without the benefit of viewing the assets. It is also a tool to determine the need for. or scope of an appraisal. Desktop opinions should clearly be marked as a "professional opinion' and stared that it is not an appraisal.

Development corporation - A private-public "partnership" in which a governmental agency, usually a city council or county government, will encourage economic development by utilizing federal, state and local funds by providing "seed capital" to private-sector startup companies. Entities who sponsor development corporations also include larger banks, the Small Business Administration, and venture capital firms. It is also not uncommon for a development corporation to be sponsored by a group of private and public sponsors.

Dilution - Either the percentage reduction of ownership in a company resulting from the sale of additional shares of stock, or in the difference between the price paid by investors in either a private-placement or public financing, and the tangible book value per share prior to the offering.

Direct Issuers - Companies that are able to sell commercial paper directly to investors, rather than have to sell commercial paper through commercial paper brokers.

Dividends - A portion of company earnings that are authorized by the company's board of directors to be paid to the holders of the various classes of its shares, based on the class of the security. While it is usually paid in cash, it can also be paid in the form of stock, or scrip.

Due Diligence - The investigation of company information including any disclosure documents including private placement memorandum, registration statement, or proposed prospectus by attorneys, investment bankers, and accountants to ensure that no material facts are omitted, and the information is accurate. Also, a general term relating to any investigation by venture capital firms and other investors of the company, its business and financial plans prior to proceeding with an investment.

Effective Date - The date the registration statement becomes "effective" and the securities can be sold to the public.

Employee Stock Ownership Plans (ESOPs) - A tax-advantaged benefit plan for employees who want to acquire a significant or total ownership in a company. It can also be considered a credit mechanism, with the ESOP borrowing money for the purpose of raising money to purchase or acquire shares.

Equity Kicker - A feature of what is usually a debt funding transaction that provides additional incentive to the funding source as a "bonus" that provides usually small ownership in the company, as an inducement to provide the funding. The equity kicker can also be in the form of a convertible feature, or a stock warrant.

Equity Stake - An equity ownership position in the company that is provided to a funding source, usually a venture capital firm, but also lenders or other investors as compensation, or additional compensation for providing management consulting, financing or miscellaneous services..

Exempt Offering - An offering "exempt" from SEC requirements for registration. For example, a private placement offering.

Export-Import Bank (Eximbank) - A bank established by the U.S. Congress to assist U.S. companies with financing exports, and foreign borrowers with financing imports. It can provide financing directly to foreign borrowers, and can also provide export guarantees, and discounted loans.

Export License - The granting of approval by the U.S. Department of Commerce to sell, manufacture or utilize U.S. technology in foreign countries.

Face Value - The value of a bond or other debt instrument, as shown on the instrument itself.

Feasibility Study - A study, usually prepared by an independent party that provides detailed information regarding the potential for the success of a product, technology or business/corporate relationship. The study usually includes, as applicable, an analysis of design, financing opportunities, research & development, pricing, market demand and market information, company strength, analysis of break-even thresholds, also both revenue and potential profit projections.

Financial Accounting Standards Board (F.A.S.B.) - The primary private sector organization that sets auditing and accounting standards.

Financial Guarantee Instruments - Usually a performance bond or other type of insurance contract used to guarantee the repayment of debt and interest, or only debt of a financing transaction.

Financial Reporting Releases - Releases by the SEC announcing changes in accounting or regulatory requirements and matters of general and accounting interest.

Firm commitment Offering - An offering agreement that provides for the underwriter, investment banking firm, or stock brokerage firm to purchase the entire issue of securities or resale to investors and other brokerage firms. (See also "Best Efforts Offering")

Foreign Corporation - A corporation chartered in a state or country other than the state in which it does business, e.g. an out-of-state corporation. It can also apply to a corporation chartered in a foreign country, which are also called "alien corporations."

Foreign Corrupt Practices Act (FCPA) - A law enacted in 1977 that requires all public companies to maintain adequate internal controls and accounting practices, and also prohibits certain payments to be made to foreign politicians and officials.

