National Association of Direct Offering Specialist

Code of Ethics

1. Preamble Small businesses are responsible for creating a large percentage of new jobs, play an important role in the creation of new wealth, and generate five times the innovation per dollar of investment (as compared to large companies). More importantly, new industries, those that will propel our economy in the 21st century, will emerge from the chaos that is today's small business arena. As with all business, small businesses require access to capital to fund their development and growth. Historically these businesses have received a disproportionately small proportion of capital relative to their impact on our economic well being. Small businesses employ 50% of the private sector work force yet receive less than 10% of measurable financing. The US Congress, Small Business Administration, and Securities Exchange Commission, among others, have recognized our society's vital economic self interest in improving small businesses' access to capital. It has recognized that the existing laws, rules, and regulations as promulgated and administered by the existing infrastructure has resulted in costs and red tape barriers that have virtually excluded these small companies from access to public sources of capital. As a result, the government and a number of it's agencies have improved the fund raising environment for small businesses by dramatically reducing the costs and regulations for businesses seeking to raise funds directly from the public. This has created the necessity and opportunity for the development of a new lower cost infrastructure of lawyers, accountants, and underwriters who are willing to develop their skills and hone their experiences for the benefit of these small businesses. The legal and audit professions are well established and will be in a good position to provide lower cost services once their reduced involvement and substantially decreased liability exposure can be reflected in their pricing structures. However, it would appear that the costs and regulations associated with the National Association of Security Dealers (NASD) and the cost associated with the existing underwriting infrastructure would preclude these areas from assisting small businesses seeking to make smaller direct offerings. This creates the need for a new type of service provider... an individual who can assist small businesses in preparing, registering, and distributing direct offerings on a low cost basis consistent with the intentions of the direct offering philosophy.

2. The Association The National Association of Direct Offering Specialists (NADOS) has been formed to coordinate and foster State based Associations supporting small businesses wishing to make direct offerings of equity or debt to institutions, governments, organizations, or individuals by creating, training, monitoring, and supervising new designations for specialized service providers of equity (eDOS), debt (dDOS) or both (DOS). The National Association will develop, maintain, and enforce a common standard for both conduct and ethics of its associates, members, and designates. These new designations are badges of a professional individual who has demonstrated the experience, competence, honesty, and trustworthiness necessary to maintain the high standards of a specialist services provider. NADOS intends to qualify as a "self" regulating organization as defined in the 1934 Exchange Act as amended and will advance the integrity and prestige of the Direct Offering Specialists by:

2.1 establishing cooperative support with individuals and organizations with compatible aims and goals,

2.2 disseminating information pertinent to the legal, auditing, consulting, regulatory, political, and business interests in direct offerings,

2.3 encouraging Direct Offering Specialists and affiliated organizations to perform in accordance with the Association's high standards,

2.4 educating the public in the benefits, issues, and responsibilities of Direct Offerings as well as promoting the role played by the Association's Specialists,

2.5 striving to uphold the honor and dignity of the direct offering industry and the Direct Offering Specialist profession,

2.6 demonstrating the common goals in maintaining the high standards of the direct offering industry and the service providers to that industry,

2.7 establishing, implementing, and maintaining a high standard of ethics and conduct as well as establishing those procedures necessary to maintain them.

3. Statement of Policy Legislative Certification, a State by State Registration Program. The National Association of Direct Offering Specialists (the National Association or NADOS) advocates a policy of legislative certification through state by state registration programs. Direct Offerings (DO's) have been developed to ensure that smaller companies have access to sources of capital for their continued success and growth. The direct offering process has been designed to offer small business a method of avoiding the costs, complexities, and the regulations of the existing accounting, legal, regulatory, and underwriting infrastructure. Specifically, DO's are designed to substantially reduce the costs and red tape resulting from the historical requirements dictated by legal and regulatory requirements that result in, among other things, multiple costs for due diligence, legal, and audit reviews. Texas Association of Direct Offering Specialists (TADOS) is the first State organization authorized by NADOS. TADOS supports the National Association's efforts and agrees that mandatory national licensing would not be in the best interest of either small business or the Direct Offering Specialist. National mandatory licensing will result, over time, in the creation of excessive rules and regulations with the attendant bureaucracy required to administer them. The legislative certification through state by state registration programs is an approach that is consistent with the way in which both the C.P.A./Certified Public Accountant and P.E./Professional Engineer organizations operate. As a result of this approach customers have alternative sources for service. The legislative certification process allows and encourages a freedom of choice for the customers'. The legislative certification process would be subject to testing procedures that would not impair independent service providers who do not desire state registration from offering their services to the public.

4. Statement of Conduct Membership in the Texas Association of Direct Offering Specialists (TADOS) signifies an individual who has demonstrated experience, competence, honesty, and trustworthiness in assisting small businesses in the preparation, registration, and distribution of Direct Offerings as well as the publishing of their ongoing results.

4.1 Members will be certain that their qualifications, training, and/or experience are suitable and appropriate for each Direct Offering that they become engaged in.

4.2 Members will not seek an engagement if a conflict of interest is known to exist.

4.3 Members support the policy of full, complete, and continuous disclosure.

4.4 Members will accept only those assignments which have the potential of providing a genuine benefit for the client.

4.5 Members will have a written agreement setting out all of the terms and conditions of the relationship with each client.

