Crowdcheck Blog
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Companies often wonder, does it make sense to do a Reg CF offering rather than a Reg A offering? Keep in mind that although selling securities using Reg CF may at first blush seem faster, cheaper and may have some advantages for marketing purposes, it is not always an easy calculation to make. There are some other factors to consider when deciding:
How quickly are you willing to be an Exchange Act reporting company?
Are you willing to keep track of an SPV and multiple reporting regimes?
Becoming a reporting company under Exchange Act Section 12(g)
For most companies (generally non-banks) under Exchange Act Section 12(g), the company would need to…
This entry is filed under Crowdfunding, Crowdfunding Conditions, Section 4(a)(6)
If you work with us, you will hear it many times that we strongly advise against financial projections … as they can get you in trouble. However, companies always seem to want to include projections that start from zero, and grow exponentially. This type of financial projection that is untethered to reality is a primary driver of what will cause investors to sue for being misled because investors expect companies to believe that those projected results are attainable.
One such commonly used financial projection is the hockey stick graph, as in the example below:
CrowdCheck Law’s projected legal revenues. (FYI, the size of the entire global legal market is…
This entry is filed under Disclosure, Fraud, SEC, Securities Law
We love crowdfunding here at CrowdCheck, and we really believe it is a great opportunity to invest in some interesting, novel and amazing companies. And you may have sorted through the companies to discover what you believe will be the next Facebook or Google. And you may be right and may have found your pink unicorn with rainbows, sparkles and all things shiny. But then you read what you have purchased, only to discover that the security that you think you have purchased doesn’t hold the windfall that you are expecting. There may be provisions and/or terms in the security or in the subscription agreement that you sign to purchase that security that detract…
This entry is filed under Crowdfunding, Disclosure, Offering materials
You are almost at the home stretch in your Regulation CF offering; however, there are still a few more formalities that need to occur.
First, you will need to identify who will be signing on your Form C. The SEC requires the following individuals to sign:
Individual who will sign on behalf of the company
Principal executive officer or officers
Principal financial officer
Controller or principal accounting officer
Majority of members and/or directors of the company
Second, you should have a filing day plan. Each of these individuals will be “signing” a document that will be filed with a federal agency. Which means they are acknowledging responsibility for…
This entry is filed under Crowdfunding, Section 4(a)(6), Securities Law
If you are about to launch a crowdfunding offering under Regulation CF, you should make sure you know when your financial statements will go “stale” (i.e., become too old). Under the disclosure requirements of Regulation CF, to “conduct” an offering (meaning to have an offering open and able to take investments) you must be using financials that are no older than a year and 120 days(link is external) since your previously completed fiscal year. This means, if your fiscal year is a calendar fiscal year, and you are using December 31, 2015 financials, the offering can only stay open until May 1 of this year (120 days since the end of the 2016 fiscal year,…
This entry is filed under Crowdfunding, Disclosure, SEC, Section 4(a)(6), Blog
Sure, there has been a lot of talk of Regulation A. Under Tier 2 of Regulation A, you can raise up to $50 million from the crowd – everyday folks (under Regulation A, investors do not need to be accredited investors). As a company you might be thinking, great, sign me up and how quickly can I get started? While Regulation A is the right fit for some companies, it is not the right fit for all companies. Below, we go through some threshold questions about eligibility to see if Regulation A is available to you.
1. Is your company organized in and with its principal place of business in the United States or Canada? (If yes, skip to question 2)
Regulation A is…
This entry is filed under Bad Actor, Disclosure, Regulation A, Securities Law, Blog