Foreign Direct Investments - Used to describe the investment by a foreign company in a company or project in another country, or a joint venture or other type of business combination.

Foreign Exchange - Anything used to make payments between two countries, including wire transfers, checks, bills of exchange or currency.

Form 8-K - A report to be filed with the SEC when certain material events have occurred.

Form 10-K - The annual report that is required to be filed with the SEC, which includes the company's audited year-end financial statements.

Form 10-Q - The quarterly report that is required to be filed with the SEC, which includes the company's quarterly unaudited financial statements.

Form S-1 - The most comprehensive registration statement to be filed with the SEC, by companies that do not qualify for any of the abbreviated registration statement forms.

Form S-2 - A registration form that is available to certain "seasoned" companies that incorporates by reference the company's annual report and other information, and which requires delivery of the company's latest annual report to investors.

Form S-3 - A registration form that is available to certain "seasoned" companies that incorporates by reference the company's annual report and other information, and which does not require delivery of the company's latest annual report to investors.

Form S-4 - An abbreviated registration statement form that is used to register securities in conjunction with "Rule 145" transactions involving certain mergers, consolidations and transfers of assets, and exchange offers for securities of the issuer or another company.

Founders' Shares - Shares of common stock issued to offices, directors and other "insiders" prior to the company, but also prior to other types of private placement equity financing. These shares are usually sold at a significant discount from the price that the shares are later offered to the public or to other investors.

Free Trade Zone - Specified geographical areas located in many countries throughout the world that allow the inspection, sorting, labeling, assembling, manufacturing and re-packaging of products without paying import taxes. The Free Trade Zone also provides for the export of products without the company having to pay import duties on the imported content.

Generally Accepted Accounting Principals (GAAP) - Accounting standards and practices established by recognized standard setting bodies, or through general practice.

Green Shoe Option - an overallotment option to purchase securities (usually shares of common stock) granted to underwriters that allows them to purchase up to a specified number of additional securities from the company in the event that they sell more shares than are allocated to them in the underwriting agreement. (First used by The Green Shoe Corporation)

In Place Value Appraisal - An opinion of the gross dollar amount to be realized between a willing buyer and a willing seller, in the open market, assuming that neither party is under compulsion to buy or sell, both are fully aware of all relevant facts, as installed for intended utilization as of the date of the appraisal.

Income Partnerships - Usually a limited partnership or joint venture structure that is normally used for certain types of real estate, oil and gas or equipment leasing financing. Potential tax benefits are usually not a key feature of income partnerships, and the motivation of investors to invest is the desire for an income stream.

Incubator Tenant - A company that leases space in an incubator facility. The facility would usually consist of a warehouse, office park, or office/research and development space. The tenant also receives services normally including administrative services such as computer time, accounting assistance, and secretarial assistance.

Initial Public Offering (IPO) - An offering of usually common stock in a company, with the result that the company obtains capital, and becomes publicly-held.

Insider trading - Trading in a company's securities by company insiders, including officers, directors and principal shareholders, or others with access to non-public information regarding the company.

Interest or Fixed-Charge Coverage - The ratio of profit before payment of interest or income taxes to interest on long-term debt or bonds. It indicates how many times interest charges are "earned" prior to the payment of taxes. This is a key debt ratio utilized in evaluating potential debt transactions by lenders.

Inter-State Offering - An offering of the sale of securities nationally.

Intra-State Offering - An offering of the sale of securities within the borders of one state, or within only several states.

Investment Bankers - Specialist firms who advise companies on available sources, structures, and timing of offerings. Investment bankers often act as underwriters of public offerings, or placement agents for private offerings.

IPO - See "Initial Public Offering"

Lead Underwriter - The underwriter who manages a securities offering. Also sometimes called a Managing Underwriter.

Letter of Credit - A financial instrument, often used in international trade or business that is issued by a bank. It guarantees the payment of up to a maximum amount of money, for a specified period of time and subject to certain terms and conditions.

Letter of Intent - A preliminary agreement usually between an underwriter and a company stating the terms and conditions that will be contained in the underwriting agreement.

