An issuer that has offered and sold securities in reliance on section 4(a)(6) of the Securities Act must file with the SEC and post on the issuer's Web site an annual report along with the financial statements of the issuer certified by the principal executive officer of the issuer to be true and complete in all material respects and a description of the financial condition of the issuer.
The annual report also must include the following disclosures:
- The name, legal status (including its form of organization, jurisdiction in which it is organized and date of organization), physical address and Web site of the issuer;
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The names of the directors and officers (and any persons
occupying a similar status or performing a similar function) of
the issuer, all positions and offices with the issuer held by
such persons, the period of time in which such persons served in
the position or office and their business experience during the
past three years, including:
- Each person's principal occupation and employment, including whether any officer is employed by another employer; and
- The name and principal business of any corporation or other organization in which such occupation and employment took place.
- The name of each person, as of the most recent practicable date but no earlier than 120 days prior to the date the offering statement or report is filed, who is a beneficial owner of 20 percent or more of the issuer's outstanding voting equity securities, calculated on the basis of voting power;
- A description of the business of the issuer and the anticipated business plan of the issuer;
- The current number of employees of the issuer;
- A discussion of the material factors that make an investment in the issuer speculative or risky;
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A description of the ownership and capital structure of the
issuer, including:
- The terms of the securities being offered and each other class of security of the issuer, including the number of securities being offered and/or outstanding, whether or not such securities have voting rights, any limitations on such voting rights, how the terms of the securities being offered may be modified and a summary of the differences between such securities and each other class of security of the issuer, and how the rights of the securities being offered may be materially limited, diluted or qualified by the rights of any other class of security of the issuer;
- A description of how the exercise of rights held by the principal shareholders of the issuer could affect the purchasers of the securities being offered;
- The name and ownership level of each person, as of the most recent practicable date but no earlier than 120 days prior to the date the offering statement or report is filed, who is the beneficial owner of 20 percent or more of the issuer's outstanding voting equity securities, calculated on the basis of voting power;
- How the securities being offered are being valued, and examples of methods for how such securities may be valued by the issuer in the future, including during subsequent corporate actions;
- The risks to purchasers of the securities relating to minority ownership in the issuer and the risks associated with corporate actions including additional issuances of securities, issuer repurchases of securities, a sale of the issuer or of assets of the issuer or transactions with related parties; and
- A description of the restrictions on transfer of the securities;
- A description of the material terms of any indebtedness of the issuer, including the amount, interest rate, maturity date and any other material terms;
- A description of exempt offerings conducted within the past three years;
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A description of any transaction since the beginning of the
issuer's last fiscal year, or any currently proposed
transaction, to which the issuer was or is to be a party and the
amount involved exceeds five percent of the aggregate amount of
capital raised by the issuer in reliance on section 4(a)(6) of
the Securities Act (
15 U.S.C. 77d(a)(6)
) during the preceding 12-month period, inclusive of the amount
the issuer seeks to raise in the current offering under section
4(a)(6) of the Securities Act, in which any of the following
persons had or is to have a direct or indirect material
interest:
- Any director or officer of the issuer;
- Any person who is, as of the most recent practicable date but no earlier than 120 days prior to the date the offering statement or report is filed, the beneficial owner of 20 percent or more of the issuer's outstanding voting equity securities, calculated on the basis of voting power;
- If the issuer was incorporated or organized within the past three years, any promoter of the issuer; or
- Any member of the family of any of the foregoing persons, which includes a child, stepchild, grandchild, parent, stepparent, grandparent, spouse or spousal equivalent, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include adoptive relationships. The term spousal equivalent means a cohabitant occupying a relationship generally equivalent to that of a spouse.
- Whether the issuer or any of its predecessors previously failed to comply with the ongoing reporting requirements.
An issuer must continue to comply with the ongoing reporting requirements until one of the following occurs:
- The issuer is required to file reports under section 13(a) or section 15(d) of the Exchange Act;
- The issuer has filed, since its most recent sale of securities pursuant to this part, at least one annual report pursuant to this section and has fewer than 300 holders of record;
- The issuer has filed, since its most recent sale of securities pursuant to this part, the annual reports required pursuant to this section for at least the three most recent years and has total assets that do not exceed $10,000,000;
- The issuer or another party repurchases all of the securities issued in reliance on section 4(a)(6) of the Securities Act, including any payment in full of debt securities or any complete redemption of redeemable securities; or
- The issuer liquidates or dissolves its business in accordance with state law.