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Proposed Rule

Final Rule

Comments

Financial Info/
Audit
Requirement

GAAP financial
statements for past
two years (or as
long as in
business); tax
returns if raising
$100k or <;
reviewed
financials if raising
> $100k up to
$500k; audited
financials if raising
> $500k

GAAP financial
statements for past
two years (or as long
as in business);
information from tax
returns if raising
$100k certified by
CEO or <; reviewed
financials if raising >
$100k up to $500k;
audited financials if
raising > $500k
relief for first time
issuers only reviewed
financials required

This is a huge win for small


business. Simply requiring
certain information from
tax returns and not the
actual return takes care of
privacy concerns of issuers.
Also, only requiring an
account review of financial
information rather than full
blown audit, while still
costly is a more manageable
requirement.

Testing the
Waters

Not allowed

Not allowed

Unfortunately the ability to


solicit indications of
interest before embarking
on a crowdfunding offering
and filing a Form C was not
made available. Although a
pity, if we minimize the
expense of launching an
offering and filing the Form
C it will take the sting out
of a failed offering.

Sales
Disclosure

Proposed Rule

Final Rule

Comments

Form C

Form C,
which requires
certain information
regarding the price
and terms of the
securities, mechanics
of the offering,
financial condition,
use of proceeds,
description of the
business, risk factors,
managers directors
and owners, and
related party
transactions

Disclosure is a fundamental
underpinning of the
securities laws and it is no
surprise that a disclosure is
still mandated. It is a relief
that the overly burdensome
requirements have been
scaled back and that the
user friendly Q&A method
has been revived.

Ability to use a Q&A


format
Raise Limit

$1,000,000 in 12
month period

Same

This cap was set in the


statute and the SEC has
limited discretion to raise it,
therefore this comes as no
surprise.

Investor
Limits

Greater of $2,000
and 5% of income
if < $100k
annually; 10% of
annual income if >
or equal to $100k
annually up to
$100k total

Almost same:
Greater of $2,000 and
5% of income if <
$100k annually; 10%
of lesser of annual
income or net
worth; if > or equal
to $100k annually up
to $100k total

While fundamentally, I feel


people are smart enough to
make their own investment
decisions if proved with
adequate information, I
understand the desire to
minimize risk to investors
and save them from
themselves

Proposed Rule

Final Rule

Comments

Portal
Liability

Issuer liability
(strict liability for
disclosures of
Issuer)

Portal can rely on the


disclosure of issuers
unless there are
apparent red flags

This was the primary


burden to operating a
crowdfunding platform
under the proposed rules, as
the assumption of strict
liability for the disclosure
of a third party, especially
in any volume, was
unreasonable to require the
platform to assume, this
more reasonable standard is
welcome and necessary
change.

Ability to
Curate

Cannot deny
Platforms have
companies access discretion as to what
to platform
offers to post on their
platform but cannot
favor one over the
other once on the
website

This is an essential fix


which will allow funding
portals to select the
opportunities that are the
best fit for their platforms
and for which they wants to
assume (albeit decreased)
liability.

Compensation
of Portal

No equity stakes in Equity interest


the issuers
allowed as long as
compensation for
services and on same
terms as investors

This helpful payment


method will now be
available to small business
who often have only one
form of currencytheir
stock.

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