FIIN 501 MoD 1 SLP Essay Example | Topics and Well Written Essays - 750 words

FIIN 501 MoD 1 SLP - Essay Example Its future performance will depend upon the possibility of oil discovery and potential reserves in the proven oil fields. Some of the important financials of the company are tabulated as per the following. Annual year ended data all numbers in thousands Financials Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Sales/Revenue Nil Nil Nil Net Income (282,999) (133,637) (136,476) Total Assets 4,011,459 2,527,944 1,746,443 Total Liabilities 1,322,241 449,030 27,409 Owner’s equity 2,689,218 2,078,914 1,719,034 Change in Cash 1,133,269 (10,174) (790,380) Source: http://finance.yahoo.com/q/is?s=CIE+Income+Statement&annual http://finance.yahoo.com/q/bs?s=CIE+Balance+Sheet&annual The reason for choosing the company is to show that the company's shares can trade in the stock market even when the company has neither made any sales nor any profit so far. The company continues to make operating expenses necessary for oil exploration activiities for last several years. This also shows that investors continue to demand shares of Cobalt because they are quite optimistic on its oil finds and once, the company is successful in oil discovery; its stock price may flare up exponentially. Initial Public Offering Going public is a significant decision for any company. The advantage is that it opens up a new avenue for the company to garner funds for its expansion requirements. The process is certainly time-consuming and the company needs to be cautious in meeting several statutory requirements. While going ahead for a public issue, the important thing is to be noted that as per the US securities laws, it is incumbent upon issuer to disclose all material information accurately and completely so that investor can make an appropriate decision. Misstatement or any omission of a fact can lead to a huge liability to the issuer, underwriters, board of directors and controlling persons. IPO in the US market necessitates that the company's Chief Executive Officer and Chief Financial Officer has taken due care in establishing the effective internal control over financing reporting to the general public. The company who is planning to go public needs to take a series of steps that can be described as per the following (Going Public in the US, 2008). The Company Board Resolution First of all, Cobalt's board needs to pass a resolution giving their consent to make an Initial Public offering by the company (A Guide to going public, 2013). Independent Auditors The company needs to appoint independent auditors as approved by the SEC. The company and its auditors need to prepare all financial statements as per the US GAAP or IFRS (A Guide to going public, 2013). SEC Registration The company needs to complete registration with the SEC and take approval for an IPO by submitting all relevant information in the prescribed format (A Guide to going public, 2013). Appointment of Counselor This is required so that counselor begins preparing prospectus related to the IPO offering. Subseque ntly, the company needs to prepare presentation material for the "Road Show" for institutional investors (A Guide to going public, 2013). Appointment of Underwriters In order to take the company public, Cobalt needs to appoint underwriters or the investment banks as they will