4.6 Members will be honest, truthful, and forthright with clients, service providers, regulators, and other groups or entities involved in or with Direct Offerings or the Direct Offering process.

4.7 Members will serve their clients with honesty, respect, and objectivity at all times.

4.8 Members will resolve disputes, that are not otherwise resolved, by mediation. If mediation fails, disputes will, before submission to a court system, be resolved by binding arbitration under the rules and procedures established by the American Arbitration Association.

4.9 Members will respect all information relating to the client as confidential except that which is required to be disclosed under law, in accordance with paragraph 4.3 herein, or in the normal course of the Direct Offering Process.

4.10 Members will at all times, through action and deed, demonstrate a high standard of moral and ethical conduct.

4.11 Members will, at all times, advance the integrity and prestige of the Association of Direct Offering Specialists and fellow members through cooperative support of individuals, organizations, and other entities that are involved in or support the Direct Offering process.

4.12 Members will disseminate to fellow members, the Association, other State Associations of Direct Offering Specialists, the Direct Public Offering Council, or other entity, organization, or individual with common purpose; information, knowledge, experience, practice, and data pertinent to Direct Offerings or the Direct Offering Process.

4.13 Members will encourage other members to conform to and perform in accordance with the Association's code of conduct and ethics.

4.14 Members will assist and promote the Association's efforts to educate the public, small businesses, service providers, regulators, and others to increase their knowledge and understanding of Direct Offerings or the Direct Offering process.

5. Qualifications for Basic Membership Any individual or company may join the Association so long as they pay fees, support TADOS's goals, and agree to support the provisions of paragraph 2 herein, and be bound by the Statements of Conduct set forth in Paragraph 4 above.

6. Qualifications for Certified Members (DOS, eDOS and dDOS) The National Association of Direct Offering Specialists (the National Association or NADOS) has developed the following criteria for qualifying certified members and establishing their privilege to use the Direct Offering Specialist (DOS) designation (eDOS for equity and dDOS for debt). These designations are awarded and administered by the State Associations under the guidance of NADOS. Members qualifying for the above TADOS designation, who are also licensed broker/dealers in good standing, may add the word "Licensed" before said designations. Example: "Licensed eDOS". Certified membership in TADOS is a symbol of experience, competence, and professionalism as a service provider. It confirms a proven history of performance with honesty and integrity. Therefore, the candidate for admission must:

6.1 submit the authorized application package in compliance with the approved procedures,

6.2 have a post graduate degree or a recognized professional designation in a business or industry related field, or have a minimum of ten years' experience at the executive level of management in business or industry or as a successful business service provider, or have packaged and registered a direct offering,

6.3 be involved as a full time services provider,

6.4 if deemed appropriate by the Board of Directors, have successfully completed an authorized Association course or courses,

6.5 provide references from the following: one personal acquaintance, one non-client business source, and three businesses or business people who will comment on the candidate's experience, competence, professionalism, and honesty,

6.6 provide the Association with a complete and detailed curriculum vitae,

6.7 agree to, and be bound by, the TADOS "Codes of Ethics and Conduct" as approved by the board of Directors from time to time,

6.8 agree to, and be bound by, the policies, rules, and regulations of the Association, including the payment of all dues and fees,

6.9 qualify under the laws, rules, and regulations for selling direct offerings (DO's) in the state(s) in which he/she plans to provide services or market DO's.

6.10 agree to the posting of his/her Direct Offering results on the NADOS World Wide Web. Candidates qualifying under all of the above provisions, except those of clause 6.4, may be certified by the Association as a Qualifying Direct Offering Specialist (qDOS) pending the timely completion of those provisions, if required. The Board of TADOS reserves the right to authorize exceptions to these rules of Certification in situations that it deems warranted and not an impairment to the high ethics and standards of the Association.

7. Basic Member Benefits An individual or company may join the Association to support its goals and service providers can tell their customers and potential customers that they belong to an organization that specializes in Direct Offerings and requires that they conform to a set of rules and guide lines for ethics and conduct. This is important in a field where there are unlimited service providers who have limited or non existent structure or experience to perform the tasks they market. Small business must have ways of determining which service providers are experienced and fully prepared to assist them in an honest and forthright manner. Members will have access to the Association's publications and reports related to events and actions in the Direct Offerings

8. Certified Member Benefits In addition to the Basic Member Benefits, a Certified Member enjoys the ability to display his/her designation on business cards, letterheads, and other promotional material. The Certified Member will be listed, with short bio and e-mail address, on the Association's World Wide Web page (http://www.1stpoint.com/NADOS/). In addition, each Certified Member will have either a link to their Home Page or their own Home Page on the Association's WEB location. Further, each Certified Member will have the results of their clients projects posted on the NADOS World Wide Web location. 9. Changes and Revisions The Board of Directors of the Association reserves the right to change, amend, or otherwise alter these rules, regulations, and statements from time to time in their sole discretion.

9. Changes and Revisions The Board of Directors of the Association reserves the right to change, amend, or otherwise alter these rules, regulations, and statements from time to time at their sole discretion.

10. Membership Application : Link to NADOS Membership Application Page: Membership Application

David Pinkus, Executive Director

1011 West 11th Street, Austin, TX. 78703

Phone 512 476-1707 Fax 512 477-9697

David Pinkus

Return to NADOS/TADOS Home Page: NADOS Home Page

You can reach us by e-mail at: david.pinkus@nados.org

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Last Modified: Sunday, November 21, 2004