A more thorough explanation:

A preliminary prospectus is a document that companies provide to potential investors during the waiting period of an initial public offering (IPO). It gives information about the company's business operations and the offering.

The Securities Act prohibits companies from making written offers during the waiting period unless the written offer complies with Section 10. However, companies can draft and distribute a preliminary prospectus before the Securities and Exchange Commission (SEC) declares their registration statement effective.

A preliminary prospectus is also known as a "red herring." It contains almost all the information that a final prospectus has, including information about the company's business operations, management, strategies, risk factors, and ownership structure. However, it only includes an estimated price range of the offering price, while the final prospectus has the final offering price.

ABC Company is planning to go public and is in the process of filing a registration statement with the SEC. During the waiting period, ABC Company drafts and distributes a preliminary prospectus to potential investors. The preliminary prospectus contains information about ABC Company's business operations, management, strategies, risk factors, and ownership structure. It also includes an estimated price range of the offering price.

This example illustrates how a preliminary prospectus provides potential investors with information about a company's business operations and the offering during the waiting period of an IPO.