15c2-11: An information statement about the company, required to be filed with the NASD by a sponsoring market maker for companies seeking to list securities for trading.

Authorized Shares: The number of shares of a particular class of stock authorized for issuance by a corporation as prescribed by its articles of incorporation.

Blue Sky Laws: State securities laws enacted to protect the public against securities fraud and other financial rip-offs.

Broker/Dealer: A securities firm registered with the NASD that buys and sells securities for its own account as a dealer or acts as an agent or intermediary (broker) in the sale of a security. Firms acting exclusively as dealers are also known as wholesale firms. Brokerage firms that sell securities to the general public are known as retail firms.

Common Stock: A class of stock of a company that allows its holders to have a common ownership and to have residual claims on the assets of a corporation after all debts have been settled and all obligations of the preferred stockholders have been met.

Equity Financing: The sale of securities representing ownership in a corporation for the purpose of raising capital.

Free-Trading Stock: Stock that can be resold without any restrictions. Typically, stock that has been registered with the Securities and Exchange Commission is free trading. Some types of securities issued in transactions exempt from registration may also be freely tradable if the criteria upon which the exemption is relied is met. To be truly free trading, the stock must be free of both federal and state restrictions on resale. The free trading portion of the outstanding stock of a company is also known as the float.

Issuer: The party selling or offering to sell its securities.

Initial Public Offering (IPO): The first sale of a company’s securities to the general public.

Liquidity: The availability of buyers and sellers in a company’s stock.

NASD: The National Association of Securities Dealers. An organization comprised of member broker dealers throughout the United States that regulates the over-the-counter markets under the supervision of the SEC.

NASDAQ: National Association of Securities Dealers Automated Quotation. A networked computer system that provides price quotes on over-the-counter securities not listed on the exchanges. NASDAQ is a subsidiary of the NASD. There are two levels of NASDAQ: 1) the Small Cap market; and 2) the National Market System. Each level has specific requirements that a company must meet in order for its securities to trade on that market.

Offering: The presentation by an issuer and/or underwriter for the purchase or sale of a security. An offering is either registered or exempt from state and/or federal securities registration requirements.

Outstanding Shares: The portion of a company’s authorized shares that have been sold to the public and/or that are held by the company’s founders or any of the company’s shareholders. Stock that is outstanding can be either free-trading or restricted.

Private Placement: A security offering and/or sale to a limited number of investors.

Registration: The process of filing the registration statement with federal and/or state authorities.

Registration Statement: A disclosure document required to be filed with the SEC pursuant to the Federal Securities Act of 1933 for non-exempt securities that will be sold to the public. The document must detail financial facts about the corporation, its background, and biographies of the company’s administrators. It must contain complete details about the firm and the stock being issued.

Restricted Security: A security that is not registered with the SEC and therefore cannot be resold except by registration or exemption from registration.

Rule 504 Regulation D: A provision under federal securities laws that permits the offer and sale of securities in a private placement.

Secondary Offering: The sale of securities by an issuer or underwriter after a company’s securities have already begun trading publicly.

Secondary Trading: The trading of a company’s securities by the general public.

Securities and Exchange Commission (SEC): A federal agency that regulates the sales of securities.

Security: Written evidence of the ownership of, or rights to property.

Underwriter: A person or organization that acquires shares of stock from an issuer or other party with a view for general distribution.