RULE 506(B) AND 506(C) OFFERINGS

THIS PAGE IS A DETAILED DISCUSSION OF RULE 506(B) AND 506(C) OFFERINGS.  I AM AN ATTORNEY, FORMER SECURITIES REGULATOR, AND HAVE OVER 20 YEARS EXPERIENCE WITH PRIVATE OFFERINGS.  CALL ME, AUSTIN ALLEN AT 214-799-2000, FOR A FREE CONSULTATION.

The process for a Rule 506(b) or 506(c) offering is:

- FIRST, we determine the best type of offering for you in your FREE CONSULTATION;

- Then, after I receive payment, the next step is the preparation  the process for a Rule 506(b) offering is preparing an offering document that describes the following:

- HOW MUCH AND HOW OFFERED - we determine the total amount to be raised, and whether it is debt, equity, or a combination; and we determine how the total amount is offered (units, shares, notes, warrants, etc.);

- THE PURPOSE AND THE RISKS - we describe in detail why you are raising the money, the plan for using it; and what are the risks for the offering and that industry, and other current business risks (shortages, pandemics, etc.); 

- POTENTIAL RETURNS - we determine the potential returns for the participants and the timing of the returns; and

- OTHER INFORMATION - like how long you will be raising the money, the prior experience and performance of the management and the offering issuer (if any), relevant legal and other disclosures, and tax considerations.

An Accredited Investor only Rule 506(b) or a Rule 506(c) offering are the least expensive offerings because they have the least regulation.  Prices range from my reviewing your  already prepared offering documents (usually 2-3 hours, approximately $700 - $1,000), to preparing all of your offering documents (including the Executive Summary), which can be approximately $8,000.  I can work on an hourly basis ($350/hr) or for an all inclusive flat fee.  I can usually have a PPM done in a week or less. 

Because if the issuer or a person important to the offering (a "covered person") has been convicted of, or are subject to court or administrative sanctions for securities fraud or other violations of specified laws BEFORE that date, then the item must be disclosed but the offering can continue; HOWEVER, if the item happened AFTER that date, then the issuer and/or covered person CANNOT use this securities exemption and the offering CANNOT go forward.

Generally, you can if have not been convicted of, or are subject to court or administrative sanctions for securities fraud or other violations of specified laws; or if you have, the item happened before September 23, 2013.  

There is no limit on the amount you can raise in either a Rule 506(b) or 506(c) offering.

For a Rule 506(b) offering: an unlimited number of Accredited Investors and up to 35 Unaccredited Investors can invest BUT the information that has to be provided (and the costs) increase dramatically if Unaccredited Investors are allowed to participate.  For a Rule 506(c) offering: an unlimited number of Accredited Investors can invest.

For a Rule 506(b) offering: NO, general solicitation (advertising, websites, etc.) is NOT allowed.  For a Rule 506(c) offering: YES, general solicitation (advertising, websites, etc.) IS allowed.

For a Rule 506(b) offering: An Accredited Investor "self accredits", meaning the investor completes information (generally a questionnaire, etc.) indicating that the investor is an Accredited Investor and how (net worth, income, etc.). For a Rule 506(c) offering: An Accredited Investor must supply PROOF of being an Accredited Investor (through a third party service, or tax returns, brokerage statements, etc.)