Leveraged Buy-Out - An acquisition of a company utilizing high percentage of debt.

Licensing Agreement - An agreement entered into by the owner of a technology or product. The licensing agreement provides the right to manufacture, market or sell the product, or use the technology for a specific period of time, subject to specific license fees and/or ongoing fees to be paid to the owner of the technology or product. The ongoing fees can be in the form of royalty payments or a percentage of gross revenue obtained.

Limited Offering - An offering of securities that is exempt from registration pursuant to certain exemptions limiting the number of purchasers or the size of the offering.

Limited Partnerships - A form of business organization that offers limited liability to the investors who become limited partners, and which offers in certain cases tax benefits. Limited partnerships are often used for research and development, real estate and oil and gas investments.

Loyalty Shares - Additional shares of stock issued to purchasers of shares in an initial public offering who agree to not sell their shares for a specific period of time, often one year from the date of the offering.

Managing Underwriter - The brokerage or investment banking firm that is the "lead" or primary underwriter in a securities offering, or the manager or leading brokerage or investment banking firm of a syndicate of brokerage or investment banking firms. (See "Lead Underwriter")

Market-Maker - A brokerage firm that "makes a market" in an over-the-counter stock. He offers to purchase shares for his inventory at the "bid" price, and offers shares for sale from his inventory at the offered or "ask" price.

Market Value Appraisal - An opinion of the gross dollar amount to be I-realized between a willing buyer and a willing seller, in the open market, assuming that neither party is under compulsion to buy or sell, both are fully aware of all relevant facts as of the date of the appraisal.

Master Limited Partnerships - Limited partnerships that are fully registered with the Securities and Exchange Commission (SEC) and publicly traded. They are usually oil and gas or real estate partnerships that are "spun-off" by the sponsoring company either to existing shareholders, or sold as a result of a public offering to obtain cash.

Maturity - The date on which the principal amount of a debt instrument or bond is due and payable.

Maturity Factoring - A method of accounts receivable financing in which the factoring company provides credit approval, collections, and pays to the selling company the amount of the accounts receivable "sold" by the selling company to the factoring company each month.

Mezzanine Financing - A financing that is provided, usually by private investors or venture capital firms prior to a company going public, or initiating its next stage of financing.

Mini-Maxi Offering - A "best-efforts" offering of the sale of securities where there is both a minimum amount that can be raised and a maximum amount that can be raised.

Monetary Authority of Singapore (MAS) - A governmental agency that regulates the banking system, insurance industry and the Stock Exchange of Singapore.

N.A.S.D. - See "National Association of Securities Dealers"

NASDAQ - An automated securities quotation system which provides price and volume information on stock traded over the counter.

National Association of Securities Dealers - The quasi-public regulatory body that regulates many brokerage firms, and the U.S. over-the-counter market.

National Association of Securities Dealers Automated Quotations - See "NASDAQ"

New Replacement Cost Appraisal - An opinion of the amount it would cost. F.OA, the new manufacturers plant, to purchase a new item of like quality and specifications in the open market place. When such an item is unavailable in the marketplace. the appraiser should use his or her best judgment in providing an estimate of value as of the date of the appraisal

Non-Recourse Loans - Loans which provide that the lenders have no recourse against any assets of the borrowers directly, but instead solely against the assets of the corporation, partnership, joint venture or project.

Offering Circular - A general term for a disclosure document prepared usually for a private placement offering.

Orderly Liquidation Value Appraisal - An opinion of the expected gross dollar amount to be realized at an orderly negotiated sale held within a reasonable period of time as of the date of the appraisal.

Overadvance - A loan provided in advance of anticipated sales, that provides the borrowing company with the ability of increasing inventory levels to support anticipated greater levels of sales.

Over-the-Counter - Securities of companies that do not trade on an exchange, but instead on either the "pink sheet" market, or on NASDAQ. Most companies that "go public" start trading on the over-the-counter market.

