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www.TheSecuritiesAttorneys.com
The new Regulation A
allows you to sell stock of existing
holders along with the stock for
the company
Being able to sell
stock gives an exit strategy to early investors,
giving them more courage to
invest
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The SEC believes that allowing selling security holders access to
avenues for liquidity will encourage them to invest in
companies
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The old Regulation A prohibited resales unless the issuer had net
income from continuing operations in at least one of its last two fiscal
years
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Allowing resales when the company does not have net income helps
developing companies, their founders and their investors
Sales by affiliates after the first year after an issuer’s
initial qualification are limited $6
million for Tier 1 offerings during 12
months
Thus, if you are a Tier 1 company
allowed to sell $20 million of stock,
your affiliates can sell up to $6
million in the first year
In Tier 2 offerings, sales by affiliates in the first year after an issuer’s initial qualification are limited to $15
million during that 12 months
Thus if you are a Tier 2 company
selling $50 million of stock, your
affiliates can sell up to $15 million in the first 12 months
Sales by non-affiliates
under a qualified offering statement are
limited only by the maximum offering
amount under Tier 1 or Tier 2
Non-affiliate sales are aggregated with sales by the issuer
and sales by affiliates to calculate the
maximum offering amount
The offering amount is calculated by aggregating the
price of all securities for which
qualification is being sought
This includes securities underlying rights to
acquire that are convertible,
exercisable, or exchangeable within
the first year after qualification or at the
discretion of the issuer
Thus if you are selling
one million shares at $10 and one million
warrants to buy shares at $10 for one
year, then you are selling $20 million of
securities
The value of the other securities
underlying rights to acquire the other securities more
than a year later, are not included
the aggregate
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Want to know more? – email me at John.Lux@ Securities-Law.info
(240) 200-4529
John E. Lux was in
the top 5% of authors on
Slideshare in 2014 and has
been quoted by Bloomberg as an expert on reverse
mergers
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This is part of a series on Regulation A, so subscribe here for more and
to learn more, go to www. TheSecuritiesAttorneys.com
and get a free copy of our book
“How to Go Public”