Process of Fundraising

Crowdfunding

Once accepted by Equity Portal and upon agreeing to our Terms, each company will need to provide a file with certain information in an “offering statement” known as a Form C. Form Cs are filed with the SEC on the EDGAR platform. To submit a Form C and other filings with the SEC, the Issuer must first obtain a filing code, known as a CIK number. SEC filings should be prepared with the assistance of your lawyer and accountant.

Equity Portal cannot provide legal or accounting services, but contact us if you need referrals to providers of these services.

Companies accepted by Equity Portal can work on their platform offering page and Form C disclosure simultaneously. However, the offering page cannot go live until a Form C has been formally filed with the SEC.

Form C Key Information

  • Price to the public or the method for determining the price, the funding goal, the expected closing date, whether the Issuer will accept investments in excess of the funding goal, and procedures for an investor to cancel an investment commitment;
  • Specified information about the Issuer and its officers, directors and, 20% or more stockholders;
  • A description of the Issuer’s business, including ownership and capital structure, and use of proceeds from the offering;
  • Description of the rights, restrictions, and limitations on any securities outstanding or being offered by the Issuer, including debt securities;
  • Material factors that make an investment in the Issuer speculative or risky;
  • Description of the business and the Issuer’s business plan, the current number of employees of the Issuer, a description of any material indebtedness, and the use of proceeds from the offering;
  • Description of business transactions between the Issuer and its founders or management team (known as “related transactions”);
  • Description of the Issuer’s financial condition, including a narrative discussion that includes a discussion of liquidity, capital resources and, historical results of operations and a discussion of each period for which financial statements are provided (see below) and a discussion of any material changes or trends known to management in the financial condition and results of operations of the Issuer subsequent to the period for which financial statements are provided;
  • Annual financial statements of the Issuer prepared under U.S. GAAP (including each of a balance sheet, income statement, statement of cash flows, statement of stockholders equity, and notes to the financial statements) covering the shorter of the two most recently completed fiscal years of the Issuer or the period since the inception of the business – with such financial statements certified, reviewed or audited by a CPA, depending on the number of crowdfunding securities offered and sold during a 12-month period, as follows:
    • For companies offering $107,000 or less, financial statements certified by the principal executive officer to be true and complete in all material respects, as well as disclosure of the total income, taxable income, and total tax as reflected in the company’s federal income tax returns certified by the principal executive officer;
    • For companies offering more than $107,000 but not more than $535,000, financial statements reviewed (but not audited) by a public accountant that is independent of the company;
    • For companies offering more than $535,000 (but less than the $5 million aggregate cap):
      • If the offering is the company’s first offering under the crowdfunding rules, financial statements reviewed (but not audited) by a public accountant that is independent of the company; and
      • If the offering is not the company’s first offering under the crowdfunding rules, financial statements audited by a public accountant that is independent of the company
  • If reviewed or audited financial statements are available to the Issuer, the Issuer must provide the reviewed or audited financial statements even if any lesser requirement would otherwise be available.

Please note the utmost importance of ensuring that information on your Form C, offering page, and related SEC filings are accurate and complete. If there is a material change after filing, you must amend Form C to include any material changes to prior information or new information that investors may consider material to their investment decision.

Equity Portal cannot provide legal or accounting services, but contact us if you need referrals to these services providers.

Ongoing Obligations

After a successful offering, the company will be required to file regular annual reports with the SEC that include all of the information that had been required to be included in the original offering statement described above (updated in all respects as applicable to the current date of the annual report). This must be filed no later than 120 days after the end of each completed fiscal year.

One difference between an annual report and the original offering statement is that the financial statements for the most recent fiscal year need only be certified by the principal executive officer of the company to be true and correct in all material respects (unless reviewed or audited financial statements are available for such year, in which case those financial statements must be provided).

Companies will be required to continue to file annual reports every year until the earliest of the following:

  • The company has filed for IPO;
  • The company has filed at least one annual report and has fewer than 300 shareholders of record;
  • The company has filed at least three annual reports and has total assets that do not exceed $10 million;
  • The company or another party purchases or repurchases all of the securities issued pursuant to crowdfunding offerings, including any payment in full of debt securities and any complete redemption of redeemable securities; or
  • The company liquidates or dissolves in accordance with state law.

Cancelation or Early Termination

  1. The campaign will have been open for a minimum of 21 days at the time of the closing;
  2. Equity Portal provides notice to any potential investors and gives or sends notice to investors that have made investment commitments in the offering of:
    1. The new, anticipated closing date of the offering;
    2. The right of investors to cancel investment commitments for any reason until 48 hours prior to the new closing date; and
    3. Whether the issuer will continue to accept investment commitments during the 48-hour period prior to the new closing date.
  3. The new offering closing date is scheduled for and occurs at least five business days after the notice is provided; and
  4. At the time of the new closing date, the campaign meets or exceeds the target offering amount.

Relationship

It is extremely important to note that once an issuers campaign is over, there may or may not be any ongoing relationship between the issuer and Equity Portal.