Oversubscribed - Refers to an initial public offering where the underwriter has the ability to sell more shares than it has agreed to purchase in a firm commitment offering. Underwriters try to achieve this condition, and then exercise the overallotment option ("green shoe") to fill those orders. This results in additional profits for the underwriter, and additional proceeds from the offering for the company. Typically an oversubscribed offering will trade at a premium in the after market.

Par - The face or nominal value of a security, usually preferred stock or bonds. The interest paid on the bond issues is usually based on a percentage of the bond's par value.

Performance Bond - A surety bond that provides protection against non-performance. Traditionally, performance bonds have been required by small issuers or commercial paper. Recently performance bonds have become increasingly used by small and medium sized companies as credit enhancers in a variety of traditional and non-traditional financing transactions.

Petrodollars - Dollars that are paid to oil exporting countries, and that are then re-deposited into U.S. banks, or invested into US companies and investments. Petrodollars have become a key part of the worldwide economy.

Post-Export Financing - Includes a variety of financing methods designed to finance accounts receivables, and bankers acceptances.

Pre-Export Financing - Includes a variety of debt financing including short-term commercial credit, term loan commercial credit, working capital guarantees, and letters of credit used normally to enable a company to finance the manufacture of a product for export.

Preferred Stock - Preferred stock is a class of capital stock that is usually junior to the company's debt obligations which are paid first in the event of a liquidation. It pays dividends at a specific rate, and has preference over common stock in the payment of dividends, and in the event of liquidation. Preferred shares can carry voting rights, or special voting rights.

Price/Earnings Ratio - The price of a share of common stock divided by the earnings per share.

Primary Offering - An offering by a company of previously unissued securities.

Prime Rate - The interest rate that banks charge their most credit-worthy customers. It is determined by market forces, and is usually "set" by major market banks, and then "followed" by smaller banks.

Private Placement - An offering of usually debt, equity or limited partnership interests to a small number of investors on a "private" basis. A private placement offering is exempt from the registration requirements of the securities laws.

Prospectus - A disclosure document prepared to provide potential investors with detailed information regarding the purchase of securities including debt offering, equity offerings or limited partnership offerings. As it pertains to a registered offering, the prospectus is Part 1 of the registration statement.

Proxy - A shareholder's written authorization for another person to vote and represent him at a shareholders' meeting.

Proxy Statement - The information provided to shareholders pursuant to SEC regulations by those soliciting shareholder proxies.

Public Float - The aggregate market value of a company's securities that are available for trading in the market. The public float usually does not include shares subject to sale under Rule 144, nor shares held by officers, directors and principal shareholders.

Public Offering - An offering of usually debt or equity that is offered for sale to the public through stock brokerage or investment banking firms.

Public Shell Company - A company that is publicly-held, but has either minimal assets or no assets, but its attractiveness is it shareholder base. The utilization of public shell companies can be beneficial in obtaining financing.

Quiet Period - The ninety-day time period between the effective date of a registration statement for shares that are sold in a public offering. During this time period only information that is disclosed in the prospectus or amendments to the prospectus can be publicly disclosed.

Rate of Return - The return on a company's common stock or equity, or the dividend yield (the dividend divided by the purchase price of the shares). For bonds and preferred stock, the current yield, which is determined by dividing the coupon rate by the price paid for the bond.

Ratio of Earnings to Fixed Charges - An analytical technique required by the SEC to be disclosed with selected financial data, and in an exhibit as part of certain registration statements. Earnings is defined as pre-tax income from continuing operations. Fixed charges are generally defined as total interest, whether expensed or capitalized.

Recourse Loan - A loan or debt transaction that provides that the guarantor or other party agrees to provide payment if the borrower defaults.

Red Herring - A preliminary copy of the prospectus used for due diligence purposes prior to the effective date of the offering. The red herring, or preliminary prospectus has red printing on its cover indicating that it is not a final prospectus. The red herring is also utilized to interest potential investors and brokerage firms with participating in the offering of securities.

Registered Offering - See "Public Offering"

Registered Partnerships - Limited partnership offerings that are "registered" with the US Securities and Exchange Commission, and usually with the state securities commissions so that a "public offering" of the limited partnership interests can be made.

