Initial Public Offering Risk Statement

By their nature, investing in an initial public offering ("IPO") can be a risky and speculative investment. As such, these investments may not be suitable for every investor. This Risk Statement contains a brief summary of certain risk factors involved in investing in new issue securities. It is not meant to be all inclusive, but rather highlights some of the more significant factors and special risks relating to IPOs. For a description of the business, operations and financial condition of an issuer, and the specific risks related to an investment in the issuer's securities, you should obtain and carefully read the prospectus prepared by the issuer before indicating an interest in the offered securities. Prospectuses may be viewed at the SEC web site, http://www.sec.gov/edgar.shtml.

You need to perform your own evaluation of whether investing in new issue securities generally or purchasing securities in a particular offering is consistent with your investment objectives, risk tolerance and financial situation.

There are a variety of risk factors typically associated with investing in new issue securities. Any one of these could have a material and adverse effect on the price of the issuer's common stock. These may include the following:

  • Lack of Operating History: An issuer that engages in an IPO or other public offering may be in the early stages of development. As such, there may be a limited history of operations and there may also be little or no revenues. In addition, the issuer may operate at a loss following the offering. Such issuers are typically subject to the difficulties, uncertainties and risks associated with the establishment of a new business. These businesses may experience insufficient manufacturing capability, limited product lines, lack of marketing expertise, the existence of more experienced or better capitalized competition and reliance on a few large suppliers or customers.
  • No Prior Market for Common Stock; Determination of Offering Price; Potential Volatility: Prior to an IPO, there is generally no public market for an issuer's common stock. There is also no assurance that an active trading market will develop or be sustained following the IPO. The offering price of securities issued in an IPO is typically determined by negotiation between the issuer and its underwriters based on certain factors . These may include the history of, and prospects for, the issuer's business and the industry in which it competes, an assessment of the issuer's management, past and present operations, prevailing market and economic conditions and any other factors deemed relevant. Following the IPO, the market price for the securities may be subject to significant fluctuations in response to numerous factors. Such factors may include lack of liquidity, general market volatility, and other factors unrelated to the operating performance of the issuer.
  • Additional Financing: An issuer that operates at a loss or with limited cash flow following an IPO will generally be required to secure additional financing in order to fund its operation. If the issuer decides to issue additional equity securities, it is possible that their issuance will result in dilution of the interests of existing shareholders, including those who purchased in the IPO. To the extent that the issuer incurs indebtedness, the issuer will be subject to certain risks including interest rate fluctuations and inability to generate sufficient cash flow to make scheduled payments. In addition, indebtedness generally ranks prior to the common stock of an issuer for purposes of distributing the issuer's assets in the event of bankruptcy. There is also the possibility that the issuer will be unable to locate financing on satisfactory terms or may be required to significantly curtail its operations.
  • Dependence on Key Personnel: An issuer is often highly dependent on the services of key technical and management personnel and loss of their services could have a material adverse effect on the issuer's business or operations.
  • Dependence on Key Suppliers: Some issuers rely significantly on a limited group of suppliers to obtain product components or materials. If an issuer is unable to obtain sufficient quantities or such components or materials fail to meet specifications, delays or reductions in shipments may result.
  • Dependence on Limited Number of Customers: An issuer's primary customer base may be limited to a small number of customers. Loss of any of these customers could have a material adverse effect on the issuer's business and financial condition.

Eligibility Requirements

We reserve the right to establish minimum eligibility requirements, which may include the following parameters: account size and relationship to Girard Securities, trading activity, investment experience, and risk tolerance. The lead underwriter may have further eligibility requirements for participation in the IPO.

Allocations

Even if you meet the eligibility requirements, you may not receive a portion or any shares when there are not enough shares to meet demand. In such instances, we use software to assist with the allocation of shares to clients. The factors in determining share allocations include, but are not limited to:

  1. The date and time that a client gives us an "Indication of Interest".
  2. The size of your "Indication of Interest".
  3. Participation in our offerings, ranked by the number of offerings in which you have participated and the number of shares purchased in each offering.
  4. Length of holding period, longer is better, ranked by sale date if shares are sold or transferred.
  5. Open market share purchases of offerings and holding period.

IPO Process

Further information regarding the IPO process can be found at http://sec.gov/answers/ipo.htm.


All offerings are processed through a registered securities broker/dealer. The IPO Solutions registered broker/dealer license is currently pending.
Accounts and assets are held by Southwest Securities, Inc. a member NYSE, FINRA and SIPC.