Term
| The advantages of Regulation A Offering |
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Definition
1. The financial statements are simpler and do not need to be audited.
2. There are no Exchange Act reporting obligations after the offering, unless the company has more than $10 million in total assets and more than 500 shareholders.
3. Companies may choose among three formats to prepare the offering circular, one of which is a simplified question-and-answer document.
4. You may test the waters to determine if there is adequate interest in your securities before going through the expense of filing with the SEC. |
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Term
Audit Procedures According to the SEC Act of 1934 |
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Definition
Each Audit Shall Include:
- Procedures designed to provide reasonable assurance of detecting illegal acts that would have a direct and material effect on the determination of financial statement amounts;
- Procedures designed to identify related party transactions that are material to the financial statements or otherwise require disclosure therein; and
- An evaluation of whether there is substantial doubt about the ability of the issuer to continue as a going concern during the ensuing fiscal year.
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Term
Non-GAAP financial measure |
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Definition
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Term
Private Placement Memorandum |
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Definition
The issuer agrees to provide all relevant material information concerning the company to permit an investor to decide whether to invest. Although it may not be a regulatory requirement, the issuer will usually provide a disclosure document (a private placement memorandum) to avoid violations of the antifraud provisions (as found in numerous securities laws). A disclaimer contained in a private placement memorandum will state that the appropriate regulators have not passed on the accuracy of the information provided in the document. The document is not used to provide the investor with the advantages of a private placement as opposed to a public offering. |
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Term
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Definition
Includes any form of electronic media including audio and videotapes, CD-ROM, facsimiles, Web sites, and voicemail messages, as well as substantially similar messages widely distributed by way of a computer. The term does not include a live or real-time communication, such as a live road show, but it would include a recorded version of a road show. |
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Term
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Definition
Rule 147 is an intrastate exemption from federal registration. In order to qualify for the exemption, the issue must meet a residency test for purchasers (coming to rest test) and various requirements based on the issue's business (doing business within test). This issue meets both of these requirements. Securities will have come to rest within a state if no sales are made to nonresidents during the time the securities are being issued, or within nine months following the last sale by the issuer. In order to meet the doing-business test, the company's principal office must not only be located within the state, but 80% of its gross revenues, assets, and proceeds from the offering must be generated, held, or invested within the state. |
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Term
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Definition
An at the market offering of securities is sold (at the prevailing market price) directly into the secondary market through a designated broker-dealer at prevailing market prices, rather than through a traditional offering of a fixed number of shares at a fixed price. Issuers may utilize a shelf registration to initiate an at the market offering, where securities are sold at various prices during the day, reflecting the supply/demand profile for that issuer. Only those issuers registering under Form S-3 or Form F-3 may engage in this type of offering. |
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