Registrar and Transfer Agent - An agency of the company that issues shares to shareholders, and compares the new shares to be issued to the number of shares tendered for cancellation.

Registration - The process of filing a registration statement with the Securities and Exchange Commission, in accordance with the 1933 Securities Act usually either prior to a company "going public", or as a result of a new issuance of securities.

Registration Statement - The disclosure document filed with the SEC in accordance with the registration requirements of the federal securities laws. The registration includes the prospectus and other information including exhibits.

Regulation A - SEC rules providing exemptions from registration of certain public offerings of up to $5 million.

Regulation C - Rules that prescribe the procedures to be followed in preparing and filing registration statements, including paper size, number of copies, etc.

Regulation D - SEC rules that govern the exemption from registration for private placements and limited offerings.

Regulation S-B - SEC rules and regulations governing financial and non-financial statement disclosures in both registration statements and periodic reports filed by "small business issuers.

Regulation S-X - SEC rules and regulations governing the form, content and periods to be covered in financial statements including in registration statements, and periodic reports for companies other than "small business issuers."

Restricted Shares - Shares of a company's stock that can not be sold to the public without either registration, or pursuant to Rule 144. These shares are usually either held by insiders including officers, directors or principal shareholders, or by investors who acquired the shares through a private-placement.

Revolving Credit - Also called a revolving line of credit, line of credit, or open-ended credit. The agreement, usually with a bank, provides a maximum amount that can be borrowed over a specific period of time. If the full-amount is "borrowed down" or the line of credit is "drawn against," as repayments are made, additional borrowings can then be made.

Road Show - A series of meetings held in different cities that provides an opportunity for members of the underwriting syndicate and prospective investors to ask company management questions relating both to the company and to the offering.

Royalty Payment - Compensation paid to the owner of a product or technology for the right to manufacture, market or utilize the product or technology. Royalties are paid, usually as a percentage of sales, with a usually a minimum quarterly, semi-annually or annually as the product is sold.

Rule 144 - The sale of insider or restricted or control stock in the public market without registration of the shares.

Rule 144A - A non-exclusive "safe harbor" exemption from the registration requirements of the Securities Act of 1933 for specified resale of restricted securities to "Qualified Institutional Buyers." Securities that are normally eligible for resale under Rule 144A are securities that generally were initially sold by issuers in offerings which were not required to be registered.

Safe Harbor Rule - An SEC provision that protects companies from legal action if the company has made a "good faith" effort to comply with SEC regulations and requirements.

SEC - See "Securities and Exchange Commission"

Secondary Offering - An offering of securities, usually shares of common stock after the company is already public. The secondary offering can consist of shares owned by officers, directors and principal shareholders, new shares issued by the company, or a combination of both.

Securities Act of 1933 (1933 Act) - An act passed by Congress and which has been amended which generally requires that public offerings of securities be registered with the SEC before they can be sold.

Securities and Exchange Commission (SEC) - The US governmental agency that regulates the securities industry and which is responsible for administration of US securities laws, including the 1933 Act and the 1934 Act.

Securities Exchange Act of 1934 (1934 Act) - An act passed by Congress and which has been amended that regulates securities exchanges and the over-the-counter markets. It also, generally requires publicly held companies to file periodic reports with the SEC.

Security - Usually either a stock or bond. A stock indicates equity ownership, and a bond indicates that the bondholder is a creditor.

Self-Underwriting - An underwriting of securities where the offering is sold and/or syndicated directly by the company itself and not by a managing underwriter or investment banking firm.

Senior Security - A bond or stock that has a "prior claim" in the event of the liquidation of the company. Senior security obligations are paid first, prior to any claims of subordinated debt, or prior to any moneys paid to shareholders of the company.

Shell - See "Public Shell Company"

Short-Swing Profits - Profits realized by certain company insiders on transactions in the company's securities completed within a six month period, whether or not based on insider information.

Sinking Fund - Funds that are accumulated in a separate account by a company to "pay off" debt or redeem preferred stock.

