How standards help Investors, SMBs & Opportunity Zones?

How standards help Investors, SMBs & Opportunity Zones?

How difficult would ordinary task be without standards? Consider if each electrical device maker had a different plug. Or, if every gas station had different sized nozzle on their pumps. The ordinary would become difficult and consume a lot of time. In business, one-way standards are used is to simplify information. One important area is Accounting with standards such as (GAAP & FASB). The goal of these standards is to present financials in a similar manner. Regulators require these standards for public companies. Nonpublic companies such as SMBs don’t have a requirement to follow these standards. Thus, making SMBs more difficult for investors to evaluate and invest in. What if there was a way to standardize SMBs and present this information in a marketplace? This is Halagard. We will be working with SMBs to take dissimilar information and create standardized offering documents allowing investors to evaluate SMBs side-by-side. Our process will work for SMBs inside & outside of Opportunity Zones (OZ).

Creating a standard for Investors and Qualified Opportunity Funds (QOF)

Halagard Screening Companies

Step 1: Identification of potential investable companies

1. • Companies apply via Halagard.com and provide basic background and financials
   • In OZ’s, our partners such as local economic development & SBA field offices identify candidates

Step 2: Triages the companies using financial ratios.  We will group the companies

1. • A – likely to be a stand-alone security offering
   • B – likely to be a bundled security offering (similar to mutual fund or ETF)
   • C – could be an A or B in the future, business owners told of concerns
   • D – financials are not strong enough for an equity offering

Step 3: Companies in group A or B are invited to a full underwriting process.

1. • We gather at least 140 business data points & 160 financial data points

Step 4:  The Halagard underwriting process leverages traditional underwriting tools such as Credit bureaus and mixing in artificial intelligence (AI) tools to examine the companies.

1. • Issues and concerns are identified and investigated

Step 5: Companies are given a score (H Score) and we determine which companies move forward to Investors.

1. • H Score is from 1 to 100,
   • Group A - a score of 80 or higher required for a company to move forward as a stand-alone offering
   • Group B – a score of 70 or higher is required to be included in a bundle (group of companies in a single security)
   • Some companies that begin the underwriting process will not move forward to the offering stage

Investor Engage

Step 6: A standardized Offering document is created so investors/QOF can compare apples to apples. We place offering documents on a portal allowing investors/QOF to develop different filters so they can easily shop for investments that match their investment criteria. With over 300 variables, we can offer investors/QOF a wide variety of ways to filter a portfolio

1. • Companies in Opportunity Zones
   • Only companies in x Industry
   • Only companies in x states or regions
   • Companies with annual revenue of x
   • Companies in business for x years, in x industry and revenue greater than x

Step 7: Halagard creates securities for the Offering & registers with regulators, as required

1. • Reminder, our marketplace is private and doesn’t have the burden of public markets

Step 8: Interested investors/QOFs participate in a bidding process to establish the price per share

1. • Goal is a level playing field for Investors and companies
   • Transactions are a win/win

Step 9: All investor/QOFs can buy shares at the consensus price set in Step 8

1. • Capital flows to companies
   • Investors receive shares in a company or bundle of companies

Step 10: All securities must age for 1 years before they can trade

1. • Halagard will be building a matching engine / ATS for trading
   • The secondary market allows for liquidity

Communication and Annual Reports for Investors

• Halagard will require business owners to communicate regularly with the shareholders
• Once a year, each company whether stand alone or included in a bundle must provide an annual report on their performance.
• Analytics and research is available to Investors / QOFs.

Ultimately, we expect Halagard to help identify and then facilitate capital flowing from the QOFs to SMBs. How can we help you?  Let us know info@Halagard.com