Michigan Scor Instructions For Form U-7 - Small Company Offering Registration (Page 5 of 6) in pdf

G. Capitalization. Capitalization should be shown as of a date no earlier than that of the most recent Financial Statements provided

pursuant to Question 46. If the Company has mandatory redeemable preferred stock, include the amount thereof in "long term debt"

and so indicate by footnote to that category in the capitalization table.

H. Officers and Key Personnel of the Company. The term "Chief Executive Officer" means the officer of the Company who has been

delegated final authority by the board of directors to direct all aspects of the Company's affairs. The term "Chief Operating Officer"

means the officer in charge of the actual day-to-day operations of the Company's business. The term "Chief Financial Officer" means

the officer having accounting skills who is primarily in charge of assuring that the Company's financial books and records are properly

kept and maintained and financial statements prepared.

The term "key personnel" means persons such as vice presidents, production managers, sales managers, or research scientists and

similar persons, who are not included above, but who make or are expected to make significant contributions to the business of the

Company, whether as employees, independent contractors, consultants or otherwise.

I. Principal Stockholders. If shares are held by family members, through corporations or partnerships, or otherwise in a manner that

would allow a person to direct or control the voting of the shares (or share in such direction or control-as, for example, a co-trustee)

they should be set forth in a footnote to the "Number of Shares Now Held".

J. Management Relationships, Transactions and Remuneration. For purposes of Question 39(b), a person directly or indirectly controls an

entity if he is part of the group that directs or is able to direct the entity's activities or affairs. A person is presumptively a member of a

control group if he is an officer, director, general partner, trustee or beneficial owner of a 10% or greater interest in the entity. In

Question 40, the term "Cash" should indicate salary, bonus, consulting fees, non-accountable expense accounts and the like. The

column captioned "Other" should include the value of any options or securities given, any annuity, pension or retirement benefits,

bonus or profit-sharing plans, and personal benefits (club memberships, company cars, insurance benefits not generally available to

employees, etc.). The nature of these benefits should be explained in a footnote to this column.

K. Financial Statements. Attach to the Disclosure Document for the Company and its consolidated subsidiaries, a balance sheet as of the

end of the most recent fiscal year. If the Company has been in existence for less than one fiscal year, attach a balance sheet as of

the date within 135 days of the date of filing the registration statement. If the first effective date of state registration, as set forth on

the Cover Page of this Disclosure Document, is within 45 days after the end of the Company's fiscal year and financial statements for

the most recent fiscal year are not available, the balance sheet may be as of the end of the preceding fiscal year and there shall be

included an additional balance sheet as of an interim date at least as current as the end of the Company's third fiscal quarter of the

most recently completed fiscal year. Also attach, for the Company and its consolidated subsidiaries and for its predecessors,

statements of income and cash flows and statements of changes in stockholders' equity for the last fiscal year preceding the date of

the most recent balance sheet being attached, or such shorter period as the Company (including predecessors) has been in

existence. In addition, for any interim period between the latest reviewed or audited balance sheet and the date of the most recent

interim balance sheet being attached, provide statements of income and cash flows. Financial statements shall be prepared in

accordance with generally accepted accounting principles. If the Company has not conducted significant operations, statements of

receipts and disbursements shall be included in lieu of statements of income. Interim financial statements may be unaudited. All

other financial statements shall be audited by independent certified public accountants; provided, however, that if each of the

following four conditions are met, such financial statements in lieu of being audited may be reviewed by independent certified public

accountants in accordance with the Accounting and Review Service Standards promulgated by the American Institute of Certified

Public Accountants: (a) the Company shall not have previously sold securities by means of an offering involving the general

solicitation of prospective investors by means of advertising, mass mailings, public meetings, "cold call" telephone solicitation or any

other method directed toward the public, (b) the Company has not been previously required under federal or state securities laws to

provide audited financial statements in connection with any sale of its securities, (c) the aggregate amount of all previous sales of

securities by the Company (exclusive of debt financings with banks and similar commercial lenders) shall not exceed $1,000,000.00

and (d) the amount of the present offering does not exceed $1,000,000.00.

If since the beginning of its last fiscal year the Company has acquired another business, provide a pro forma combined balance sheet

as of the end of the fiscal year, and a pro forma combined statement of income as if the acquisition had occurred at the beginning of

the Company's last fiscal year, if any of the following exists: (a) the investments in and advances to the acquired business by the

Company and its subsidiaries' (other than the acquired business) exceeds 20% of the Company's assets on its consolidated balance

sheet at the end of the Company's last fiscal year, (b) the Company's and its subsidiaries (other than the acquired business')

proportionate share of the total assets (after intercompany eliminations) of the acquired business exceeds 20% of the assets on the

consolidated balance sheet, or (c) the Company's and its subsidiaries' (other than the acquired business') equity in income from

continuing operations before income taxes, extraordinary items and cumulative effect of a change in accounting principle, of the

acquired business exceeds 20% of such income of the Company and its consolidated subsidiaries for the Company's last fiscal year.

The financial statements should reflect all stock splits (including reverse stock splits), stock dividends and recapitalizations even if

they have occurred since the date of the financial statements.

Page 5 of 6

Michigan Scor Instructions For Form U-7 - Small Company Offering Registration Page 5

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