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| Private Placements |
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| Your company may not choose
to go public for its own reasons but may still require
new capital to finance it's business plan. This can come
in the form of senior and subordinated debt, preferred
and common equity, lease and mortgage financing Amerigo
Corporate Finance Partners, LLC can assist you with
the arrangement of a Private Placement by providing you
with the documentation and legal work along with referrals
to the capital markets including Amerigo
Ventures, LLC. With respect to private placements,
it is important to stay within the guidelines of the SEC
with regards to certain exemptions. |
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| Section 4(2) of the Securities
Act exempts from registration "transactions by an
issuer not involving any public offering." To qualify
for this exemption, the purchasers of the securities must:
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- have enough knowledge and experience in finance
and business matters to evaluate the risks and merits
of the investment (the "sophisticated investor"),
or be able to bear the investment's economic risk;
- have access to the type of information normally
provided in a prospectus.
- agree not to resell or distribute the securities
to the public.
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| In addition, you may not use
any form of public solicitation or general advertising
in connection with the offering. |
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| Regulation
A |
| Section 3(b) of the Securities
Act authorizes the SEC to exempt from registration small
securities offerings. By this authority, Regulation A
was created to provide an exemption for public offerings
not exceeding $5 million in any 12-month period. If you
choose to rely on this exemption, your company must file
an offering statement, consisting of a notification, offering
circular, and exhibits, with the SEC for review. Regulation
A offerings share many characteristics with registered
offerings. For example, you must provide purchasers
with an offering circular that is similar in content
to a prospectus. Like registered offerings, the securities
can be offered publicly and are not "restricted,"
meaning they are freely tradable in the secondary market
after the offering. The principal advantages of Regulation
A offerings, as opposed to full registration, are
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- The financial statements are simpler and don't need
to be audited;
- 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;
- Companies may choose among three formats to prepare
the offering circular, one of which is a simplified
question-and-answer document; and
- 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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| Regulation
D |
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| Regulation D establishes three
exemptions from Securities Act registration. Let's address
each one separately. |
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| Rule
504 |
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| Rule 504 provides an exemption
for the offer and sale of up to $1,000,000 of securities
in a 12-month period. Your company may use this exemption
so long as it is not a blank check company and is not
subject to Exchange Act reporting requirements. Like the
other Regulation D exemptions, in general you may not
use public solicitation or advertising to market the securities
and purchasers receive "restricted" securities,
meaning that they may not sell the securities without
registration or an applicable exemption. However, you
can use this exemption for a public offering of your securities
and investors will receive freely tradable securities
under the following circumstances: |
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- You register the offering exclusively in one or
more states that require a publicly filed registration
statement and delivery of a substantive disclosure
document to investors;
- You register and sell in a state that requires registration
and disclosure delivery and also sell in a state without
those requirements, so long as you deliver the disclosure
documents mandated by the state in which you registered
to all purchasers; or,
- You sell exclusively according to state law exemptions
that permit general solicitation and advertising,
so long as you sell only to "accredited investors,"
a term we describe in more detail below in connection
with Rule 505
and Rule 506 offerings.
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| Even if you make a private
sale where there are no specific disclosure delivery requirements,
you should take care to provide sufficient information
to investors to avoid violating the antifraud provisions
of the securities laws. This means that any information
you provide to investors must be free from false or misleading
statements. Similarly, you should not exclude any information
if the omission makes what you do provide investors false
or misleading. |
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| Rule
505 |
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| Rule 505 provides an exemption
for offers and sales of securities totaling up to $5 million
in any 12-month period. Under this exemption, you may
sell to an unlimited number of "accredited investors"
and up to 35 other persons who do not need to satisfy
the sophistication or wealth standards associated with
other exemptions. Purchasers must buy for investment only,
and not for resale. The issued securities are "restricted."
Consequently, you must inform investors that they may
not sell for at least a year without registering the transaction.
You may not use general solicitation or advertising to
sell the securities. It is up to you to decide what
information you give to accredited investors, so long
as it does not violate the antifraud prohibitions. Nevertheless,
you must give non-accredited investors disclosure documents
that generally are the same as those used in registered
offerings. If you provide information to accredited
investors, you must make this information available
to the non-accredited investors as well. You must also
be available to answer questions by prospective purchasers.
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Rule 506 |
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| Rule 506 is a "safe harbor"
for the private offering exemption. If your company satisfies
the following standards, you can be assured that you are
within the Section 4(2) exemption: |
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- You can raise an unlimited amount of capital;
- You cannot use general solicitation or advertising
to market the securities;
- You can sell securities to an unlimited number of
accredited investors (the same
group we identified in the Rule 505
discussion) and up to 35 other purchasers.
Unlike Rule 505, all
non-accredited investors, either alone or with a purchaser
representative, must be sophisticated - that is, they
must have sufficient knowledge and experience in financial
and business matters to make them capable of evaluating
the merits and risks of the prospective investment;
- It is up to you to decide what information you give
to accredited
investors, so long as it does
not violate the antifraud prohibitions. But you must
give non-accredited investors disclosure documents
that generally are the same as those accredited
investors, you must make this
information available to the non-accredited investors
as well;
- You must be available to answer questions by prospective
purchasers;
- Financial statement requirements are the same as
for Rule 505;
and
- Purchasers receive "restricted" securities.
Consequently, purchasers may not freely trade the
securities in the secondary market after the offering.
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Amerigo
will assist you in developing your private placement
plan that is within the "safe harbor" laws
of the SEC Act and will be ready for you to approach
your investors. For senior and subordinated debt, preferred
stock, lease or mortgage financing, Amerigo will bring
partners to the table, in conjunction with
Amerigo Ventures, LLC
to structure your private placement deal.
BUSINESS PLANS OR EXECUTIVE SUMMARIES
We are always looking for new investment prospects.
If you feel you have an opportunity that would fit with
Amerigo´s approach and strategy, please submit a business
plan or executive summary to the below address or electronically
to: LB@AmerigoPartners.com
Amerigo Corporate Finance Partners, LLC
20501
Ventura Blvd. Suite 270
Woodland
Hills, CA 91364
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