Final answer:
The primary purpose of Frey, Inc.'s common stock offering is to raise capital for business expansion, allowing the firm to finance its growth without incurring debt.
Step-by-step explanation:
Frey, Inc.'s intention to make a $2,000,000 common stock offering under Rule 506 of Regulation D of the Securities Act of 1933 is primarily to raise capital for expansion. This method of raising funds is beneficial for a small and growing firm as it allows the company to access significant financial capital without the obligation of repayment like with a loan. The capital acquired can be used to increase the firm's visibility in the financial markets, expand operations, invest in new projects, or develop new products and services.
If the company is successful and generates profits, the board of directors may decide to issue dividends to shareholders or reinvest earnings back into the company for continued growth. However, it's important to consider that issuing stock has associated costs such as fees for investment bankers and lawyers, and it requires adherence to reporting standards set by government entities like the Securities and Exchange Commission (SEC).