Mention must be made of appropriate risk factors. Statements made concerning the risks or lack thereof in purchasing the securities must be made in the light of the financial information concerning the particular issuer. In the case of church bond offerings, it must be stated that church bonds may be offered by other issuers (of the same or other denominations) offering similar terms for greater security and less risk. Statements to the effect that little or no risk is involved in buying church bonds will be regarded as material misrepresentation. Likewise, comparisons with other investments made solely on the basis of the interest return paid will be considered misleading, unless other comparative aspects of these investments are also described. The disclosure document involved must make prominent reference to the risk factors, along with a notation as to the page number in which these risk factors may be found. The risk factors which are to be disclosed shall not be limited
to the following. (1) The issuer is primarily dependent upon contributions of the membership to meet the expenses of operation and the payment of the principal and interest on the securities. Due to population shifts or other factors, the issuer may not receive sufficient funds to meet its obligations. (2) There has been no quoted market for the issuer's debt securities; however, the broker-dealer may effect secondary market transactions upon compliance with applicable securities laws. Neither the issuer nor the broker-dealer is obligated to repurchase the securities at the request of the holder thereof. Consequently, investors may not be able to resell any securities purchased should they need or wish to do so for emergency purposes or otherwise. (3) (If the entity does not have a fixed price contract for the proposed construction, the following disclosure must be included.) A fixed price contract has not been obtained;
consequently sufficient funds may not be available for completion of the project. (4) If the entity has defaulted on previous issues and this issue is to refinance such a default, then such should be disclosed. (5) If appropriate, the trust indenture permits the issuer to further encumber the property securing the bonds of this issue through the issuance and sale of additional bonds at some future date, the maximum debt-to-property valuation ratio and the debt-to-income ratio, in such event, should be set forth under section called "additional bond issues." (6) If appropriate, issuer's financial statements as shown under "financial statements and statistical data" may be unaudited and prepared on a cash basis. (7) Bonds of this issue will be offered to the general public and therefore must compete with other investment opportunities which may be of more or less risk by comparison and similarly provide
higher or lower interest yields. (8) The total value of the security for payment of bonds of this issue is based upon the market value appraisal of the land as shown under "security for payment of bonds" and the anticipated cost of the proposed facility to be constructed as shown under "purpose of bond issue." There is no assurance that the facility (its construction being for the most part single purpose) and land could be sold for the values stated therein in the event of a default.
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