Navigating the Regulations of Financial Offerings: Solutions & Exemptions
Explore the challenges and solutions in financing projects while complying with federal and state laws. From seeking funding through family and friends to understanding exemptions like Rule 506(b) and Regulation A, learn how to navigate the legal landscape of investment offerings effectively.
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Presentation Transcript
The Cow Jumped over the Digester Getting a Dairy RNG Project Financed Avisen Legal Renewable Energy Lawyers
The Developers Dilemma Great Idea Great Location Great Technology Great Team No Money Can t afford permitting Can t afford preliminary engineering Can t afford experts Mark is expensive!
The Solution? Ask family, Grandma loves you Ask all your friends for money Ask all their friends Email and Text everyone Post on LinkedIn, Facebook, Twitter, Instagram, Tik Tok, Twitch and Discord Hold public investing events in local area
The Problem with the Solution Federal and State law restrict who can invest and how you can ask Done wrong, SEC and states can force you to offer to give everyone their money back, with interest Investors can demand their money back, with interest, plus their lawyers fees SEC and states can fine and even stop you from trying again.
Real Solutions Every offer and sale of stock, LLC units, promissory notes, convertible notes, SAFEs, etc (defined as a security under federal and state laws) is regulated. Must either be registered or exempt. Registered means an IPO, a SPAC, Public Shell Merger Exempt means Crowdfunding, Regulation D, Regulation A Must meet requirements of both Federal and State rules do not always match up
Exemption Offerings More money raised in exempt offerings than registered offerings, no matter how much hype you hear around SPACs. Exempt offerings limit one of more of the following: Wealth/income of investors Advertising to find investors Number of investors
Exempt Offerings Rule 506(b) by far the most used. Only accredited investors and no advertising. Over 90% of all offerings. Crowdfunding works only if you can find the crowd. Not always easy. Regulation A also needs a crowd and has a lot of information requirements. Intrastate offerings only investors and business in state but was used successfully by a lot of ethanol plants
Registered Offerings IPOs, SPACs, Shell/Reverse Mergers Expensive and time-consuming Reliant on market conditions Much more scrutiny about business plans and financials Can be worthwhile if business already established and looking for bigger money to grow SPACs aren t dead but the SPAC craze is over, having generally failed
Offering Materials Most exempt offerings require some business and financial disclosure to investors More required with non-accredited investors No requirement under the rule for most all accredited exemptions (506, 4(a)(2). None required for 504, even though it allows non-accredited investors Registered offerings, crowdfunding and Regulation A all require certain information, including ongoing reporting
CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM Common Stock 10,000,000 Shares Todd s Amazing Biomass Company, Inc. Price per Share: $100 _____ Todd s Amazing Biomass Company, Inc. (the Company ), is offering for sale 10,000,000 shares of common stock at a price of $100 per share (the Shares ). All proceeds from the sale of Shares in this offering (this Offering ) shall be deposited in the Company s general account upon its acceptance of subscriptions. The Company may terminate this Offering at any time. _____ AN INVESTMENT IN THE SHARES IS HIGHLY SPECULATIVE. THUS, PROSPECTIVE INVESTORS SHOULD CAREFULLY REVIEW AND CONSIDER THE MATTERS DESCRIBED UNDER "RISK FACTORS" HEREIN. _____ THE SECURITIES OFFERED BY THIS PRIVATE MEMORANDUM ) HAVE NOT BEEN REGISTERED WITH OR APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING, OR THE ACCURACY OR ADEQUACY OF THIS PRIVATE PLACEMENT MEMORANDUM. ANY SUCH REPRESENTATION TO THE CONTRARY IS UNLAWFUL. Price to Investors Commissions (1) Per Share $100 Total $1,000,000,000 _____ (1) The Company has not retained any placement agent or finder in connection with the offer of Shares in the Offering. Nevertheless, the Company reserves the right to retain one or more placement agents or finders in connection with the Offering and pay such persons customary compensation. Dated: March 15, 2022 PLACEMENT MEMORANDUM (THIS Proceeds to Company $100 $1,000,000,000 $0 $0
Practical, entrepreneurial lawyers Over 20 years working with developers, equity partners, funds, lenders, construction and technology providers Todd Taylor 612 325 5036 ttaylor@avisenlegal.com www.avisenlegal.com
