If you are selling your securities as a private placement, exempt from SEC registration, include a line stipulating your shares are restricted securities and may not be readily resold. Your investors should be aware that restricted securities may not be eligible for resale for an indefinite period of time.
Keep in mind that your proposed company offering is your first crack in the negotiation process with interested capital investors. The deal you sign may look quite different.
It’s a good idea to present your current and proposed (post-offering) number of outstanding shares of common stock in tabular form. Indicate any shares offered by key management people, and show the number of shares investors will hold after the deal is completed.
If this is your first request for outside investment, you should prepare a scenario for the attraction of required capital, approximate price per share and timing, and show the dilution or percentage ownership of initial and subsequent investors.
Investors are concerned about the future value and liquidity of their investments. A company that doesn’t look profitable enough or large enough within five years might not spark their interest. This is also true if management indicates an unwillingness to go public for fear of losing control.
In the long run you hit only what you aim at. Therefore, though you should fail immediately, you had better aim at something high. Henry David Thoreau.