Great guide overall – a couple of clarifications, though. The first sentence of the Ownership section seems to confuse ‘authorized’ with ‘issued and outstanding’ shares. The amount of shares authorized must be in your corporate charter and requires shareholder approval to change. From that pool of authorized, the board can then issue shares which then become the ‘issued and outstanding’ shares. If you add in the amount of shares that could be issued if all securities convertible into that class of stock were converted (e.g. convertible debt, options, warrants) then you have fully diluted issued and outstanding. Also, as someone pointed out, ISO vs. NSO has nothing to do with employee vs. advisor: ISO’s are incentive plans/options that are designed to meet certain requirements in order to allow favorable tax treatment.