Small Business Issuer - A company incorporated in the US that has less than $25 million of revenue and public float, as defined in the SEC regulations for the past two fiscal years.

Spin-Off - A form of reorganization that results in either part or all of existing company operations being distributed to shareholders in the form a separate company, which in many cases becomes a publicly-held company. Spin-offs can be most effective in obtaining financing for new technologies, or for expansion.

Sponsor - A term typically used in conjunction with limited partnerships or other investment programs. The term used to identify the general partner or "promoter" of the program. As it relates to the stock of a company, the institution, investment banking, or brokerage firm whose favorable opinion and recommendation of the stock stimulates other interest from investors and institutions.

Spread - the percentage difference, or the difference in dollars between the current market price of a company's stock, and the anticipated value upon the completion of a reorganization, or acquisition.

Staff Accounting Bulletins (SABs) - Published interpretations and practices followed by the staff of the SEC.

Strategic Partnership - A collaboration of a company with usually a larger, financially stronger company that can provide resources to achieve corporate, economic and strategic goals. Also known as a strategic alliance or a corporate venture.

Subscription - An agreement to purchase debt or equity securities of a company.

Technology Transfer - A transfer of technology from one company or country to another company or country. Originally technology transfers were utilized primarily to assist the economies of developing countries. In recent years, technology transfers have become more significant between countries and companies worldwide. The transfer of technology is usually accomplished with a licensing agreement, joint venture agreement or the direct sale of the products or technology.

Technology Transfer Agreement - An agreement that provides for the transfer of certain technology, or a portion of certain technology to a third-party. It states what remains under the company's control, and what compensation is paid to the company, and on what terms, by the third-party.

Tender Offer - An offer to purchase existing company securities in usually an attempt to gain control of the company.

Tombstone Ad - A published ad or notice of an offering which generally discloses only the amount of the offering, the name of the company, a description of the security, the offering price and the names of the underwriters.

Total Return Rate - The dividend plus any appreciation in a company's stock, divided by the purchase price of the stock.

Transfer Agent - An agent of the company that records information regarding shareholders, and transmits the shares between buyers and sellers by issuing new shares to purchasers of stock, and canceling share certificates of sellers. See also "Registrar and Transfer Agent"

Transmittal Letter - A letter used to file he registration statement with the SEC. It usually calls attention to matters of uncertainty or importance to facilitate the SEC's review of the registration statement. It also should confirm the results or resolutions of any informal communications or conversations held with the SEC staff.

Treasury Investors Growth Receipt (TIGR) - A special form of a US Government backed zero-coupon security. The principal of the bond and its coupon are sold separately at a usually deep discount from the face value.

Underwriter - A brokerage firm, securities dealer or investment banking firm that sells company securities to investors and to other brokerage firms, securities dealers and investment banking firms. This can occur either through a private placement offering or public offering.

Underwriting Agreement - The underwriting agreement contains the details of the company's arrangements with the underwriters, including the type of offering (best efforts or firm commitment), the underwriters' compensation, the offering price and the number of shares or securities offered.

Unit - An offering of securities of a company, which usually consists of one or more shares of common stock, and one or more common stock purchase warrants that provide for the purchase of an additional share or shares at a specific price during a specific time period.

Venture Capital - Typically high-risk financing, generally in the form of preferred stock convertible into common stock or common stock, or debentures convertible into common stock, often provided to companies not qualifying for other types of financing. The venture capital investor typically requires a high potential of returns, and will structure the investment so that it can be liquidated through an initial public offering, or in some other manner within a three to seven year period.

Warrant - A security that provides for the purchase of usually a share or shares of stock of a company at a specific price, during a specific time period.

Yield - The return on an investor's investment. With bonds or debt instruments, the yield is the coupon interest rate, divided by the purchase price.

Yield To Maturity - The rate of return on a debt instrument or bond. It is calculated by including the total of annual interest payments, the purchase price, the redemption price and the balance of time until the maturity date.

Zero-Coupon Bond - A bond for which not interest payments are made during the period of time that the bond is outstanding. Instead zero coupon bonds are sold at a deep discount from their face value