IPO Offerings

P64 Capitalization Table

Capitalization Table This is a 2 column table which shows: Debt and equity capitalization of the company prior to the Offering Pro forma adjusted debt and equity capitalization after giving effect to the adjustments to debt and equity arising from the Offering

P17

Describes "The Offering" The company also believes that it will be traded on the New York Stock Exchange and they have indicated their proposed trading symbol ("STAY")

P57 Use of Proceeds

Describes "Use of Proceeds" from the Offering This is a discussion around the Company's plans for the "use of the net proceeds" from the Offering. This may involve things such as: Paying off debt of the Company Acquisitions of companies Dividends or distributions to prior stockholders Significant capital expenditures, such as plant expansions, etc.

Summary of perspectus: P1, P2, P2

Describes the company in detail Discusses the recent operating history - Speaks to "competitive strengths"

P24 The risk factors

Discusses "The Risk Factors" Goal is to describe in "extreme detail" everything that could go wrong in the company and the industry in which it operates so that the reader has a clear understanding of the risks of investing. This section is usually "over comprehensive" out of fear that any investor could come back later, should something unforeseen happen or there be a subsequent decline in the value of the stock, and say that they were either (a) not aware of the risk, or (b) aware that the matter could have such a significant adverse effect on the company's financial condition, results of operations, or cash flows.

P19 historical financial info

Includes Summary Historical Financial Information, and "Pro Forma" Financial Information Pro Forma Financial Information applies the most significant adjustments that result from The Offering to the most recent historical financial information to show the effect "as if" the Offering had occurred at the beginning of the periods for which a Registration Statement requires disclosure. Those periods are (a) the prior year, and (b) the most recent YTD interim financial information. The "pro forma adjustments" that are expected in an IPO include: Addition of "cash" and the "change in equity" from the sale of the stock An adjustment to show the "use of the proceeds"; these could be things such as (a) paying off long-term debt, (b) acquiring another business, and (c) paying dividends to owners, etc.

why is Filing an IPO a "significant" effort and is very expensive.

It creates significant legal exposure because any important misrepresentation or omission of data (not just the information included in the financial statements) could mislead an investor, and should that investor incur a loss due to a subsequent decline in the value of the stock, a lawsuit against the company and "all parties" involved in the Offering would likely result.

P96 Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A")

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") This is, in management's words, a discussion of the company's financial condition, and a discussion of fluctuations by major income statement category (i.e., revenues, cost of goods sold, expense categories). The most recent YTD interim period is compared to the same prior year interim period The most recent fiscal year compared to the prior fiscal year The prior fiscal year compared to the year preceding it

The Cover of the Prospectus discloses the following:

Number of shares being sold and the estimated range of sales price per share Names of the Underwriters who are selling the shares of the stock. It is very common that large issues/sales of stock involve more than one Underwriter, and that was the case in Extended Stay's IPO. These are some of the largest Underwriters and who are individually, or together with other Underwriters, involved in many IPO's:

Summary of perspectus: P4, P6, P8, P12

Outlines business and growth strategies Discusses in general the industry in which the company operates Summarizes recent financial developments - Describes the company's corporate structure (usually flow charts it to show the structure both "before" and "after" the public offering)

P90 Selected Historical Financial Information

Selected Historical Financial Information This is a required summary of selected historical financial information for at least the last 5 fiscal years. The financial information includes a summarized income statement, certain balance sheet data, and summarized cash flow statement information (cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities), as well as key "operating data"

P138 Table of contractual obligations by year P139 Critical accounting policies

Table of contractual obligations by year (debt repayment obligations, lease obligations, etc.) - Critical accounting policies (this is a summary of the accounting policies which are most important to the company's financial statements

comfort letter

The Underwriters require that the independent auditors report to them via a "Comfort Letter" on the specifics of what they have done to determine that key financial and non-financial amounts included in the Registration Statement are correct and precise.

what is an IPO

"Initial Public Offering" of Common Stock or a sale of Common Stock in a public market.

P70 Unaudited Pro Forma Consolidated Financial Statements

- Unaudited Pro Forma Consolidated Financial Statements This is a columnar presentation of the Balance Sheet and Income Statement which show: Historical financial statement amounts Adjustments to show the pro forma effects of the Offering on the various Balance Sheet and Income Statement accounts Pro forma adjusted Balance Sheet and Income Statement giving effect to the adjustments from the Offering

After a company files a Registration Statement with the SEC, the SEC has ?????days to review the Registration Statement.

30

The Independent Auditors also are responsible for

Are responsible for preparation of the "Comfort Letter" that is issued to the Underwriters. This gives a very detailed written discussion of the procedures performed by the Independent Auditors to determine the accuracy of key amounts disclosed outside of the financial statements. Take a lead role in assisting management in responding to any SEC questions about the financial statements. Are considered "Experts" in accounting and auditing matters, and formally "Consent" to inclusion of their audit opinion on the company's financial statements that included in the Registration Statement.

The Company's outside SEC legal counsel:

Assists management in the "hands on" effort associated with preparing the Registration Statement Acts as a "sounding board" for management when issues arise (which could include conflicts with the Underwriters, and dealing with other accounting and reporting or disclosure matters such as litigation) Usually take the lead when responding to non-financial questions raised by the SEC

The Registration Statement Cover discloses:

Type of stock (i.e., common stock, par value, etc.) to be issued Number of shares to be sold Estimated sales price per share and gross proceeds Registration Statement number Effective Date of the Registration Statement

Management engages 3 primary parties to assist them in filing their Registration Statement and ultimately selling the stock to the public:

Underwriters who are responsible for managing the registration statement process and sale of the common stock. Attorneys who specialize in SEC matters (i.e., "SEC counsel") Independent accountants who have SEC expertise and are qualified, by the PCAOB, to audit public companies

the underwriters

actually responsible for selling the stock to the public and they take the lead in assisting the company in preparing the Registration Statement. Underwriters are generally paid a commission based on the sales proceeds of the IPO, and their fee is typically in the $ millions. Underwriters must ensure extreme accuracy of the company's information in the Registration Statement. Any inaccuracy or omission could lead to a lawsuit (i.e., alleged misrepresentation) if there is any later substantial decline in the value of the stock.

what is it called when the SEC approves the Registration Statement and it becomes

effective Once Effective, the company can proceed to sell shares of its Common Stock to the public.

what is the prospectus

is a legal document offering the shares of common stock for sale and it is required to include pertinent disclosures.

The Underwriters also hire their own

legal counsel (i.e., "Underwriter's Counsel") who review the Registration Statement in detail to ensure that the Registration Statement is complete and accurate, and in no way misleading.

The SEC requires that a Registration Statement include what

of 2 Balance Sheets and 3 Income Statements / Stockholders' Equity Statements / Cash Flow Statements The financial statements must be audited by CPA's who are qualified by the PCAOB to audit public companies

All sales of Common Stock to the public are governed by the

sec Therefore all sales of Common Stock in an IPO must follow a very defined & disciplined process, requiring a company to file a Registration Statement with the SEC (the most common "form" of Registration Statement is an S-1, but there are other forms depending on both the nature of the Offering and the size of the company). Before a company is permitted to sell shares of Common Stock, the SEC must review and approve the Company's Registration Statement.

"amend"

when the company responds in writing to the SEC's questions