Securities Lawyer 101 l Brenda Hamilton

Securities Lawyer 101 l Brenda Hamilton

Tuesday, December 10, 2013

The Emerging Growth Company

The issuer may not sell the securities covered by the registration statement until the SEC staff declares the registration statement “effective.”   The disclosures required by the 1933 Act vary depending upon if the issuer qualifies as an emerging growth company and whether the company previously engaged in a reverse merger with a public shell company.
An issuer will qualify as an emerging growth company under the JOBS Act if its total annual gross revenues are less than $1 billion during its most recently completed fiscal year and if, as of December 8, 2011, the issuer had not sold equity securities under a registration statement.
A company that completes its going public transaction will continue to be considered an emerging growth company for the first five fiscal years after it completes an IPO, unless:
♦ its total annual gross revenues are $1 billion or more;
♦ it has issued more than $1 billion in non-convertible debt in the past three years; or
♦ it becomes a “large accelerated filer,” as defined in Exchange Act Rule 12b-2.
Registration Statement Requirements
Companies that go public, whether emerging growth companies or not, should familiarize themselves with the disclosures required in an SEC Registration Statement.
There are two principal parts to SEC registration statements. Part I is the prospectus, the legal offering or “selling” document. In it, the company filing the statement must disclose important facts about its business operations, financial condition, results of operations, risk factors, and management. It must also include audited financial statements. The prospectus must be delivered to everyone who buys the securities, as well as anyone who is made an offer to purchase them.
Part II of the registration statement contains additional information that the company need not deliver to investors but must file with the SEC, such as copies of material contracts.
Form S-1
All companies may use SEC Form S-1 to register a securities offering, including companies conducting direct public offerings as part of a going public transaction. Form S-1 requires specified disclosures in the prospectus. Among them are:
♦ a description of the company’s business, properties, and competition;
♦ a description of the risks of investing in the company;
♦ a discussion and analysis of the company’s financial results and financial condition;
♦ the identity of the company’s officers and directors and their compensation;
♦ a description of material transactions between the company and its officers, directors, and significant shareholders;
♦ a description of material legal proceedings involving the company and its officers and directors; and
♦ a description of the company’s material contracts.
A company filing a registration statement must also provide disclosures about the securities offering, including:
♦ a description of the securities being offered;
♦ the plan for distributing the securities; and
♦ the intended use of the proceeds of the offering.
The financial statements of U.S. companies must comply with the form and content requirements of Regulation S-X.
Annual reports must be audited by an independent certified public accountant registered with the Public Company Accounting Oversight Board (“PCAOB”), which regulates public accounting firms that audit financial statements filed with the SEC.
Companies must provide all information necessary to ensure that disclosures are not false or misleading.
Emerging Growth Companies
The JOBS Act created a new category of issuer known as the “emerging growth company.”  If a company meets the requirements of the emerging growth company status as defined in Section 2(a)(19) of the Securities Act, it may elect to provide reduced disclosures that are scaled for newly public companies under the JOBS Act.
Emerging growth companies may:
♦ follow the smaller reporting company requirements for disclosure and audited financial statements;
♦ not have to provide an auditor attestation of internal control over financial reporting under Sarbanes-Oxley Act Section 404(b); and
♦ choose not to become subject to certain changes in accounting standards.
Confidential Filing for Emerging Growth Companies as Defined by the JOBS ACT
Registration statements filed with the SEC can be viewed by anyone using the SEC’s EDGAR system by going to the SEC’s website. If a company is an emerging growth company it can make its initial filings on a confidential basis, until the review process is completed. When SEC comments and questions have been satisfactorily resolved, the final version of the registration statement will be published on EDGAR.
More information on the process for SEC registration statements is available at:
For further information about this article, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton Florida, (561) 416-8956, by email at or visit This memorandum is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. For more information concerning the rules and regulations affecting the use of Rule 144, Form 8K, FINRA Rule 6490, Rule 506 private placement offerings, Regulation A, Rule 504 offerings, Rule 144, SEC reporting requirements, SEC registration on Form S-1 and Form 10, Pink Sheet listing, OTCBB and OTCMarkets disclosure requirements, DTC Chills, Global Locks, reverse mergers, public shells, go public direct transactions and direct public offerings or please contact Hamilton and Associates at (561) 416-8956 or by email at Please note that the prior results discussed herein do not guarantee similar outcomes.
Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855

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